## Your future, ## Annual Report and Accounts 2022 ## Your future, ## your way ### In a changing world, we understand that clear financial advice ### creates confidence and greater certainty. At St. James’s Place ### we help our clients move forward, towards their goals. Acting ### responsibly, we ensure they have the advice to build their ### future, their way, delivering positive, long‑term impact. | Strategic Report | Governance | Financial Statements | | --- | --- | --- | | Chair’s report 04 | Board of Directors 102 | Independent Auditors’ Report to the | | How we do business 08 | | Members of St. James’s Place plc 180 | Corporate governance report Our stakeholders 09 (including section 172(1) statement) 104 Consolidated Financial Statements under International Financial Chief Executive’s report 16 Report of the Group Audit Committee 122 Reporting Standards 188 Our business model 20 Report of the Group Risk Committee 132 Parent Company Financial Market overview 22 Report of the Group Nomination Statements under Financial and Governance Committee 139 Our strategy 25 Reporting Standard 101 255 Report of the Group Building community 28 Supplementary information: Remuneration Committee 143 Consolidated Financial Statements Being easier to do business with 29 Directors’ report 175 on a Cash result basis (unaudited) 262 Delivering value to advisers Statement of Directors’ and clients through our responsibilities 178 investment proposition 30 Building and protecting | our brand and reputation 31 | Other Information | | --- | --- | | Our culture and being a | Shareholder information 270 | | leading responsible business 32 | How to contact us and advisers 271 | | Continued financial strength 33 | Glossary of alternative | | Our responsible business 34 | performance measures 272 | | Chief Financial Officer’s report 66 | Glossary of terms 275 | Financial review 70 Risk and risk management 90 Approval of the Strategic Report 99 01 # 2022 Highlights ## Financial highlights **£17.0bn** **Gross inflows** Down 7% from £18.2 billion in 2021 **£9.8bn** **Net inflows** Down 11% from £11.0 billion in 2021 **£148.4bn** **Funds under management** Down 4% from £154.0 billion at 31 December 2021 ![img-0.jpeg](img-0.jpeg) **£410.1m** **Underlying cash result¹** Up 2% from £401.2 million in 2021 **£405.4m** **IFRS profit after tax** Up 41% from £287.6 million in 2021 **52.78p** **Dividend per share** Up 2% from 51.96 pence in 2021 **£1,589.7m** **European embedded value (EEV) operating profit¹** Up 3% from £1,645.4 million in 2021 ¹ The Underlying cash result and EEV operating profit are alternative performance measures (APMs). The glossary of alternative performance measures on pages 272 to 274 defines these APMs and explains why they are useful. The Underlying cash result is reconciled to International Financial Reporting Standards (IFRS) on pages 74 and 75. ## Non-financial highlights **+3%** **2022 growth in advisers** Page 28 **87%** **2022 percentage of employees who feel proud to work at St. James's Place** 2021 85% Page 58 **£8.0m** **Invested in our communities** 2021 69.2 million Page 10 Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 02 ## Strategic Report Chair’s report 04 How we do business 08 Our stakeholders 09 Chief Executive’s report 16 Our business model 20 Market overview 22 Our strategy 25 Building community 28 Being easier to do business with 29 Delivering value to advisers and clients through our investment proposition 30 Building and protecting our brand and reputation 31 Our culture and being a leading responsible business 32 Continued financial strength 33 Our responsible business 34 Chief Financial Officer’s report 66 Financial review 70 Risk and risk management 90 Approval of the Strategic Report 99 ### 03 Strategic Report ## Helping you to ## move forward ## with confidence Other InformationFinancial StatementsGovernance 04 Strategic Report # Chair's report # Supporting our clients ## Overview 2022 was another extraordinary year, not least in the UK where global events contributed to rising rates of inflation that have exacerbated a cost-of-living crisis. Domestic political change has further unsettled the macroeconomic environment and it is against this backdrop that the Board has had to operate, ensuring we make careful decisions that take account of the long-term implications for our stakeholders. St. James's Place (SJP) exists to give people the confidence to create the futures they want, and during challenging times, the case for robust financial advice appears even clearer. As a Board, we believe the SJP Partnership provides the very best support for people looking to make the right decisions to safeguard the futures for them and their families. During 2022 I was delighted to spend considerable time with our advisers in the Partnership and it is clear to me that they are motivated and focused on delivering great outcomes for clients. Reflecting on 2022, the Board has been pleased to see further demonstration of the resilience of our business model, which emphasises the opportunity we have ahead of us as we continue to execute our strategy. ## The Board The shadow of COVID-19 was cast over much of 2021, but 2022 provided the opportunity for the Board to return to regular face-to-face interaction and allowed us to welcome back shareholders to meet with us at our Annual General Meeting in May. The pandemic demonstrated how adaptable boards and companies could be and, as a Board, we are now even more confident in our agility and resilience when unforeseen events arise. The Board and Group Nomination and Governance Committee have both reported on the implementation of the Board's succession plans in recent years. In 2023 we will see Simon Jeffreys and Roger Yates retiring following the Annual General Meeting, having each served nine years on the Board. On behalf of the Board, I would like to take this opportunity to thank both Simon and Roger for their contribution to the Board and in particular their stewardship of the Group Audit and Remuneration Committees. Succession planning is a key focus of the Group Nomination and Governance Committee, and its work over the last few years has enabled us to manage the departure of Executive and Non-executive Directors with orderly handovers being provided to their successors. In November we welcomed Dominic Burke to the Board as a Non-executive Director, and he will be taking on the role of Senior Independent Director following the Annual General Meeting. Dominic brings with him a deep knowledge of financial services and the experience of having founded and led large businesses in the sector. Dominic's appointment has resulted in the percentage of women on the Board falling to 30% temporarily, but the Board made the appointment fully aware that the proportion of women would be 37.5% when both Simon Jeffreys and Roger Yates step down after the AGM in May 2023. A more detailed overview of the work of the Group Nomination and Governance Committee can be found in its report later in this Annual Report. ## The market Despite the challenges I have referenced above, the Group continued to deliver resilient results in 2022. We also continued to demonstrate the discipline to manage our cost growth within plan, despite the macroeconomic headwinds. However, no business is immune to the impact of the rates of inflation seen in the UK in 2022 and the Board is mindful that while maintaining discipline on costs is critical, we must also remain focused on making decisions that drive further long-term success for our business. Financial services regulation has never been more demanding of firms, something which should give consumers confidence that robust advice can help deliver the right outcomes for them. The introduction of the FCA's Consumer Duty is a case in point and is a step change in the way supervision will work in future, emphasising the importance of putting customer outcomes at the heart of decision-making. This is a key area of focus for the business and the Board in 2023. In such a demanding world SJP's advisers benefit from the backing of a FTSE 100 organisation that has invested in a wide range of support functions that enable them to focus on the most important thing: delivering excellent service to their clients, and so we welcome the reform. St. James's Place plc Annual Report and Accounts 2022 ### 05 Strategic Report Financial Statements Other InformationGovernance ## We firmly believe in ## the value of advice and ## are strong advocates ## for regulated advice. Paul Manduca, Chair ## 52.78p Dividend per share 2021: 51.96 pence www.sjp.co.uk 06 Strategic Report Chair's report ***"Being responsible is not only the right thing to do; there is a compelling commercial case for it. This is why our ambition is to be a leading responsible business in the UK."*** The infrastructure to support the provision of advice in the current environment does not come without investment and we recognise that, across the market as a whole, the supply of advice falls short of the potential demand. We firmly believe in the value of advice and are strong advocates for regulated advice, which means we are keen to work with policymakers and other stakeholders to help ensure a broader segment of society has long-term financial security, even if they are never SJP clients. The high inflation and intense cost-of-living pressures witnessed throughout 2022 have highlighted, more than ever, the need for greater financial resilience. The defined benefit pension scheme is a thing of the past for many and the shift increases the pressure on individuals and households to generate the savings they will need to see them through their retirement. Setting aside the money to save in the current environment is difficult for many, but the challenge of turning these savings into something that can sustain an ever-ageing population is perhaps even greater. There are now many more options available to investors, but research continues to tell us that people lack confidence when it comes to managing their own financial affairs. Whilst advice may not be the right answer for some, for many it will be and our continued growth, even in the most challenging economic circumstances, demonstrates that demand exists. #### **The Board's priorities and our strategy** Our key planning assumptions and strategy to 2025 were set out in 2021 and these remain broadly unchanged. Our ambition is still to grow new business by 10% per annum and contain growth in controllable expenses to 5% per annum, and we still intend to pay out around 70% of the Underlying cash result in dividends to shareholders. At our Board Strategy Day in June the Board took the opportunity to reaffirm its support for the existing strategy as well as turn an eye to the future beyond 2025, seeking insight from both inside and outside the business. At the half-year we declared an interim dividend of 15.59 pence per share and the Board is pleased to be able to recommend to shareholders a final dividend for 2022 of 37.19 pence per share. This brings our full year dividend to 52.78 pence per share, equivalent to 70% of the Underlying cash result. The Board's key focus areas for 2022 were as follows: **The Partnership** – The health of the Partnership remains critical for this business as it is the engine that drives SJP forward. The importance of personal interaction with clients and with each other has been a theme throughout our history and in 2022 our advisers have continued to evolve their own propositions for clients by augmenting their in-person engagements with online meetings. We have also been able to hold a full programme of development conferences for our adviser community, allowing them to share experiences with each other, further their development and provide valuable feedback to senior management. **Administration** – As previously reported, the Illuedoor migration has provided us with a platform for improving our administration and client services. Realising all of the benefits will take time as we optimise our new-found capabilities, but the Board has been delighted to see further progress in 2022 in the quality and robustness of administration. Where possible we are seeking to introduce straight-through processing which ensures our advisers can process client transactions in a timely and accurate manner. **Digital** – 2022 saw the release of our first client app, enabling our clients to see personalised performance figures for their investments and reducing the need for paper documents. SJP clients who prefer paper correspondence and statements will still be able to have these, but the app represents a step towards greater digital capability for clients and advisers to support their face-to-face engagement. In 2022 we were also able to continue the development of and integration of Salesforce, with the benefits of the platform beginning to emerge for a number of stakeholders across the SJP community. The transition to a strong customer relationship management (CRM) system is a key component in enabling us to evidence how the new Consumer Duty is being met by SJP. St. James's Place plc Annual Report and Accounts 2022 ### 07 Strategic Report Investment performance – The turmoil in global markets Being responsible is not only the right thing to do; there is during 2022, combined with fiscal measures in response to a compelling case for it. This is why we put responsible and macroeconomic pressures, have inevitably impacted fund sustainable decision-making at the heart of everything performance. While investment markets weighed on client we do. Last year we provided a fuller picture of what being Governance Financial Statements Other Information investment returns in 2022, the Board has been pleased to a responsible business meant to us and I am pleased to see relative performance improving as the year progressed. report that we made further progress in 2022 and you can Our third Value Assessment Statement (VAS), published in find more detail in the our responsible business section July 2022, built upon the previous two reports and was well of this Annual Report and Accounts on pages 34 to 65. Our received. It highlighted areas where we still need to focus, responsible business Framework recognises that, to have and the Board wants to continue to prioritise these in line the greatest impact, we should focus on areas that align with regulatory expectations and our desire to deliver good most closely with our purpose, and where we are best outcomes to clients. positioned to move the dial. This is why we have identified four strategic priorities (financial wellbeing, investing Rowan Dartington and Asia – Despite the challenging responsibly, climate change and community impact) external environment, Rowan Dartington has been able which are underpinned by nine strategic enablers (see to deliver in line with its headline financial objectives. page 35 for more information). During 2022 the business Asia also faced challenges in 2022 including the COVID-19 developed, and the Board agreed, our responsible business restrictions which remained in place in Hong Kong for narrative, goals and KPIs which will permeate throughout much of the year. Whilst the restrictions and volatile our business and provide the basis for the environmental, markets have suppressed new business growth, the social and governance (ESG) targets we set management, business has performed well. including those forming part of their annual bonus objectives (see page 163 for more information). Our culture and responsibilities Concluding remarks Our special culture is one of the main reasons SJP has been successful over the years, but over time we have had to I would like to express my thanks to my Board colleagues work harder to make sure it transmits as effectively across for their support and hard work during the year and much larger adviser and employee bases. It is the Board’s congratulate management, the employees and in role to monitor culture, but doing so is not straightforward. particular our Partner businesses for what they have However, it is easy to recognise when culture is not as we achieved in a challenging year. Whilst I have tried to give would like so we are keen to make sure we put down some a flavour of the Board’s activity in 2022, I would encourage markers now to remind us what makes our culture good you to read the corporate governance report which covers and where we still aspire to be better. These markers this in more detail. 2021 was an exceptional year for SJP so provide reference points by which we can measure and to back it up with another good set of new business and monitor aspects of our culture, and give early warnings financial results in 2022 further demonstrates that not if any element of it may be straying outside our high only do we have the right strategy, but also a community standards. Throughout this report we reference our capable of delivering future growth. I look forward to stakeholders, and the Board is delighted that we have welcoming shareholders to this year’s Annual General such high levels of engagement. But what is most Meeting, which will be held on 18 May 2023. important is that we listen to our stakeholders and take account of their views in our decision-making. As is the case with many organisations, our stakeholders demand Paul Manduca, Chair that we act responsibly, and we know that being a 27 February 2023 responsible business is no longer an option but a necessity. To continue to deliver unrivalled stakeholder value, and If you would like to discuss any aspect of my report or to enhance the transformational impact we can have, the corporate governance report on pages 101 to 121, we have made a commitment to become a leading please feel free to email me on: chair@sjp.co.uk UK responsible business. www.sjp.co.uk ### 08 Strategic Report ## How we do business ## Who we are ## Why we exist ### To give you confidence to create the future you want ## What we do ### We work in partnership to plan, grow and protect clients’ financial futures ## Where we are going ## Our vision ### To be the best place to create long-term financial security Our financial goals to 2025 | 10% | 5% | 95% | £200bn | | --- | --- | --- | --- | | Annual new | Annual growth | Annual | Total client FUM by 2025 | | business | in controllable | retention of | | | growth | expenses | client FUM | | ## How we do it ## We will work together Doing the right thing Being the best version Investing in long-term of ourselves relationships Valuing, respecting and Achieving and celebrating Helping each other caring about people excellence to develop and grow Giving back Being brave and bold Creating success together Striving to put things right Embracing diversity Being easy to do business with if we make mistakes Find out more on our culture and being a leading responsible business on page 34 St. James’s Place plc Annual Report and Accounts 2022 ### 09 ## Our stakeholders Strategic Report | Advisers | Clients | Employees | | --- | --- | --- | | We give you the freedom to build | We help you feel confident about | We give you the opportunity | | and grow your financial advice | your future by empowering you with | to create the career you want | | business, your way, with the | clear financial advice to help you | and the confidence to chart | | confidence of a FTSE 100 | achieve your personal goals and | your own career path. | | company behind you. | improve your financial wellbeing. | | | Page 10 | Page 11 | Page 12 | ## Society Shareholders Our ambition is to be a leading We offer the opportunity to invest responsible business in the UK. in the leading wealth management To us, this means considering business in the UK, giving you responsible and sustainable access to long-term structural decision-making in everything growth through a business that we do. has sustainable competitive advantage and a clear direction. Page 13 Page 14 Other InformationFinancial StatementsGovernance www.sjp.co.uk ### 10 Strategic Report ### Our stakeholders ## Supporting ## our advisers ### We give you the freedom to build and ### grow your financial advice business, ### your way, with the confidence of ### a FTSE 100 company behind you. How we help our advisers move forward with confidence Our advisers help clients create the futures they want for themselves, so we enable, support and empower our advisers to deliver sound financial planning advice and build great businesses. We help them grow, succeed and stay safe by providing a range of services including marketing support, business checking, technical support, technology and training. We do this because we’ve always believed the best financial advice and the best client outcomes start with supporting the best financial advisers. How we engage with our advisers We enjoy a close relationship with our advisers, ## 4,693 as, by working in partnership with them we can better help our clients. We provide regular ## Advisers bulletins and updates to them through our 31 December 2021: 4,556 digital communication channels, but we focus much of our effort on face-to-face engagement, from individual meetings to regional conferences and our Annual Company Meeting. We host consultation sessions and conduct adviser engagement surveys so that we better understand the issues and opportunities that matter to them. We also offer learning and development opportunities so that our advisers are constantly improving in what they do, and we provide regulatory oversight so that we keep both advisers and clients safe. St. James’s Place plc Annual Report and Accounts 2022 ### 11 ## Empowering Strategic Report ## clients ### We help you feel confident about your ### future by empowering you with clear ### financial advice to help you achieve Governance Financial Statements Other Information ### your personal goals and improve ### your financial wellbeing. How we help our clients move forward with confidence Planning for your future can be complicated, especially during times of investment market volatility, so we help clients by ensuring they are supported by financial advisers who can give sound, long-term financial advice. Our advisers build trusted relationships across family generations, helping clients support those closest to them too. We want clients to feel confident in their finances, so we provide a broad range of products and services to meet their needs, both for today and for the future. And we help them to invest for the long term, with an investment approach that aims to deliver financial wellbeing in a world worth living in. How we engage with our clients ## We want great outcomes for clients so we’re 917,000 always looking to understand how we can do better for them. Our 4,693 advisers enjoy strong ## Clients relationships with clients so they are a key source of regular feedback. We complement 31 December 2021: 868,000 this through engaging directly via client focus groups, regular and ad-hoc client surveys, and targeted market research. www.sjp.co.uk ### 12 Strategic Report ### Our stakeholders ## Developing ## employees ### We give you the opportunity to create ### the career you want and the confidence ### to chart your own career path. How we help our employees move forward with confidence We want to attract, retain and develop the best talent in the UK. Beyond offering a career with an ambitious and fast-growing business, we are committed to personal and professional development, helping our employees achieve their potential with us. We want an engaged and motivated workforce, so we work hard to ensure our employees understand their contribution and feel they’re making a real difference. We want a diverse workforce, so we’re always doing more to ensure we’re an inclusive community where different perspectives are embraced and people can be themselves. We’re constantly reinforcing our culture and values so that our employees share a strong sense of purpose and feel confident they’re part of a business with real positive impact. How we engage with our employees ## 87% Hearing directly from our employees is very important in ensuring we have real insight into how our people are feeling. Frequent one-to- ## Retention rate one, team and divisional meetings ensure communication is regular and two-way. We ## for core UK conduct online pulse surveys and monthly round-table lunches hosted by executive ## employees management and senior leadership, with 2021: 82% feedback and ideas circulated to the Board. This complements the activity of our Workforce Engagement Panel, led by Non-executive Director Lesley-Ann Nash. We’ve also embraced digital communication platforms. St. James’s Place plc Annual Report and Accounts 2022 ### 13 ## Making a Strategic Report ## difference ## to society ### Our ambition is to be a leading ### responsible business in the UK. To us, ### this means considering responsible Governance Financial Statements Other Information ### and sustainable decision-making ### in everything we do. How we help society move forward with confidence We play an important role in supporting our clients’ financial wellbeing through the face-to-face advice provided by the Partnership. In doing so, we have an opportunity to help address the social, environmental and economic challenges faced by all in society. So, our aim is simple: to always act in a way that considers the long-term needs of our clients as well as the impacts of our actions on our communities and society at large. First and foremost, this means delivering great financial advice to over 917,000 clients. It also means delivering financial education in schools and other institutions, supporting charities and the St. James’s Place Charitable Foundation, and developing an investment proposition that helps clients align their investments with their values. Find out more about how we make a difference to society in the our responsible business section on pages 34 to 65. How we engage with society ## To make sure we understand the issues and £8.0m topics that matter most to our stakeholders, our Responsible Business Framework reflects ## Invested in our feedback from both internal and external stakeholders, is backed by a detailed materiality ## communities study, and measured by clear goals and key performance indicators (KPIs). These help us 2021: £6.2 million focus and flex our efforts to become a leading responsible business. We also engage with industry bodies, regulators and the UK Government to hone our support – for example via The Investing and Savings Alliance (TISA) and the Money and Pensions Service (MaPS). www.sjp.co.uk ### 14 Strategic Report ### Our stakeholders ## Committing to ## shareholders ### We offer the opportunity to invest in the ### leading wealth management business ### in the UK, giving you access to long-term ### structural growth through a business that ### has sustainable competitive advantage ### and a clear direction. How we help our shareholders move forward with confidence We’re already the largest wealth manager in the UK, and we’ve set out ambitious plans to grow our business in the years ahead. Reaching £200 billion of FUM by 2025 will not be easy, but we’re confident. Hitting that milestone will result in significant value creation for shareholders as we build on our past investment in the business to grow more efficiently in the years ahead. We’ll do all of this while making sure we are financially resilient, ensuring we can continue to invest for the future and provide returns to shareholders. We’ll also do it responsibly, ensuring we take leadership on matters most important to us. How we engage with our shareholders ## £148.4bn We want to build close and direct relationships with our shareholders, so they better understand what we do, and we better understand their ## Funds under views of SJP. We host regular shareholder meetings to explain our strategic progress and ## management corporate performance, and members of the 31 December 2021: £154.0 billion Board have direct engagement with major investors. We also commission shareholder feedback reports with third parties, giving us valuable and independent insight as well as an understanding of the issues most material to our shareholders. St. James’s Place plc Annual Report and Accounts 2022 ### 15 Strategic Report Other InformationFinancial StatementsGovernance ## Section 172(1) statement The Directors have a duty to promote the success of the Company for the benefit of its members as a whole, having regard to a number of factors and stakeholders. In accordance with the requirements of section 172(1) of the Companies Act 2006, a statement providing further information on how the Directors fulfil this duty is set out on pages 104 to 111 of the corporate governance report. www.sjp.co.uk 16 Strategic Report # Chief Executive's report # Another successful year # Introduction 2022 was yet another extraordinary year. The favourable external environment which emerged towards the end of 2021, with vaccination programmes in full swing and economies rebounding strongly, continued into the start of 2022. However macroeconomic and geopolitical conditions across the globe quickly deteriorated with high inflation, rising interest rates and the conflict in Ukraine creating a more difficult backdrop for many investment markets, companies and individuals worldwide. In the UK this was compounded by shifting political sands. Despite this, we achieved the second-best year for new business flows in our history. This strong outcome once again demonstrates the strength and resilience of our advice-led business model, and the enduring commitment of all in the Partnership to supporting their clients. # Operating and financial performance After a record outturn in 2021, during 2022 we made further good progress on our journey to achieving the objectives we have set out for 2025. We attracted £17.0 billion of gross inflows in 2022, and our advisers have worked hard to help clients understand the current environment and the importance of remaining focused on their long-term financial goals despite short-term pressures. This has ensured retention rates for client investments have remained very high at 96.5%; contributing to net inflows of £9.8 billion. This is equivalent to 6.4% of opening funds under management. The significant falls in investment markets resulted in funds under management ending the year at £148.4 billion, down 4% compared to the start of the year. Despite the high inflation environment, we contained growth in controllable expenses to 5%, in line with our guidance. This is one of the drivers behind our strong financial outcome for the year, with the Underlying cash result of £410.1 million (2021: £401.2 million) and IFRS profit after tax of £405.4 million (2021: £287.6 million). For more information refer to the Chief Financial Officer's report. £17.0bn 96.5% Gross inflows in 2022 2021: £18.2 billion Retention of client investments¹ 2021: 96.4% ¹ Excluding regular income withdrawals and maturities. St. James's Place plc # Dividend We are committed to paying out around 70% of the Underlying cash result in dividends to shareholders. The 2% increase in the Underlying cash result therefore drives a proposed final dividend of 37.19 pence per share, making for a total dividend of 52.78 pence per share for the year, an increase of c.2% over the 2021 dividend. # Supporting clients We aim to give clients the confidence to create the futures they want. In the short term some clients will have understandably been unsettled by the macroeconomic conditions that arose during the year, with inflation for example being higher than many will have seen in their adult lives. It is in these uncertain times that the trusted relationship clients have with their adviser really comes into its own. Advisers have been providing confidence to clients throughout the year by reassuring them, and ensuring they understand the environment and wherever possible do not disrupt their long-term financial plans. I am thankful to our clients for entrusting their savings to us, and for endorsing our business through voting for us in various industry awards. As we look ahead, a key area of focus for the business is on progressing our implementation plan for the FCA's Consumer Duty, which comes into effect at the end of July 2023. This is a significant step forward for our industry, raising the bar to ensure businesses deliver good outcomes for clients, so we welcome the reform. # Strategic progress Our 2025 business plan is underpinned by four key financial objectives, and I am pleased with the progress we have made on our journey so far. During 2022 we: - delivered £17.0 billion of gross inflows. Two years into our five-year plan our cumulative gross inflows are ahead of where we would have expected them to be at the outset. We aim to grow gross inflows by 10% per annum on a compound basis, but we were clear from the start that growth would not be linear; - retained 96.5% of client investments¹, better than our 95% objective; - contained controllable expense growth to 5% in line with our target, in spite of the high inflationary environment; and - achieved funds under management of £148.4 billion. This is 4% down year on year due to market falls, but we remain well placed to deliver our £200 billion target by the end of 2025. Annual Report and Accounts 2022 ### 17 ## St. James’s Place has ## delivered its second-best Strategic Report ## year ever for new ## business flows despite ## the challenging external ## environment. Andrew Croft, Chief Executive Other InformationFinancial StatementsGovernance ## Why invest in St. James’s Place ### Helping you to create your future, your way. | #1 | #2 | #3 | | --- | --- | --- | | What we are | What we do | Where we’re going | | We are a financially strong, FTSE 100 | We work in partnership to plan, grow | We have a clear strategy to help | | financial advice business, driving | and protect clients’ financial futures, | us capitalise on the large and | | growth and delivering value for all | delivered by a team of 4,693 highly | growing opportunity to help more | | our stakeholders. | skilled advisers within the | individuals plan, save and invest for | | | St. James’s Place Partnership. | their future, driving growth in funds | under management. | #4 | #5 | | --- | --- | | How we do it | Why we do it | | We continue to invest in our technology | We exist to give our stakeholders | | and infrastructure, driving efficiency | confidence to create the future they | | so we can achieve our growth | want. We are committed to doing this | | ambitions while delivering great | responsibly, by putting responsible | | service to our clients and advisers. | and sustainable decision-making | at the heart of everything we do. www.sjp.co.uk ### 18 Strategic Report ### Chief Executive’s report We remain committed to our 2025 ambitions and confident in our ability to deliver against these; however, inflationary pressures mean that controllable expense growth in 2023 will be around 8% on a pre-tax basis as we continue to focus on cost discipline while ensuring our business Being easier to do business with remains well invested for the future. As a growing business, we know that technology can streamline and optimise what we do and how we do it, During the year we also made real progress in delivering transforming the experience we give our people and against the six business priorities that will underwrite their clients. We made further progress on our technology a successful future for St. James’s Place: journey in 2022. We launched a new app for clients, which enables them to see the value of their investments in real time and offers ea sier access to information, documents and insights that are relevant to them. In due course we will launch Building community additional functionality, for example enabling clients to A thriving SJP community is critical to supporting engage with their adviser via the app. great outcomes for our clients and other stakeholders. We’re therefore pleased to have grown the Partnership Having rolled out Salesforce to the Partnership in 2021, with the addition of a net 137 new advisers during the year, during 2022 we launched complementary digital and through a combination of recruitment of experienced social marketing tools for our advisers to use to better financial advisers and 257 advisers completing our support their clients. Academy programme. We have also been focusing on our service improvement With our focus on making SJP the best place to build a programme, as we look to drive higher administration financial advice business, our proposition for advisers is standards, accuracy and efficiency across our business. stronger than ever. This, together with the growing scale of our Academy which now has more than 350 new advisers in training, means we’ve built a good pipeline for continued growth in the Partnership in the years ahead. Our learning and development programmes for both the Delivering value to advisers and clients Partnership and employees continue to develop at pace. through our investment proposition Technology has enabled us to create more user-friendly, We put our clients at the heart of our business, with the aim on-demand content and to innovate using tools such as of giving them confidence to create the futures they want. virtual reality to supplement more traditional learning We deliver this by ensuring clients are supported by great practices. We are delighted that our progress in learning financial advisers who establish long-term relationships and development has been recognised by being short- built on trust, and by creating well-rounded propositions listed for six industry awards; most notably the AIXR Global that meet their needs. The current high inflationary Virtual Reality Awards for Virtual Reality Education and environment only accentuates the need to get this right. Training of the Year. We continually evolve our investment proposition to ensure We see real value in building relationships based on face- we can support great client outcomes. Changes we have to-face and personal engagement, which was a challenge made in recent years have contributed to further during the COVID-19 pandemic. In 2022 we focused on improvement in this regard. reconnecting our communities through social engagement. During 2022 we also launched our new range of unitised funds-of-funds (Polaris range) for clients in the accumulation stage of saving, complementing the unitised InRetirement decumulation funds launched in 2020. The Polaris range is simple for clients to understand and automatically rebalances funds, removing the need for periodic manual intervention. In 2021 we committed to reducing the carbon footprint of client investments, with an interim target of a 25% reduction by 2025. We are delighted to have already exceeded this target. We will continue to work hard with our external fund managers to make further progress in the years ahead, underscoring our desire to create financial wellbeing in a world worth living in. St. James’s Place plc Annual Report and Accounts 2022 ### 19 Strategic Report Building and protecting our brand and reputation Continued financial strength We continue to work hard to strengthen the perception of With new business and FUM remaining resilient against the our business, so that when people think financial advice, backdrop of significant macroeconomic and geopolitical they think SJP. In 2022 we began the roll-out of our refreshed uncertainty during the year, and our disciplined approach brand identity for the Group, which we believe will help drive to expenses, we have achieved a record Underlying cash better awareness and trust, supporting our ambition to result of £410.1 million for the year. I am also pleased that serve more clients in the future. It is important for us to our businesses for the future, SJP Asia and Rowan complete the roll-out sustainably, without creating waste, Dartington, have been resilient and remain on track and so we’ve taken steps such as running down stocks of to break even in 2025 and 2024 respectively. existing stationery before moving to the new stock. All of this enables our financial model to remain robust. While we have further phases of the roll-out to implement, We are well positioned to continue to invest in our we’re delighted with progress we’ve made so far and the business to drive future growth and deliver cash returns Governance Financial Statements Other Information positive feedback we’ve received from clients, advisers, to shareholders over time, while ensuring our balance and other interested stakeholders. sheet remains strong. Summary and outlook Despite the extraordinary circumstances we found ourselves in during 2022, I believe SJP had another successful year and I hope shareholders agree. Our culture and being a leading This outcome could not have been achieved without responsible business the excellent work and contribution of the whole SJP Our culture is a huge asset and in recent years we have community, both here in the UK and in our offices in Asia. focused on codifying this in order to preserve its positive I would therefore like to personally thank our advisers, features and to learn where there is scope for further their staff, all of our employees and the administration evolution. It is also important that we recognise and support teams for their continued hard work, dedication reward those within our community who exhibit the very and commitment. best aspects of our culture. We have developed structures to achieve this, such as our Impact Awards ceremony It remains clear to us that the demand for trusted, face- for employees, which launched during the year. to-face advice is only getting stronger, so with a growing Partnership and a business in great shape, we continue to Having developed our Responsible Business Framework be well positioned to capitalise on our market opportunity in 2021, in 2022 we focused on enhancing this through and deliver against our 2025 ambitions. adding clear goals and metrics. Clearly articulating the outcomes we are striving to achieve will help us grow 2023 has continued in much the same way that 2022 the positive impact we can have as a business, and our ended, but we remain encouraged to see indicators that metrics will help us to measure our progress. Our goals UK inflation may have peaked and that there are some are set out in the our responsible business section on signs of optimism for the direction of economies and pages 34 to 65, and we will share the metrics in due course. investment markets worldwide. As we stated in our new business update in January, a sustained recovery in such For us, being a responsible business means focusing indicators would naturally be conducive towards improving primarily on responsible investment, financial wellbeing, consumer sentiment, activity levels and of course funds our community impact, and climate change. But our under management, as 2023 unfolds. responsibilities extend beyond these key focus areas to others where we must also make sure we’re doing the right thing – such as being an inclusive and diverse employer, Andrew Croft, Chief Executive respecting and valuing human rights, and promoting 27 February 2023 responsible procurement. The most visible aspect of our local activities is our continued support for the St. James’s Place Charitable Foundation. This continues to be a source of enormous pride for all our people, who recognise its hugely positive impact on the charities it supports. I am therefore delighted that our community raised a further £10.5 million for the Charitable Foundation in 2022, inclusive of Company matching. www.sjp.co.uk ### 20 Strategic Report ## Our business model ## How we ## What we do ## deliver value ### We work in partnership to plan, ### grow and protect clients’ financial ### futures, delivered by a team of ### highly skilled advisers within the ### St. James’s Place Partnership. ### Clients We help clients to move forward with confidence, creating the future they want. ## 917,000 Clients ### The Partnership We promote financial advice and wealth management through the St. James’s Place Partnership. ## 4,693 Advisers ### St. James’s Place We support clients and the Partnership, ensuring they can create financial wellbeing in a world worth living in. ## £148.4 billion Funds under management ### Responsible business We are committed to being a leading responsible business, putting responsible and sustainable decision-making at the heart of everything we do and helping our clients and communities to move forward with confidence. St. James’s Place plc Annual Report and Accounts 2022 ### 21 Strategic Report ## We receive We enhance We deliver ### We operate a fee-based We help all our We have a resilient ### income model where stakeholders to move business model which ### we receive fees based forward with confidence enables us to take ### on the level of client funds and create the futures advantage of the ### under management. they want. market opportunity. Governance Financial Statements Other Information Client We attract assets ## We offer an attractive +3% investment, product and service 2022 growth in advisers proposition that is exclusive to the St. James’s Place 2021: +5% Partnership and clients. Find out more on page 28 Financial | advice | | We retain | | | --- | --- | --- | --- | | | Annual | We forge close, trusted | 81% | | | management | relationships with our advisers, | | of clients would recommend fee based on helping them to run successful St. James’s Place client funds under businesses and drive great management outcomes for clients. This means 2021: 91% Assets advisers and clients stay with us. Find out more on page 62 invested We invest | | We are a long-term business | -4% | | --- | --- | --- | | Assets | so we plant seeds for the | | | managed | | 2022 reduction in FUM | future through investment in technology, our operations, 2021: +19% growth in FUM our proposition, and our people. Find out more on page 71 We impact We want to be a leading ## responsible business that £8.0m creates financial wellbeing, Invested in our communities invests responsibly, has a positive community impact, 2021: £6.2 million and commits to limiting Find out more on page 52 climate change. www.sjp.co.uk 22 Strategic Report Market overview # Demand for advice is increasing ## The UK wealth market ### Rising affluent wealth Total UK retail wealth is large and growing. Third parties suggest that retail liquid assets alone account for some £3.8 trillion as at the end of 2022 (source: GlobalData). Individuals in the mass affluent market with around £50,000 to £5 million of investable assets are estimated to control around 67% of UK investable wealth (source: GlobalData), and that proportion increases when we think about people either side of those thresholds who are also in our target marketplace. We know that the market opportunity is even greater when we consider personal pension assets and insurance-wrapped savings. ### UK individuals with between £50,000 and £5m of investable wealth ![img-1.jpeg](img-1.jpeg) (Source: GlobalData) ### Number of retail investment advisers ![img-2.jpeg](img-2.jpeg) Bank and building society Other Financial adviser (Source: FCA) Household wealth is highest for those with a head of household aged between 55 and state pension age, with the median average wealth of those households approximately 25 times the average wealth of those with a head of household aged between 16 and 24 (source: Office for National Statistics). This shows the extent of asset decumulation we can expect in the years and decades ahead, and the scale of intergenerational wealth transfer to come. ### Increasing demand for financial advice We estimate that there are approximately 13.1 million individuals in the mass affluent market in the UK, including 3.7 million who are currently non-advised but are open to receiving financial advice (source: Royal London – Exploring the Advice Gap report). Looking more broadly than the mass affluent market, according to Prudential UK's Family Wealth Unlocked report, 53% of UK adults say the financial crisis caused by COVID-19 has prompted them to seek or plan to seek advice from a financial adviser. We know that this is because financial advice creates real value and helps individuals to feel confident in their financial futures, which is referenced in research from the likes of Vanguard, Morningstar and the International Longevity Centre. In recognition of this market opportunity we've seen many developments in the DIY investment platform market, as well as in robo-advice offerings. But demand for personal, face-to-face advice has continued to grow as people lacking the time, inclination or confidence to manage their financial affairs, seek help from a trusted adviser. We expect demand for face-to-face advice to only get stronger. That's because there are a number of systemic factors driving the need for advice: - the complexity of personal taxation; - the decline of defined benefit pension schemes; - the options and challenges open to savers through 'pensions freedom'; - the scale of the UK savings gap; and - intergenerational wealth transfer. Demand for advice is therefore increasing, but there aren't enough advisers in the UK to meet it. The shortfall is likely to worsen as more and more experienced advisers approach retirement or sell their businesses: the average age of a financial adviser in the UK is 58 (source: Professional Adviser). There's already an 'advice gap' today and we think this will widen. St. James's Place plc Annual Report and Accounts 2022 ### 23 How SJP can benefit from the market opportunity We are staunch advocates of the need for individuals and families to become more financially resilient and more We’re the leading advice-led wealth management confident of their futures, but we know that holistic financial business in the UK, with 4,693 advisers at the end of 2022. Strategic Report planning advice, delivered by highly qualified professional We have a proven track record of attracting and retaining advisers, will not be accessible to all. We’re therefore great financial advisers, as well as those looking to build very supportive of efforts and initiatives, whether led by a new career with us through our Academy programme, companies, regulators or legislators, to help more people which means our adviser population is growing. Our make better decisions around their basic finances. advisers have an average age of 46 and so are able to We have not seen the competitive landscape for our establish and build long-term relationships with clients. holistic face-to-face financial planning service change Those training in our Academy have an average age of 35. materially: many of the newer advice offerings that have As a result, we are ideally placed to take advantage of the emerged in recent times have aimed to support individuals increasing demand for financial advice. with more straightforward requirements to save and invest for the future. Competition in the advice market There is a wide range of different offerings in the UK wealth management and financial advice industry, ranging from Governance Financial Statements Other Information technology-led solutions to the holistic face-to-face financial planning and advice service that we provide. In recent years we have seen an increase in the number of businesses looking to establish a toe-hold in UK financial advice, with this interest reflecting the scale of opportunity in what remains a growing and still under-served market. Financial Statements Other Information ## Our UK market | The mass affluent market in the UK | Our FUM compared | Our clients compared | | --- | --- | --- | | is often defined as individuals with | to target market | to individuals in | | between £50,000 and £5 million | liquid assets | our target market | in investable assets. There were 2022 2022 estimated to be 13.1 million such individuals at the end of 2022, and this number is expected to grow to 14.3 million by the end of 2026 (source: GlobalData). The liquid assets of this group are forecast to increase from £2.6 trillion to £3.0 trillion in this time £2.6 trillion 13.1 million (source: GlobalData). We target the mass affluent market but also look after clients either side of this space, be it individuals in the early stages of accumulating wealth or at the other end of the spectrum, £148.4bn 917,000 high-net-worth individuals who need specialist support from Market size Individuals in our core target market our Private Clients team. SJP FUM SJP clients www.sjp.co.uk 24 Strategic Report # Market overview # Market trends The UK wealth landscape is evolving, providing opportunities and challenges. We list below five key trends shaping the UK wealth management landscape of tomorrow. | Market trend | Why this is important and our response | | --- | --- | | **#1****Technology: shifting client expectations and digitally-enabled advisers** Financial advisers are making greater use of digital solutions to improve client experience and run more efficient businesses: for example, using digital tools to help service their clients. Clients are also embracing technology and are increasingly expecting companies they interact with to use data to deliver unique, personalised services. | At SJP we embrace technology to make it easier for our advisers and clients to do business with us. We have a modern, scalable back-office administration system in Bluedoor, and have rolled out Salesforce, a leading CRM system, across the Partnership. During 2022 we launched the SJP app to a group of clients, so they can monitor the value of their investments in real time. In 2023 and beyond we will launch the app to all remaining clients and enhance its functionality, for example to enable clients to view documents, send messages and book meetings with their adviser. | | **#2****Responsible investment** 2022 saw environmental, social and governance (ESG)-related investment approaches move further into the mainstream, as consumer demand for responsible investing continued to increase. At the end of 2022, retail funds under management in ESG funds accounted for £91 billion or 6.7% of the industry, an increase from 5.6% at the end of 2021 (source: Investment Association). Clients want to see their investments act as a force for good, and for wealth managers to be responsible businesses. | At SJP we recognise the importance of investing responsibly, and we integrate ESG considerations into decision-making. We believe that investing responsibly is key to achieving long-term, sustainable returns and to delivering financial wellbeing in a world worth living in; hence it is one of the seven investment beliefs in our investment proposition. For more detail on our approach to investing responsibly see pages 43 to 45. We provide our advisers with a suite of tools to keep them abreast of the latest developments in this space. | | **#3****Personal finance complexity** Managing your personal financial affairs is increasingly difficult: the UK personal taxation regime is complicated and planning for your retirement is challenging. Government borrowing has surged in the wake of the COVID-19 pandemic, the conflict in Ukraine and the energy crisis, which means it's likely there are tax increases to come. Meanwhile, interest rates are increasing but remain well below inflation, creating challenges for savers. | At SJP we deliver holistic face-to-face financial advice via the 4,693 advisers in our Partnership. They establish long-term, trusted relationships with clients, understanding each client's unique financial situation. Our advisers are highly qualified and we provide them with detailed technical support, so they can navigate any complexities a client faces and put suitable financial plans in place. They also reassure clients in times of uncertainty, such as the current macroeconomic environment in the UK, helping them to manage short-term pressures while maintaining a long-term mindset. | | **#4****Decline in the population of financial advisers** Industry experts predict the adviser population will decline over the medium to long term as advisers either retire or sell their businesses due to external pressures such as increased regulation. Yet there is growing demand for financial advice, so wealth managers will need to train new advisers. | At SJP it has been many years since we identified the need to 'grow our own' advisers to achieve our long-term growth ambitions. As a result, our Academy was established more than ten years ago, providing the professional training and experience necessary to become a successful financial adviser. Of the 4,693 advisers currently in the Partnership, 1,064 have been trained by the Academy and we have over 350 more individuals currently in training. | | **#5****Pensions and intergenerational wealth transfer** The decline of defined benefit pension schemes in favour of defined contribution schemes places the responsibility on individuals, rather than employers, to provide for their retirement. At the other end of the scale, young adults entering the workforce are likely to have lower levels of savings compared to previous generations due to high housing costs. This will lead to substantial intergenerational wealth transfer in the years ahead. | At SJP our advisers help clients plan for their retirement, ensuring they understand their current resources and what they need to save to enjoy their retirement. Beyond retirement, they help clients plan their estate for intergenerational wealth transfer. Financial advice is needed by those on the receiving end of this transfer too, and with 23% of our advisers appointed in 2022 under the age of 30, this has helped to attract an increasing proportion of clients who are also under the age of 30. | St. James's Place plc Annual Report and Accounts 2022 ### 25 ## Our strategy ## Implementing our strategy Strategic Report ## Our key business aim Governance Financial Statements Other Information ### Our key aim is to grow our funds under management (FUM) over time. ### We attract, retain and grow client FUM through offering a high-quality ### service to the Partnership and clients. We therefore pursue a simple growth ### and support strategy, built on clear and focused strategic objectives. ## How we achieve this ### We grow FUM by attracting new client investments to St. James’s Place, and ### providing high-quality services to ensure clients stay with us for the long term. ## Our strategy Our growth strategy Our support strategy Growing the size of the Partnership Delivering exceptional service to advisers and clients Increasing adviser efficiency Driving great client outcomes Broadening our client proposition Ensuring we remain a trusted, robust and resilient business for our clients ## £17.0bn 96.5% 1 Gross inflows in 2022 Retention of client investments in 2022 1 Excluding regular income withdrawals and maturities. www.sjp.co.uk ### 26 Strategic Report ### Our strategy ## Our business priorities We focus our long-term business priorities on six core areas. In each of these, we maintain a consistent and rigorous approach to risk management and governance. | | | | | Principal risks | Responsible | Link to executive | | --- | --- | --- | --- | --- | --- | --- | | | | | | and uncertainties | business focus | remuneration | | Business priority What this means What we achieved in 2022 Our focus for 2023 | | | | (see page 94) | (see page 35) | (see page 151) | | | We’ll help every corner |  We welcomed a net 137 new advisers into the Partnership |  We’ll continue to grow the Partnership, |  Partner proposition |  Financial wellbeing |  Net manpower growth | Building community of our growing community and improve adviser productivity  We made changes to how our field management team support  People  Community impact  Employee learning contribute to its success the Partnership so we’re even better positioned to help Partners  We’ll support Academy graduates to and development  Inclusion and diversity build great businesses and serve their clients become more productive more quickly  Partner sentiment  Responsible  We reconnected the SJP community through face-to-face events  We’ll launch the My House app, relationships  Employee engagement transforming the way we support learning and development We’ll invest in technology and  We launched the first phases of a new mobile app to a group  We’ll launch additional functionality  Administration service  Financial wellbeing  Administration Being easier to do processes that transform the of clients within our next-generation client app, performance  Partner proposition  Client satisfaction business with experience we provide people and extend its availability to all clients  We launched digital and social marketing tools to and retention  Salesforce adoption complement Salesforce  We’ll enhance Salesforce functionality  Data privacy  Digital client proposition and embed it across our corporate  We continued to work hard on our service improvement  Responsible  Client adoption of functions programme with a focus on limiting administration errors procurement digital literature  We’ll focus on increasing the speed  Operational efficiency of administration, and further reduce our error rate We’ll put the right people, data  We continued evolving our investment proposition to support  We’ll focus on further improving  Client proposition  Investing responsibly  Value assessment ratings Delivering value to and governance in place to great client outcomes, with progress set out in our Value our investment performance and  Climate change  Delivery of fund changes advisers and clients drive performance, delivering Assessment Statement supporting great client outcomes through our  Client satisfaction and  Operational excellence financial wellbeing in a world  We launched our Polaris range of unitised funds-of-funds  We’ll enhance our investment retention | investment | worth living in | | |  Responsible investment | | --- | --- | --- | --- | --- | | | | for clients in the accumulation stage of their savings journey | proposition to ensure it can be scaled | | | proposition | | | beyond our £200 billion aim for 2025 | |  We exceeded our interim target of a 25% reduction by 2025 in the carbon footprint of client investments  We’ll continue to grow and raise the profile of our Private Clients proposition We’ll be clearer about who we  We began the roll-out of our refreshed brand identity  We’ll implement a Group-wide plan  Conduct  Financial wellbeing  Client sentiment Building and are and who we want to be, so across our business for compliance with the Consumer  Outsourcing  Climate change  Brand protecting our brand when people think financial Duty regulation  We increased the cyber resilience of the Partnership and reputation  Regulatory  Client satisfaction  Digital marketing advice, they think SJP  Our refreshed brand identity will be  We increased our media engagement, strengthening and retention  Security and resilience  Value of advice fully embedded, and we’ll continue our standing with trade and national press  Inclusion and diversity to focus on our reputation  Strategy, competition  Cyber security and brand  Policy influence  Client complaints  Risk management  Internal audit, risk and regulation We’ll build a purpose-led  We determined goals, metrics and the target operating  We’ll educate the SJP community  Client proposition  Financial wellbeing  Responsible business Our culture and being business that has a positive model to accompany our Responsible Business Framework on our responsible business strategy, strategy  Outsourcing  Investing responsibly a leading responsible impact on society narrative and goals  We launched a new internal reward and recognition scheme,  Net zero commitments business  People  Climate change and held our first Impact Awards ceremony for employees  We’ll focus on the work we are  Community impact  Regulatory  Community impact doing to achieve our inclusion  Our community raised £10.5 million for the St. James’s Place  Inclusion and diversity and diversity ambitions  Strategy, competition  Responsible Charitable Foundation, with Company matching and brand relationships  We’ll continue to focus on limiting  We were rated AAA by MSCI and Low Risk by Sustainalytics our environmental footprint in all  Inclusion and diversity areas of our business  Corporate governance We’ll manage our resources  Our new business and FUM were resilient despite significant  We’ll aim to achieve further growth  Financial  Financial wellbeing  Partner lending Continued financial carefully so we can continue macroeconomic and geopolitical uncertainty in new business and FUM in support  Risk management  Capital usage strength to grow the investment into of our 2025 ambitions  We contained growth in controllable expenses to 5%  Responsible  Regulator relationship our business  We’ll consider the long-term  We achieved a record Underlying cash result, driving procurement interests of the Group and aim to strong dividend growth for shareholders limit growth in controllable expenses to 8% pre-tax for 2023, given the high inflationary environment St. James’s Place plc Annual Report and Accounts 2022 ### 27 ## Our business priorities We focus our long-term business priorities on six core areas. In each of these, we maintain a consistent and rigorous Strategic Report approach to risk management and governance. | | | | | Principal risks | Responsible | Link to executive | | --- | --- | --- | --- | --- | --- | --- | | | | | | and uncertainties | business focus | remuneration | | Business priority What this means What we achieved in 2022 Our focus for 2023 | | | | (see page 94) | (see page 35) | (see page 151) | | | We’ll help every corner |  We welcomed a net 137 new advisers into the Partnership |  We’ll continue to grow the Partnership, |  Partner proposition |  Financial wellbeing |  Net manpower growth | Building community of our growing community and improve adviser productivity  We made changes to how our field management team support  People  Community impact  Employee learning contribute to its success the Partnership so we’re even better positioned to help Partners  We’ll support Academy graduates to and development  Inclusion and diversity build great businesses and serve their clients become more productive more quickly  Partner sentiment  Responsible  We reconnected the SJP community through face-to-face events  We’ll launch the My House app, relationships  Employee engagement transforming the way we support learning and development Governance Financial Statements Other Information We’ll invest in technology and  We launched the first phases of a new mobile app to a group  We’ll launch additional functionality  Administration service  Financial wellbeing  Administration Being easier to do processes that transform the of clients within our next-generation client app, performance  Partner proposition  Client satisfaction business with experience we provide people and extend its availability to all clients  We launched digital and social marketing tools to and retention  Salesforce adoption complement Salesforce  We’ll enhance Salesforce functionality  Data privacy  Digital client proposition and embed it across our corporate  We continued to work hard on our service improvement  Responsible  Client adoption of functions programme with a focus on limiting administration errors procurement digital literature  We’ll focus on increasing the speed  Operational efficiency of administration, and further reduce our error rate We’ll put the right people, data  We continued evolving our investment proposition to support  We’ll focus on further improving  Client proposition  Investing responsibly  Value assessment ratings Delivering value to and governance in place to great client outcomes, with progress set out in our Value our investment performance and  Climate change  Delivery of fund changes advisers and clients drive performance, delivering Assessment Statement supporting great client outcomes through our  Client satisfaction and  Operational excellence financial wellbeing in a world  We launched our Polaris range of unitised funds-of-funds  We’ll enhance our investment retention | investment | worth living in | | |  Responsible investment | | --- | --- | --- | --- | --- | | | | for clients in the accumulation stage of their savings journey | proposition to ensure it can be scaled | | | proposition | | | beyond our £200 billion aim for 2025 | |  We exceeded our interim target of a 25% reduction by 2025 in the carbon footprint of client investments  We’ll continue to grow and raise the profile of our Private Clients proposition We’ll be clearer about who we  We began the roll-out of our refreshed brand identity  We’ll implement a Group-wide plan  Conduct  Financial wellbeing  Client sentiment Building and are and who we want to be, so across our business for compliance with the Consumer  Outsourcing  Climate change  Brand protecting our brand when people think financial Duty regulation  We increased the cyber resilience of the Partnership and reputation  Regulatory  Client satisfaction  Digital marketing advice, they think SJP  Our refreshed brand identity will be  We increased our media engagement, strengthening and retention  Security and resilience  Value of advice fully embedded, and we’ll continue our standing with trade and national press  Inclusion and diversity to focus on our reputation  Strategy, competition  Cyber security and brand  Policy influence  Client complaints  Risk management  Internal audit, risk and regulation We’ll build a purpose-led  We determined goals, metrics and the target operating  We’ll educate the SJP community  Client proposition  Financial wellbeing  Responsible business Our culture and being business that has a positive model to accompany our Responsible Business Framework on our responsible business strategy, strategy  Outsourcing  Investing responsibly a leading responsible impact on society narrative and goals  We launched a new internal reward and recognition scheme,  Net zero commitments business  People  Climate change and held our first Impact Awards ceremony for employees  We’ll focus on the work we are  Community impact  Regulatory  Community impact doing to achieve our inclusion  Our community raised £10.5 million for the St. James’s Place  Inclusion and diversity and diversity ambitions  Strategy, competition  Responsible Charitable Foundation, with Company matching and brand relationships  We’ll continue to focus on limiting  We were rated AAA by MSCI and Low Risk by Sustainalytics our environmental footprint in all  Inclusion and diversity areas of our business  Corporate governance We’ll manage our resources  Our new business and FUM were resilient despite significant  We’ll aim to achieve further growth  Financial  Financial wellbeing  Partner lending Continued financial carefully so we can continue macroeconomic and geopolitical uncertainty in new business and FUM in support  Risk management  Capital usage strength to grow the investment into of our 2025 ambitions  We contained growth in controllable expenses to 5%  Responsible  Regulator relationship our business  We’ll consider the long-term  We achieved a record Underlying cash result, driving procurement interests of the Group and aim to strong dividend growth for shareholders limit growth in controllable expenses to 8% pre-tax for 2023, given the high inflationary environment www.sjp.co.uk ### 28 Strategic Report ### Our strategy ## Building ## community ### We’ll help every corner of our growing Our employees We want to be an employer of choice within the financial ### community contribute to its success. services sector; one that is able to attract, develop and retain the best talent in the UK and give our people the confidence to create the futures they want. We’re doing Our approach more to listen to our employees and understand how We know that our people are our greatest asset and we can build a better business for them, whether through they drive the success of our business for all stakeholders. greater work flexibility, career development, training, Whether it’s our advisers, their staff or our own employees, mentoring, reward, and many other areas. Find out more we want to build a thriving community of people who can on pages 57 to 58. build great futures with us. What we achieved in 2022 The Partnership We’re pleased to have welcomed a net 137 new advisers to Growing the Partnership means we can help clients the Partnership in 2022 through both recruiting experienced have the confidence to create the futures they want. We’ll advisers and by 257 advisers completing our Academy continue to attract experienced advisers to the Partnership programme. With our focus on making SJP the best place through our traditional recruitment channels, but we’re also to build a financial advice business, we’ve also built a increasing the capacity and capability of our Academy, good pipeline for continued growth in the Partnership in which provides the professional training and experience the years ahead. We’re making progress on developing necessary for individuals to become financial advisers. our learning and development capabilities, and we’ve made changes to how we support the Partnership through our field management teams so that we’re even better positioned to help them build great businesses and serve their clients well. We’re pleased that adviser retention ## 137 remained very strong at 93%. Net new advisers welcomed in 2022 ## 2021: 218 “People are our greatest ## asset and they drive the ## success of our business ## for all stakeholders.” Reconnecting our communities We see the value in building relationships based on face-to-face and personal engagement, Iain Rayner, Chief Operating Officer and this holds as true for connecting our communities as it does for our advisers engaging with their clients. After the challenges of COVID-19, we’ve focused on getting back to building community through social engagement. In March 2022, we were delighted to welcome around 3,300 of our broader SJP community, back to our Annual Company Meeting at the O2 in London. This kick- started a programme of engagement across our community including adviser and employee events, conferences, and greater opportunities for networking and collaboration. St. James’s Place plc Annual Report and Accounts 2022 ### 29 ## Being easier to Strategic Report ## do business with ### We’ll invest in technology that transforms ### the experience we provide people. Governance Financial Statements Other Information Our approach As we’ve become a bigger business, we’ve inevitably become a more complex one, as has the industry we’re a part of. This can create challenges across our community, whether for clients, advisers, their staff or our employees. Processes can be fragmented, experiences therefore diminished and inefficiencies compounded, so in our 2025 plan we’re addressing this. We’re removing processes we don’t need any more, decommissioning systems we’ve outgrown or which have become obsolete, and setting high standards for the providers we work with. Business improvement teams will identify opportunities to simplify and streamline what we do. Experts in robotic process automation will look for ways to automate tasks and therefore enhance the accuracy of processes. We’ve already automated hundreds of tasks and we’re looking for opportunities Using technology to enhance to take this further. With Bluedoor and Salesforce as the client experience backbone of our technology ecosystem, we can continue With a strong technology ecosystem now in to decommission legacy systems and improve how we place, we’ve been able to develop and launch do things. As we bring on board new service providers, a new client-facing app. The app, which is or renew contracts with existing ones, we’ll integrate optional for clients, enables them to have a our systems seamlessly with theirs, with interfaces that mobile view of their investments with SJP and communicate with each other automatically in real time. offers easy access to information, documents We’ll create a new ‘hub and spoke’ operating model for and insights that are relevant to them. It will managing our data, pushing data expertise as close also enable clients to engage with their as possible to the Partnership. advisers via the app, enhancing and strengthening the trusted relationships our What we achieved in 2022 advisers already enjoy with their clients. We made further progress on our technology journey in 2022. Having rolled out Salesforce across the Partnership in 2021, we spent 2022 launching complementary digital and social marketing tools for our advisers to use to better support their clients. We also launched the first phases of our new client mobile app to a group of clients as part of our programme to enhance client user experience, ## “Bluedoor and Salesforce and we’ve worked hard on our service improvement programme to raise client and adviser service standards. ## are the backbone of our ## technology ecosystem ## and enable us to improve ## how we do business.” Ian MacKenzie, Chief Operations & Technology Officer www.sjp.co.uk ### 30 Strategic Report ### Our strategy ## Delivering value to advisers ## and clients through our ## investment proposition ### We’ll put the right people, data What we achieved in 2022 We’re always evolving our investment proposition so that ### and governance in place to drive we can support great client outcomes, which is our first ### performance, delivering financial investment belief and the starting point for everything we do. Changes we’ve made in recent years have contributed ### wellbeing in a world worth living in. to further improvements and these are reflected in the progress outlined in our latest annual Value Assessment Statement. We continue to evolve our range of funds, Our approach including the launch of our Polaris range of fund-of-funds We’re focused on giving clients the confidence to create for clients in the accumulation phase of their savings the futures they want by planning, growing and protecting journey, and made changes to existing funds including their wealth over time. We take an approach to investment our Global Growth and Emerging Markets funds. management that gives clients diversification and expertise on a global scale that is beyond many wealth managers. We’ve also made further good progress in reducing the We design and build our own range of investment funds carbon footprint of client investments, having already and portfolios, but we contract some of the world’s best exceeded our interim target of a 25% reduction by 2025. external managers to manage them. We also offer our clients discretionary fund management and stockbroking services, giving them even greater choice and flexibility in how to manage their investments. ## “Our investment proposition We’ve established a team of over 40 investment ## is built to support great professionals, who are supported by a panel of investment advisers, to focus on the performance of our funds and ## client outcomes.” portfolios. Their work is underpinned by best-in-class data and technology solutions, and a governance structure that’s designed to support well-informed decision-making. Tom Beal, Investments Director Launching our Polaris funds ## The introduction of the Polaris range, to sit 4 alongside our InRetirement range, completes Solutions a suite of fund-of-funds solutions that are at the core of our investment proposition. within the Polaris fund- Designed to offer a simple solution for clients of-funds range looking to grow their wealth over time, our four Polaris funds offer fund-of-funds solutions for clients in the accumulation phase of their life. These automatically rebalanced funds are engineered to be globally diversified, using the optimal blend of strategies to achieve the most suitable range of risk for clients across the risk spectrum. These funds complement our existing solutions, giving clients access to even more choices. St. James’s Place plc Annual Report and Accounts 2022 ### 31 ## Building and protecting Strategic Report ## our brand and reputation ### We’ll be clearer about who we are ## “A strong brand enables ### and who we want to be, so when people ## those experiencing it to ### think financial advice, they think SJP. Governance Financial Statements Other Information ## feel a human connection Our approach ## Our brand is the sum of all the thoughts and associations and establish a lasting, people have when they hear the name ‘St. James’s Place’. ## We want our brand to attract people to us – making them personal relationship.” more likely to choose us, partner with us or work for us. Claire Blackwell, Chief Client & Reputation Officer ‘Project Brand’ began in 2020 aiming to create a clear, compelling and robust positioning for SJP, giving our clients the confidence to create the future they want. Our refreshed brand is how we look, how we sound, and what we say. Thinking clearly about these elements, and protecting them, creates a stronger brand that will stand the test of time. Through our refreshed brand, we will build our reputation as a strong and responsible business that is trusted, considered, and recommended. Our brand is an organising principle that enriches the adviser and client experience across every touch point, and attracts and retains talent within the SJP community, reinforcing cultural change priorities. So when people think of financial advice, they think SJP. What we achieved in 2022 During the year we began the roll-out of our evolved brand identity across our business. We committed to doing this sustainably, without creating waste. For example, we’ve run down stocks of existing stationery before moving to the new stock. We have launched a refreshed corporate website, and updated websites for each of our Partner businesses. We have continued to build and strengthen our relationships with journalists, and increase our visibility in the media. This has resulted in improving Addressing cyber risk media sentiment in 2022, as people better understand in the Partnership who we are and what we do. We recognise that cyber risk continues to develop apace, particularly with the threat of State-sponsored cyber attacks. To help ensure our Partner practices are well protected and able to keep our clients’ data safe, during 2022 we asked all Partner practices to gain the Cyber Essentials Plus external accreditation. This could either be sought directly through demonstrating the robust nature of their cyber security systems, or by using our ‘Device as a Service’ (DaaS) scheme. Through DaaS, advisers can acquire SJP technology which has been certified to Cyber Essentials Plus standard. www.sjp.co.uk ### 32 Strategic Report ### Our strategy ## Our culture and being a ## leading responsible business ### We’re committed to being a purpose- What we achieved in 2022 In 2022 we focused on developing our Responsible Business ### led business that has a positive impact Framework with clear goals and KPIs. Clearly articulating ### on society. the outcomes we are striving to achieve will help us grow the positive impact we can have as a business, and our metrics will help us to measure our progress along the way. Our approach We’ve also continued to shine a light on our culture and Our culture is one of our biggest strengths and is how it is embraced by our people with new rewards and fundamental to our success. The values and behaviours recognition, including our first-ever employee Impact we share help us to embrace change, manage resources Awards. We gained great recognition for our progress in effectively, and make our business less complex. We’re developing our approach to responsible investing as a having regular conversations about culture across the signatory of the Stewardship Code. And the work of the SJP community – to celebrate when we get things right St. James’s Place Charitable Foundation continues to be a and challenge ourselves where we need to improve. huge source of pride. We’re delighted that our community raised £10.5 million during the year with Company matching. Behaving responsibly is a key part of our culture that The St. James’s Place Charitable Foundation is now the 1 touches every part of our business. It’s a philosophy that third largest Corporate Foundation . helps to inform our decisions and how we run our business. This is important as we believe tomorrow’s clients, advisers and employees will increasingly want to buy from, work ## “Behaving responsibly with, and work for a company that understands its responsibility to society. When it comes to financial ## wellbeing, we’re in a great position to help tackle some of is a key part of our culture the problems facing society today – from the retirement ## savings gap to the long-term care crisis and gender that touches every part inequality in pensions. ## of our business.” Liz Kelly, Chief Corporate Affairs & People Officer 1 Association of Charitable Foundations, Giving Trends 2021. Reducing the carbon footprint of client investments ## 25% Climate change is one of the most significant Target reduction in global challenges we face today. We believe we can the carbon footprint have the greatest impact on climate change through how of client investments we invest our £148.4 billion of funds under management, and so in 2021 we committed to reducing the carbon from 2019 to 2025 footprint of client investments, with an interim target of a 25% reduction by 2025. We are delighted to have already exceeded this target, in large part due to changes we’ve made to our funds in recent years. We will continue to work hard with our external fund managers to make further progress in the years ahead. St. James’s Place plc Annual Report and Accounts 2022 ### 33 ## Continued financial Strategic Report ## strength ### We’ll manage our resources carefully so ### we can continue to grow our investment ### into our business. Governance Financial Statements Other Information Our approach We have a straightforward financial business model. We generate revenue by attracting clients through the value of our proposition. They trust us with their investments and then stay with us. This grows our funds under management (FUM), on which we receive product management charges. This income is then used to meet our overheads, invest in the business and pay dividends to our shareholders. We’re financially prudent and we make sure that we’re always holding assets to fully match our clients’ investments. This, and the simplicity of our business model, means we have a resilient capital position capable of meeting our liabilities even in adverse market conditions. Our ambitions We’ve set ambitious financial objectives through to 2025. Gestation: driving growth We want to build FUM to £200 billion and we’ll do this by in our future cash flows growing new client investments by 10% per annum on Annual product management charges are our average over that period, and by retaining 95% of existing key profit driver. However, these are not taken for the investments every year. We believe these growth ambitions first six years for investment and pension business. are achievable given the market opportunity, the quality Business in this six-year period is known as ‘gestation of our proposition and the strength of the Partnership, FUM’, and for this period it contributes nothing although growth in gross inflows will not be linear. to the Cash result apart from a day one margin arising on new business. We’ve also set out a financial envelope for how we manage our resources over time, with the aim of containing annual Gestation FUM is a very significant store of value and 1 growth in controllable expenses to 5%. This will not be easy gives a high degree of visibility to the emergence of but we believe it’s achievable in the medium term. In the additional cash flows. Based on current market levels short term, the impact of high inflation means we expect and assuming no withdrawals, gestation FUM at growth in controllable expenses to be 8% on a pre-tax basis 31 December 2022 would contribute £383.5 million for 2023. The investments we’re making in how our business per annum to the Cash result once it is all out of the runs will allow us to work more efficiently. Better data, better first six-year period, including £47.9 million over 2023. systems and more automation will mean more control, This contribution comes at no additional expense. fewer errors and less waste. We can grow our business more efficiently and we can prioritise strategic investment. 1 Controllable expenses are an alternative performance measure (APM). For further information refer to the glossary of APMs on pages 272 to 274. ## “Gestation is a concept ## 8% ## unique to SJP, and a really Aim to contain growth in pre-tax ## positive differentiator.” controllable expenses to 8% in 2023 2022: 5% Craig Gentle, Chief Financial Officer www.sjp.co.uk ### 34 Strategic Report What’s inside? Our responsible business 34 Financial wellbeing 40 Investing responsibly 43 ## Our responsible Climate change 46 Community impact 52 Strategic enablers 57 ## business ### At SJP, our ambition is to be a leading Journey to date ### responsible business in the UK. To us, In 2021, we set the aspiration to be a leading UK responsible business, identified the topics most material to us and ### this means considering responsible developed our Responsible Business Framework (hereafter ### and sustainable decision-making in our Framework) to give structure to our approach. ### everything we do. Working in collaboration with stakeholders across the business and with the support of external consultants, Being a responsible business marries our long culture in 2022 we then set initial goals and metrics for each of of giving back with our clear purpose to help our clients the topics within our Framework, drawing together existing and community embrace their tomorrow and create the measures and developing new goals where we want futures they want. In this section of the Annual Report and to drive progress. Alongside this we mobilised our new 1 Accounts we discuss our approach and impact on the Responsible Business Advisory Group to lead and report long-term wellbeing and resilience of individuals, on our progress. communities, the environment and society. Agreeing our goals and metrics brings our Framework to life and gives us tools to better measure our performance ## Our approach from 2023, helping us tell our story and supporting our stakeholders to understand our progress. While we are As a FTSE 100 company with £148.4 billion of funds under not yet ready to share our metrics, you will see our goals management, we recognise the impact and influence throughout this section. we can have, and our responsibility to use this positively. Our ambition to be a leading UK responsible business is In October 2022, our approach was recognised at the a long-term aspiration. It requires us to have a deep Global Good Awards where we were awarded Gold for understanding of the topics most material to us, clearly ‘Global Good Company of the Year’. articulated goals, the right processes to operationalise for success, and metrics that provide transparency on our progress. This journey will take time and involve continuous focus and review as our plans evolve. The external environment is changing rapidly and what might be perceived as ‘leading’ today is unlikely to stay the same for long. Being a leading responsible business is a state of mind, not a destination; whilst we don’t claim to have all the answers, we are committed to our ambition – to understand the role we can play, make real progress and bring others with us on the journey. ## “Striving to be a leading responsible business is a continuous ## journey for us. We know there is more work to do, but it was ## heartening to be considered alongside so many brilliant ## businesses making their work a force for good.” Vicki Foster, Divisional Director, Responsible Business 1 The Advisory Group has representation from all areas of our business and will report regularly to our Executive Board and Group Risk Committee. St. James’s Place plc Annual Report and Accounts 2022 ### 35 ## St. James’s Place Responsible Business Framework Strategic Report | Leading the conversation | | | | | Enhancing financial wellbeing for our | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | on investing responsibly | | | | clients, our people and our communities | | | | | | | | | | | With £148.4 billion of funds under management, | | | | | As a leading UK financial advice business, we | | | | | | | | | | we are committed to using our scale and | | | | | | are committed to enhancing financial | | | | | | | | | influence to lead the conversation on | | | | | | | resilience and confidence in all our | | | | | | | | investing responsibly. We do this through | | | | | | | | communities, from our clients to | | | | | | | fund manager engagement, our | | Financial | | | | | the charities we support, and from | | | | | | | | commitment to the UN Principles | | wellbeing | | | | | | primary school children to those | | | | | | | for Responsible Investment, our | | | | | | | | | most vulnerable in society. | | | | | | membership of the Net-Zero | | | | | | | | | We do this through providing | | | | | | Asset Owner Alliance, and | | | | | | | | | | sound financial advice | | | | | our education for clients | | | | | | | | | | | | and delivering | | | on how to use money | | Vision | | | | | | | | | financial education. | | | | as a force for good. | | Purpose | | | | | | | | | | | | | | | Culture | | | | | | | | | | | Page 40 | | | Investing | | Climate | | | | | | | | | | | Page 43 responsibly change Taking action on climate change Some of the issues facing our world today can feel overwhelming, but solving them involves everyone playing their part. We are committed to Community doing what we can to tackle climate Giving back to support local impact change through our operations, supply chain communities and regeneration and investment management approach. Giving back is in our DNA; from our founding Our approach to reaching net zero includes days we have looked beyond ourselves to make a educating our community on climate change, difference to those less fortunate. We are committed to embedding environmental considerations into driving positive community impact, building social capital decision-making and conserving resources – not only within communities, and connecting the dots between the to reduce our impact, but also have a positive one. charities we support and the social initiatives we run, by offering place-based and skills-based outreach. Page 46 Other InformationFinancial StatementsGovernance Page 52 ### Strategic enablers Bringing together material topics that enable our business to function and grow sustainably. People Governance  Responsible relationships  Corporate governance  Inclusion and diversity  Risk management  Policy influence  Data privacy  Client satisfaction and retention  Responsible procurement  Human rights Page 57 Page 63 www.sjp.co.uk ### 36 Strategic Report ### Our responsible business ## How we measure our progress ### We want to make it easy for all our stakeholders to understand the work we’re doing ### and how we’re measuring our performance. We are aligning our approach to key ### external frameworks which help broaden our impact. ### United Nations Sustainable Development Goals (UNSDGs) In 2020, we became a participant of the United Nations Global Compact, with the ambition to further embed those UNSDGs most relevant to our business into our long-term approach. Within our Responsible Business Framework, our material topics each contribute to progress against the UNSDGs. We believe we can have the greatest impact on the six UNSDGs listed below. SDG Our promise and progress Our promise To improve money management in the next generation by supporting schools and other organisations to deliver financial education to children and young people. Alongside this, we aim to provide our advisers with the resources and knowledge to teach financial education. To provide relevant financial skills and education to our clients to give them the confidence to create the Target 4.4 future they want. By 2030, substantially increase the number Our progress of youth and adults Most notably in 2022, we launched a strategic partnership with national charity Young Money, sponsoring who have relevant skills, the development of 21 ‘Centres of Excellence’ over the next three years, equipping schools – predominantly including technical in areas of deprivation – to deliver a robust financial education curriculum. and vocational skills for employment, decent jobs and entrepreneurship. Our promise To ensure equal opportunities for women through our inclusion and diversity programmes and by ensuring we align to national commitments. Our progress In 2022, we continued to make progress against our commitments to increasing gender and ethnicity Target 5.5 representation in our employee base, aligned with the Women in Finance and Race at Work charters. Ensure women’s full and effective participation We also continued our commitment to mentoring, completing our fifth year with the 30% Club cross-sector and equal opportunities mentoring programme supporting female development, organising nine months of senior mentoring for for leadership at all minority ethnic employees and members of the Aleto Foundation, and completing the second year of levels of decision- our in-house mentoring programme for talented women in the pipeline for senior roles. This programme making in political, supported 50+ women with mentoring by senior leaders as well as providing access to masterclasses economic and and psychometric profiling. public life. Our promise To invest in our employees through training and development. To increase the aspirations of young people by working with schools and charities to support employability and provide positive work experiences. As part of our social mobility strategy, we actively seek to support disadvantaged young people into financial services careers. Target 8.5 Our progress By 2030, achieve full and productive In 2022, we continued to enhance our development offering, working to create virtual reality learning employment and and delivering pathway learning through interactive, digital curricula. decent work for all We also worked with the Aleto Foundation to sponsor a three-day minority ethnic leadership programme, women and men, providing Aleto alumni and SJP employees with skills workshops and an innovation challenge, the results including for young of which were presented to a panel of SJP senior leaders including CEO Andrew Croft. people and persons with disabilities, and equal pay for work of equal value. St. James’s Place plc Annual Report and Accounts 2022 ### 37 SDG Our promise and progress Our promise Strategic Report To encourage responsible practice among our suppliers and fund managers in the areas of environmental impact, societal impact and governance. To support our Partner practices in operating responsibly and aligning to national standards. Target 9.2 Our progress Promote inclusive In 2022, we continued to highlight ESG considerations in our due diligence and conversations with suppliers, and sustainable and within our investment management approach. We also influenced industry participants to use industrialisation and, by client-friendly terminology, working closely with the collaborative industry body The Investing and Saving 2030, significantly raise Alliance (TISA). industry’s share of Following the launch of our Framework in 2021, we built support for Partner practices on how to develop employment and gross their own responsible business approach, and provided tailored consultancy as well as producing tools domestic product, and sharing knowledge, for example by running a national panel for peers to share best practice. in line with national circumstances, Governance Financial Statements Other Information and double its share in least developed countries. Our promise To support the St. James’s Place Charitable Foundation, through funding and volunteering, as its grants support charities that reduce social inequality and promote economic inclusion. To support employability programmes throughout our business. Target 10.2 Our progress By 2030, empower In 2022, the SJP community raised £10.5m for the Charitable Foundation, which in turn distributed £10.1m to 853 and promote the social, charities, supporting social mobility both in the UK and overseas. We also continued our strategic partnership economic and political with the Duke of Edinburgh (DofE) Award (see page 54). inclusion of all, As well as our Aleto leadership programme for minority ethnic employees and Aleto alumni, we ran our irrespective of age, Futures in Finance initiative for the second year, and continued to build on our inclusion and employability sex, disability, race, partnerships including The Diversity Project, LGBT Great, Stonewall, The Valuable 500, the Aleto Foundation, ethnicity, origin, Progress Together, the Business Disability Forum and Disability Confident. religion or economic or other status. Our promise To control and reduce our environmental impact and promote sustainable business practices. Our progress Notably in 2022, we built a carbon conservation measure tracker to better understand existing energy usage across our corporate estate, allowing us to make recommendations for optimisation and identify Target 13.2 opportunities for carbon reduction in support of corporate targets. Integrate climate We also signed up to the Financial Reporting Council’s UK Stewardship Code, joining 235 other signatories change measures adhering to high standards for the responsible management of capital. The aim is to not only create into national policies, long-term value for clients, but also support sustainable benefits for the environment, economy and strategies and planning. society by taking ESG factors, including climate change, into account when making investment decisions. ### Memberships and partnerships Strategic partnerships and collaboration are essential to driving meaningful change and contributing to greater progress. As well as aiming to report in a way consistent with our industry, we are also proud to be members and supporters of many organisations driving change, including those shown below. www.sjp.co.uk ### 38 Strategic Report ### Our responsible business ### Sustainability Accounting Standards Board We’re pleased to continue to align our reporting to the Sustainability Accounting Standards Board (SASB) framework for our industry. The standards offer a consistent method of reporting and we engage with the framework for the benefit of all our stakeholders, sharing sustainability data in a consistent and transparent way. Given our focus on wealth management we have responded to the reporting standards for Asset Management & Custody Activities. Topic Accounting metric 2022 status Code | Transparent | (1) Number and (2) percentage of covered | We publish complaints data half-yearly which | FN-AC-270a.1 | | --- | --- | --- | --- | | Information & Fair | employees with a record of investment- | can be found on our website at www.sjp.co.uk/ | | | Advice for | related investigations, consumer-initiated | site-services/how-to-make-a-complaint. | | | Customers | complaints, private civil litigations, or other | | | We do not currently publish further information. regulatory proceedings Total amount of monetary losses as a We do not currently publish this. FN-AC- result of legal proceedings associated with 270a.2 marketing and communication of financial product related information to new and returning customers Description of approach to informing Before any advice is provided, our advisers must FN-AC- customers about products and services inform clients about the products and services 270a.3 we offer. This is a closely regulated area in the UK and we are fully compliant. We publish numerous supporting documents, available on our website. Employee Diversity Percentage of gender and racial/ethnic This data breakdown can be found on pages 59 FN-AC-330a.1 & Inclusion group representation for (1) executive and 60. management, (2) non-executive management, (3) professionals, and (4) all other employees Incorporation of Amount of assets under management, by 1. 100% of SJP manufactured funds. FN-AC-410a.1 Environmental, asset class, that employ (1) integration of 2. 3% (Sustainable and Responsible Equity Fund). | Social, and | environmental, social, and governance (ESG) | | | | --- | --- | --- | --- | | Governance | issues, (2) sustainability themed investing, | 3. Our general approach is for engagement | | | Factors in | and (3) screening | | rather than divestment with companies to drive | | Investment | | | positive change. We have an exclusions policy | | Management | | | which covers all of our manufactured funds. | & Advisory | Description of approach to incorporation | Responsible investing is a defining characteristic | FN-AC-410a.2 | | --- | --- | --- | | of environmental, social, and governance | of our investment approach and is an important | | | (ESG) factors in investment and/or wealth | component in creating long-term value for our | | | management processes and strategies | clients. | | Our approach to responsible investing can be found on our website at www.sjp.co.uk/products- and-services/investment/responsible-investing. Description of proxy voting and investee Details on proxy voting are publicly disclosed FN-AC-410a.3 engagement policies and procedures in our:  Stewardship and Engagement Report  Stewardship, Engagement and Shareholder Voting Policy These and further statements can be found on our website at www.sjp.co.uk/products-and-services/ investment/responsible-investing. St. James’s Place plc Annual Report and Accounts 2022 ### 39 Topic Accounting metric 2022 status Code Business Ethics Total amount of monetary losses as a result Fraud: FN-AC-510a.1 Strategic Report of legal proceedings associated with fraud, There have been no losses that fall within the insider trading, anti-trust, anti-competitive definition of ‘legal proceedings’ outlined in the behaviour, market manipulation, SASB criteria. malpractice, or other related financial We hold data on monetary loss in respect of industry laws or regulations fraud, but this is categorised as a ‘loss’ due to our corporate decision to reimburse our clients for any losses suffered as a result of fraud. The frauds generally materialise as a result of adviser negligence, premeditated intent or a mistake at one of our administration centres and so we feel duty bound to reimburse. This data is not disclosed publicly. Malpractice: We currently hold data on the monetary losses Governance Financial Statements Other Information accrued in respect of claims brought against SJP by clients for negligent financial advice provided to clients by our advisers. We do not disclose this publicly, and some litigation claims have strict non-disclosure agreements. We are not currently aware of any litigation in relation to anti-trust, anti-competitive behaviour or market manipulation that we would be required to disclose. Insider trading: Metric currently not held or disclosed. Description of whistle-blower policies We maintain robust whistleblowing policies and FN-AC-510a.2 and procedures procedures, overseen by our Whistleblowers’ Champion, which enable members of our internal community and those external to the Group to raise any concerns about wrongdoing connected to SJP. Our employees receive regular training on whistleblowing arrangements. The whistleblowing policy can be found on our website at www.sjp.co.uk/about-us/corporate- governance. Activity (1) Total registered and (2) total unregistered (1) £0 FN-AC-000.A assets under management (AUM) (2) £148.4 billion The majority of AUM is retail unit trusts authorised by the FCA in the UK, with the balance primarily being insurance company assets. Total assets under custody and supervision Our closing 2022 funds under management stood FN-AC-000.B at £148.4 billion. www.sjp.co.uk ### 40 Strategic Report ### Our responsible business ## Financial wellbeing ## Enhancing financial wellbeing for our clients, ## our people and our communities. We take action in line with this philosophy. For example, in ### Helping our clients create the futures 2022, we grew our podcast series focusing on experts who ### they want through sound, empathetic have experienced vulnerability. ### and personal financial advice is our As part of our wellbeing initiative and tackling cost-of-living ### very purpose. issues, we also launched a ‘Resilience in a Changing World’ podcast to help individuals find their way through challenging periods and build robust strategies to navigate As a leading UK financial advice business, we are financial, emotional and societal issues. committed to enhancing financial resilience and confidence for our clients through face-to-face financial As a research initiative, we launched the Finance in Society advice provided by expert financial advisers (our Research Institute in collaboration with the University of Partnership). We believe in the importance of long-term Gloucestershire, to advance high-quality collaborative relationships built between our advisers and their clients. personal financial research and provide technical and These relationships are built on mutual trust, enabling our policy advice to organisations and government. advisers to gain a deeper understanding of their clients’ future aspirations and long-term goals. We take the same holistic approach in how we support our wider communities, from the school children we provide with financial education to the charities we engage with, and how we help those most vulnerable in society. Our goals Enhance clients’ long-term financial ## 1. wellbeing through face-to-face financial advice delivered by qualified, expert advisers. Help to improve long-term financial resilience ## 2. in society by providing financial education in schools and to charities. Enhance the long-term financial resilience ## 3. of employees through education and access to advice. St. James’s Place plc Annual Report and Accounts 2022 41 # Facing societal challenges We know financial wellbeing is a key component of a healthy and thriving society. When we talk about financial wellbeing, we mean the feeling of being financially confident, resilient and prepared for the future. 2022 was a critical year in highlighting the importance of financial confidence, resilience and wellbeing, with the cost-of-living crisis, rising inflation and soaring energy bills hitting the UK. Knowing how to grow and protect your finances is complicated and the risk of getting it wrong is high, so advice from a trusted professional can help people make better choices for the future. This is at the heart of what we offer our clients and our communities: the confidence to create the future they want. In 2022, we aligned our approach to helping improve financial wellbeing in society with the UK Government's Money and Pensions Service (MoPS) strategy. This highlighted the need for increased financial wellbeing across the UK to enable individuals to make more informed financial choices. Our strategy draws together a range of financial wellbeing programmes, from our core advice proposition to workplace sessions, financial education in schools, support for military veterans and our developing propositions for female and LGBT+ investors. In addition to this, our insights programme of content and communications provide both clients and the public with information to improve financial wellbeing and understand the benefits of taking advice. We believe everyone should have access to information to make their own informed choices and increase their financial literacy, confidence and resilience. 1,081 Number of Chartered Financial Planners within the SJP community in 2022 2021: 1,000 917,000 Clients we helped achieve financial wellbeing for in 2022 2021: 868,000 # Working with our clients - We reached 1,081 Chartered Financial Planners within our community in 2022 (2021: 1,000) - We have continued to build on the popular podcast series focusing on experts who have experienced vulnerability - We launched a 'Resilience in a Changing World' podcast to help individuals find their way through challenging periods We supported the financial wellbeing of our 917,000 clients through our ongoing advice model – enabling them to set, review and achieve not only their financial goals, but the futures they want through sound financial advice. We know that client financial wellbeing is improved when people realise the value of the advice they are receiving: increased financial literacy, increased confidence, increased peace of mind, generated through a tailored solution and progress towards financial returns. In October 2022, we created a new suite of marketing materials to help our advisers raise awareness among both existing clients and prospects that expert, face-to-face advice can support their wellbeing by helping them feel confident, capable and in control of their finances. The financial wellbeing portal which hosted the new materials was accessed by over 500 advisers and there were 1,000+ downloads of the new materials. We also shared financial-wellbeing-themed articles, videos and infographics via our corporate SJP social media accounts and these posts collectively had over 47,000 impressions and 1,500 engagements. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 42 Strategic Report # Our responsible business # Broadening our impact in the community - We supported the delivery of financial education to 5,825 young people in 2022 (2021: 12,881 young people) - We gave £216,530 in grants to charities to support financial education activity in 2022 (2021: £57,500) - We supported the launch of the Finance in Society Research Institute with the University of Gloucestershire Looking beyond our client and employee communities, we know that greater financial literacy benefits society as a whole, so we're also committed to providing financial education to school children and young adults, and making financial advice more accessible to people from all walks of life. In 2022, we reached a total of 5,825 young people with our financial education programmes, delivered by our advisers and employees to schools, community groups and in areas of deprivation. We helped 3,068 young people through face-to-face and virtual workshops led by employee and adviser volunteers, and 1,857 by providing resources and funding to schools and charities. Our workshop materials have been through an extensive accreditation process with the charity Young Money, in association with the Money and Pensions Service (MaPS), to maintain their FE Quality Mark. We have also continued to extend our reach and impact by providing grants to, and building relationships with, charities including Young Enterprise, RedSTART, The Money Charity, National Numeracy, the Centre for Financial Capability, Help for Heroes and Forces MoneyPlan. Building on our existing approach, in 2022, we were delighted to announce a new corporate partnership with national charity Young Money, a subsidiary of Young Enterprise. We have committed to sponsoring 21 school-based centres of excellence over the next three years, working with Young Money to equip schools to deliver a robust financial education curriculum. Our sponsorship will fund one-on-one advice from an expert education consultant, staff training and access to financial education resources for each school. In addition to this funding, each school will work with an SJP location to understand what additional support might be useful – for example, financial education sessions for students or teachers, work experience opportunities, mentoring, volunteering and more. As we move through the partnership, both SJP employees and members of the Partnership will build relationships with the schools and their pupils by contributing their skills, expertise and time. # Working with our employees - We launched our refreshed employee financial wellbeing strategy Throughout 2022, we refreshed our support for employees with a new financial education and wellbeing programme launched in November. Collaborating with experts across our business, our financial toolkit helps all our people understand and manage their finances no matter their background. The toolkit includes a series of seminars, videos and podcasts designed to empower informed decisions. Content was created following direct engagement with employees, helping to ensure our support best meets their needs. £216,530 Grants given to charities to support financial education activity in 2022 2021: £57,500 "Financial wellbeing is about feeling secure and in control. It is knowing that you can pay the bills today, can deal with the unexpected, and are on track for a healthy financial future. In short: confident and empowered." Defining financial wellbeing – MaPS St. James's Place plc Annual Report and Accounts 2022 ### 43 ## Investing responsibly Strategic Report ## Leading the conversation on investing responsibly. ### With £148.4 billion of funds under Our net zero targets 2022 saw the start of an unprecedented energy crisis in ### management, we are committed to the UK. This has led to greater recognition from businesses using our scale and influence to lead that energy sources need to be diversified, which includes Governance Financial Statements moving towards renewable options. ### the conversation on investing responsibly. ### We do this through fund manager This year we’ve continued our journey to becoming net zero in our investment proposition by 2050. In 2021 we ### engagement, our commitment to the UN set an interim target of achieving a 25% reduction in the ### Principles for Responsible Investment, our 1 carbon emissions of our investment proposition by 2025, compared to 2019. We are delighted to have already ### membership of the Net-Zero Asset Owner exceeded this target, and we will continue to work hard ### Alliance, and our education for clients on with our external fund managers to make further progress in the years ahead. More details on our progress can be ### how to use money as a force for good. found in our annual Portfolio Carbon Emissions Report: www.sjp.co.uk/responsible-investing/sjp-carbon- report-2022. Our goals 1 In line with our Net-Zero Asset Owners Alliance commitment, Net zero in investments by 2050. the asset classes in scope for this target are public equity, ## 1. publicly traded corporate debt and real estate. Embed responsible investing within our ## 2. investment processes and use our influence Other Information to maximise impact. Have a complete responsible investment ## 3. proposition and supporting education programme for advisers and clients. www.sjp.co.uk ### 44 Strategic Report ### Our responsible business Embedding responsible investing 3. Our strategic partner Robeco’s engagement within our investment processes with companies For us, responsible investment is driven by company Robeco are engagement specialists, helping us maximise engagement. We support positive change in the world our influence in this important area by engaging with by using our voice, amplified by our size and scale, to companies on around 20 carefully selected themes, make companies work harder and aim higher in their such as biodiversity, digital innovation in healthcare, and environmental, social and governance (ESG) efforts. responsible executive remuneration. Throughout 2022, we continued our quarterly client reporting on Robeco’s There are three elements to our approach: activity, published on our website. For example the Q4 2022 report can be found at www.sjp.co.uk/sites/sjp-corp/files/ 1. Engaging with our fund managers SJP/product-and-services/investments/responsible- investing/our-approach/Robeco_Report_2022_Q4.pdf. We are clear with our fund managers that they must actively engage with the companies in which they invest Find out more about our engagement approach in the our clients’ money. They must also integrate ESG factors Stewardship and Engagement Report 2021 available on into their investment decision-making process, to minimise our website at www.sjp.co.uk/products-and-services/ risk and maximise opportunity. investment/responsible-investing. Published in the second quarter of 2022, the report earned us the right to become 2. Our fund managers’ engagements a signatory to the Financial Reporting Council’s UK with companies Stewardship Code, which sets high stewardship standards. We don’t prescribe how each fund manager should meet the baseline standards mentioned above, but we do Becoming a signatory of the Code recognises our require regular reporting. We expect our managers to set significant efforts in this space. As successful applicants, well-informed and precise objectives with their underlying we join 235 other signatories of the UK Stewardship Code companies. We’ll share examples of these company and will be required to report on an annual basis to remain engagements through a regular stream of case studies a member. for our clients, available in 2023. ## “A single client doesn’t have the ## time or access to influence ## company board agendas, ## direction, or objectives – ## but when we unite our clients, ## our fund managers, and their ## collective assets, companies ## listen. Our influence becomes ## difficult to ignore.” Petra Lee, Responsible Investment Consultant at SJP St. James’s Place plc Annual Report and Accounts 2022 ### 45 Not an investment strategy, but the investment strategy Companies are increasingly measured not only by their Strategic Report Adapting to changing regulation monetary value, but also by the impact they have on the world. Correspondingly, the changing world has an impact Through the course of 2022, we kept a vigilant eye on how these companies operate and perform. Our fund on the evolving regulatory environment in which managers understand this evolving landscape, so they we operate. We influenced industry participants to invest in the companies they believe will stand the test drive client-friendly terminology in a developing but of time and deliver returns over the long term. jargon-heavy arena. This included working closely with the collaborative industry body TISA. We also It’s our belief that if you’re focused on performance, took the following steps: investing responsibly isn’t an investment strategy, it’s the  We are developing factsheets containing ESG investment strategy. Our external engagement partner disclosures to help our clients understand where Robeco helps us understand how companies approach their money is invested and how sustainability ESG factors which feeds into how we identify future is being considered. These factsheets will be investment risks and opportunities. released in 2023. Governance Financial Statements Other Information  We created and ran a climate investment Plans for 2023 education programme in collaboration with We’ll continue to collaborate with our stakeholders and Imperial College and investment manager Ninety the industry to create a client-led, intuitive approach to One, helping our investment analysts become responsible investing. It’s important that we keep pace even more aware of how to incorporate climate with our peers and our regulators and use our size and change into their everyday monitoring. scale to drive meaningful change.  We produced an e-learning module to educate Internally, we will look to develop investment solutions our advisers and employees about the importance suited to the growing number in our target market who of responsible investing and how we integrate it in would like to put sustainability at the forefront of their our proposition. investment strategy. Having identified our top 20 carbon- emitting holdings, we’ll work with our external engagement partner Robeco to engage more deeply with them in 2023 and beyond. ## “We recognise we are on a journey ## and will continue to develop our ## responsible investment approach, ## but validation of our process and ## becoming a signatory to the UK ## Stewardship Code certainly ## demonstrates how we are ## on the right track.” Sam Turner, Head of Responsible Investment & Proposition Strategy www.sjp.co.uk ### 46 Strategic Report ### Our responsible business ## Climate change ## Taking action on climate change. ### Some of the issues facing our world We are advocates of transparency Effective and transparent reporting promotes ### today can feel overwhelming, but solving accountability. We therefore welcome and endorse the ### them involves everyone playing their part. recommendations of the Financial Stability Board and support the increased regulatory focus on disclosing climate-related risks and opportunities from the Bank We are committed to doing what we can to tackle climate of England and the Financial Conduct Authority. These change through our operations, supply chain and disclosures demonstrate how we assess the impacts of investment management approach. Our approach to climate change on our business and promotes a more reaching net zero includes educating our community on informed understanding of climate-related risks and climate change, embedding environmental considerations opportunities in our whole community. into decision-making and conserving resources – to not only reduce our impact, but have a positive one. We are reporting against the Task Force on Climate- Related Financial Disclosures (TCFD) framework for the third time this year, building on our reporting from the past two years. Given its size and scale, our comprehensive 2022 TCFD Report including all 11 TCFD disclosures can be found separately here: www.sjp.co.uk/TCFD2022. To aid readers Our commitment to addressing of the Annual Report and Accounts, we provide a summary climate change of the key plc disclosures from the report (overleaf), together with an overview of our approach to addressing We aim to contribute to building a sustainable future climate change. by actively tackling climate change through the way we do business. We have a responsibility to our clients, society and the planet and we are committed to being a proactive force in the transition to a lower carbon economy. We also recognise the commercial business case of leading this change. 2022 presented yet more evidence that climate change is causing significant global impacts even at the current level of global warming, from record- breaking temperatures in the UK to life-altering floods in Pakistan. Taking action on climate change is one of the four strategic priorities in our Framework, as we know it presents significant financial and non- financial risks to our sector and communities. As our purpose is to give stakeholders the confidence to create the future they want, we must operate in a way that is responsible, future-focused and long term. We set out our approach to climate change here: www.sjp.co.uk/about-us/responsible-business. St. James’s Place plc Annual Report and Accounts 2022 ### 47 Summary of the Task Force on Climate-related Financial Disclosures Pages in the | | | 2022 TCFD | | | Our disclosure in our | Strategic Report | | --- | --- | --- | --- | --- | --- | --- | | Theme Description | | | report TCFD recommended disclosure 2022 | | 2022 TCFD report | | | Governance | Disclose the | 10-16 a) Describe the Board’s oversight | | | We have provided an | | | | organisation’s | | | of climate-related risks | overview of how we | | | | governance | | | and opportunities. | govern climate-related | | | | around climate- | | | | risks and opportunities, | | b) Describe management’s role in related risks and our accountable assessing and managing climate- opportunities. leaders and our related risks and opportunities. performance against new and former commitments. Strategy Disclose the 17-32 a) Describe the climate-related risks We have provided actual and and opportunities the organisation a summary of where Governance Financial Statements Other Information potential has identified over the short, medium, we are today, our impacts of and long term. memberships, our climate-related carbon audit and the b) Describe the impact of climate- risks and levers we are applying related risks and opportunities on the opportunities to achieve net zero, plus organisation’s businesses, strategy, on the our scenario analysis. and financial planning. organisation’s businesses, c) Describe the resilience of the strategy, and organisation’s strategy, taking into financial consideration different climate- planning where related scenarios, including a +2°C such information or lower scenario is material. | Risk | Disclose how | 33-45 a) Describe the organisation’s processes | | We have described our | | --- | --- | --- | --- | --- | | management | the organisation | | for identifying and assessing climate- | climate-related risks | | | identifies, | | related risks. | and opportunities, | | | assesses, | | | the timeframe over | b) Describe the organisation’s processes and manages which they manifest for managing climate-related risks. climate-related and their significance risks. to our business, c) Describe how processes for along with an overview identifying, assessing, and managing on how we integrate climate-related risks are integrated this into our risk into the organisation’s overall risk management process. management. We plan to enhance our understanding of technology-related climate risks during 2023. | Metrics and | Disclose the | 45-52 a) Disclose the metrics used by the | | We have provided our | | --- | --- | --- | --- | --- | | targets | metrics and | | organisation to assess climate-related | organisational metrics, | | | targets used | | risks and opportunities in line with its | our progress against | | | to assess and | | strategy and risk management process. | targets and the impact | | | manage relevant | | | of our investment | b) Disclose Scope 1, Scope 2 climate-related proposition on our and, if appropriate, Scope 3 risks and exposure to carbon- greenhouse gas (GHG) emissions, opportunities intensive companies. and the related risks . where such information c) Describe the targets used by the is material. organisation to manage climate- related risks and opportunities and performance against targets. Recommendations we have been able to fully disclose against Recommendations we have made significant progress against, and plan to enhance our disclosure further www.sjp.co.uk ### 48 Strategic Report ### Our responsible business Our governance Accountability for managing climate-related risks and opportunities is led by the Board, which decides Our goals the strategic direction of our environmental strategy. During 2022 we continued to make progress on our The Executive Board then facilitates the execution of environmental approach. We have maintained our the activities, and these are supported by the Responsible operational carbon neutrality through offsetting. Business Advisory Group, Climate Change Working Group, the Group Risk Committee, the Group Audit Committee, the Investment Executive Committee and our sustainable 1 Climate positive in our operations by 2025 investment regulation programmes. Within this list, the ## 1. main committees overseeing activities are our Responsible  All SJP sole occupied offices use 100% Business Advisory Group and Climate Change Working electricity from renewable resources. Group, with ultimate responsibility resting with our Chief  83% of our Company fleet are now electric Executive Officer, Andrew Croft. The Responsible Business or hybrid and 100% of our new orders are Advisory Group and Climate Change Working Group meet electric therefore we will, eventually, have regularly to co-ordinate Group carbon reduction plans, a fully green fleet as we continue to make review environmental performance and agree mandatory electric cars the best choice for our and voluntary environmental reporting and disclosure. travelling employees. Net zero in our supply chain by 2035 ## 2.  We undertook a supply chain review and engaged with a percentage of Implementation of a carbon conservation our suppliers on their climate targets measure (CCM) tracking tool and ambitions. In April 2022 our corporate real estate (CRE) team  We shared best practice and case studies, launched a CCM tracking tool to complete a full helping them learn from one another. survey of energy usage across SJP’s office estate. This allows us to better understand existing set-ups,  We helped them understand their carbon make recommendations for optimisation and identify footprint and set their own net zero targets. opportunities for carbon reduction in support of corporate targets. Net zero in our Partnership by 2035 ## 3. The survey identified 270 opportunities; 161 of these  We are providing the Partnership with were through building management system (BMS) emissions calculator recommendations optimisation and the remaining were capital works. to help them identify, track and offset The BMS works were implemented immediately and their carbon emissions. ranged from setting restrictions on air-conditioning  We track, review and celebrate climate controllers to improving settings and adapting action commitments in the Partnership. demand triggers. Further improvements include working to update all meters we manage to smart  We are running workshops on best meters, and linking these to analytical software, to practice and developing toolkits for 2023. allow us to measure savings, identify efficiencies,  We’ll offset any residual emissions and capture regular consumption data. We can also after 2035. compare this data across different buildings and use it to support financial decisions regarding capital works. Our optimisation programme was completed Net zero in our investments by 2050 in September 2022, and alongside other ## 4. improvements and efficiencies already implemented  As an interim target, in 2021 we committed should deliver projected carbon savings across the to a 25% reduction in the carbon footprint estate of around 395 tCO 2 e annually. of client investments by 2025.  We are delighted to have already With the CCM tracking tool we now have the ability exceeded this target. We will continue to identify carbon reduction opportunities across the to work hard with our fund managers to estate and make informed decisions on how to react make further progress in the years ahead, to these, which in turn means we will more effectively underscoring our desire to create financial meet environmental and sustainability timelines wellbeing in a world worth living in. and targets. 1 By being climate positive we will remove more carbon emissions than from the environment than we contribute. St. James’s Place plc Annual Report and Accounts 2022 ### 49 Our approach to tackling climate change Following the agreement of our net zero targets in 2021, we have continued to make progress by focusing on education, Strategic Report reduction, conservation and embedding climate-positive actions across all our operations. In 2022, we took the following actions: Educate our community on climate change Reduce our footprint and become net zero  educated senior leaders, Board members and our  100% of electricity supplied to our sole occupied employee base on climate risk and our progress offices is from renewable resources Governance Financial Statements Other Information  continued to capture the benefits of decreased  maintained our operational carbon neutrality business travel and use of accommodation through through offsetting reviewing our policies on travel and face-to-face  83% of our Company cars are now electric or hybrid, meetings, and empowering employees to make with twice as many electric charging points offered the low-carbon choice the norm than in prior years ### Educate our community on climate change ### Make it instinctive If addressing climate change ### is integrated into our people processes Embed Reduce and practices, it will become a climate into our footprint necessity to operating. our decisions and become net zero ### Conserve our resources | Embed climate into our decisions | | Conserve our resources | | | --- | --- | --- | --- | |  took opportunities to continue right-sizing our real | |  encouraged 59,929 clients to go paperless | | | | estate portfolio to ensure we do not carry unused | | in 2022 In total, we now have 246,745 clients | | | office space | | signed up to paperless reporting | |  when relocating to new office space, sought to | |  led our corporate brand refresh with a ‘no waste’ | | | | occupy buildings with high environmental credentials | | philosophy |  built our CCM tracking tool to survey energy usage across our corporate estate and acted on areas highlighted for optimisation www.sjp.co.uk 50 Strategic Report ## Our responsible business ### Our climate risk management We choose to assess and manage both direct and indirect climate-related risks and opportunities, so that we fully understand how climate change impacts our business, strategy and financial planning. Full details of our risk management approach are available in the risk and risk management section of this Annual Report and Accounts, on pages 90 to 99. ### Our climate change metrics and targets We collect and report our environmental data from October to September each year. The tables below summarise our targets and progress, expressed in terms of both absolute and normalised carbon dioxide equivalent (CO$_{2}$e) emissions for our core business activities in recent years. Core business activities are defined as those within 'operational control'. Our emissions are calculated in line with the Greenhouse Gas Protocol using the 2021 emission factors provided by the Department for Environment, Food & Rural Affairs (DEFRA). The emissions were calculated by our external sustainability partner, BeZero. #### 1. Targets We are committed to doing our part to cap global warming at 1.5 degrees Celsius by 2050 and are exploring science-based targets in each area of our business. On the journey to limiting global warming to 1.5 degrees Celsius by 2050 we have set the following interim targets for 2025: ##### Absolute emissions targets | ID | Scope | Description | % of emissions in scope | % decrease from base year | Base year | Base year emissions | Target year | | --- | --- | --- | --- | --- | --- | --- | --- | | Abs1 | 1 | Gas and owned vehicles | 100% | 50% | 2018 | 835 | 2025 | | Abs2 | 2 (Market-based) | Electricity | 100% | 100% | 2018 | 167 | 2025 | | Abs3 | 3 | Business travel, waste, and well-to-tank (WTT) | 100% | 50% | 2018 | 10,380 | 2025 | #### 2. Progress ##### Absolute emissions progress | ID | Scope | Actual emissions in year (tonnes CO_{2}e) | % of target achieved | Comment | | --- | --- | --- | --- | --- | | Abs1 | 1 | 649 | 45% | Since 2019 we have opened 3 new larger offices: Lombard Street, Knightsbridge and Aztec West. These increased both scope 1 and 2 consumption, but particularly gas usage. We have since introduced a carbon conservation measures (CCM) tracking tool that identifies efficiencies and opportunities to reduce our carbon output. This has proved effective, demonstrated by a marked reduction in both gas and electricity consumption over the last year. We have also updated our location meters (where we manage them), introduced utility analytical software and are working more closely with our utility brokers to ensure data accuracy and to identify trends, benchmark consumption across locations and reduce inefficiency. | | Abs2 | 2 (Market-based) | 198 | -18% | In 2022, we continued to purchase 100% renewable electricity for our UK operations, reflecting best practice and driving demand in the renewable energy market. | | Abs3 | 3 | 3,828 | 126% | As we came out of the COVID-19 pandemic in 2022, there has been an increase in scope 3 emissions compared to prior year but has remained well below the baseline year. | St. James's Place plc Annual Report and Accounts 2022 ### 51 3. Gross emissions As a large, quoted company incorporated in the UK, we are required to report our global and UK energy use and carbon emissions in accordance with the Companies (Directors’ report) and Limited Liability Partnerships (Energy and Carbon Strategic Report Report) Regulations 2018. The data presented below represent emissions and energy use for which St. James’s Place plc is responsible. To calculate our emissions, we have used the requirements of the Greenhouse Gas Protocol Corporate Standard along with the UK Government GHG conversion factors for company reporting 2021. The results below represent 100% of our activity using the operational control approach. Any estimates included in our totals are derived from actual data which have been extrapolated to cover the full reporting period. 2018 2021 2022 | | | | | Global | Global | Global | | --- | --- | --- | --- | --- | --- | --- | | Scope Description Unit | | | UK | (excl. UK) UK | (excl. UK) UK | (excl. UK) | | 1 Emissions from gas, | tCO | 2 e 835 – 934 – 649 – | | | | | refrigerants and owned vehicles | 2 Location-based Electricity emissions using | | | tCO | 2 e 1,836 168 1,629 102 1,335 198 | | | --- | --- | --- | --- | --- | --- | | | | geographical location | | | Governance Financial Statements Other Information | | | Market-based Electricity emissions using | | tCO | 2 e – 168 – 102 – 198 | | purchased electricity factor 3 Business travel in tCO 2 e 1,208 – 158 – 277 – private cars Location-based 3,879 168 2,721 102 2261 198 1, 2 & 3 Total emissions tCO 2 e Market-based 2043 168 1,092 102 926 198 Direct and indirect kWh 10,451,833 263,607 12,633,648 164,045 10,367,808 301,819 energy consumption | | Location-based | Normalised emissions | | | 0.0003 0.0006 0.0002 0.0006 0.0002 0.0007 | | --- | --- | --- | --- | --- | --- | | 1, 2 & 3 | | | tCO | 2 e/ kWh | | | | Market-based 0.0001 0.0006 0.0001 0.0006 0.0001 0.0007 | to kWh | | | | | 3 Other business travel, waste, | | | tCO | 2 e 10,380 1,337 3,828 | | hotel stays, WTT and T&D 3 Property Trust tCO 2 e 11,469 7,872 6,221 Total (market-based) tCO 2 e 22,851 10,245 10,896 We account for 100% of our operational activity using the Operational Control Approach. There are no exclusions. Normalised emissions | | Normalised | | Normalised | | | | --- | --- | --- | --- | --- | --- | | | emissions in | | emissions | | | | | prior year | | | in year | | | | (tonnes CO | 2 e | (tonnes CO | | 2 e | | Scope | per ‘000 sq ft) | | per ‘000 sq ft) Comment | | | 1 1.74 1.23 Despite new hybrid working conditions put in place post the COVID-19 pandemic, encouraging employees to return to offices, the emission 2 (Market-based) 0.19 0.37 intensities for scopes 1 and 2 have continued to decrease. However, 3 1.17 7.25 a rise in business travel has resulted in increased business miles resulting in a rise in scope 3 intensity. Our approach to offsetting As part of our approach, we offset carbon emissions that we can’t reduce through our current initiatives. However, purchasing carbon credits alone is not a long-term strategy for tackling climate change, and we continue to work hard to reduce emissions throughout our operations, supply chain, Partnership and investments. We work with a reputable carbon offsetting company, Coco+, to reduce the impact of carbon emissions produced by SJP, investing in projects that benefit both people and planet. This year we offset 8,000 tCO 2 e across a mix of geographic locations by funding projects which supported clean cooking, renewable energy and forest conservation. All offsetting projects are aligned with the Verified Carbon Standard (VCS) and we chose projects that supported not only the main UN Sustainable Development Goals we align with, but as many of the 17 as possible through the projects available to us. www.sjp.co.uk ### 52 Strategic Report ### Our responsible business ## Community impact ## Transformative community impact, giving back ## to support local communities and regeneration. ### Giving back is in our DNA; from our founding days we have looked beyond ourselves ### to make a difference to those less fortunate. We are committed to driving positive ### community impact, building social capital within communities, and connecting the ### dots between the charities we support and the social initiatives we run, by offering ### place-based and skills-based outreach. Our goals ## £8.0m Generate community impact through ## 1. Total invested in communities Partner and employee engagement. 2021: £6.2 million Invest in local communities. ## 2. Improve the financial literacy ## 3. of young people. Annual Report and Accounts 2022St. James’s Place plc ### 53 Strategic Report ## £537,055 The value of the time our employees gave during working hours 2021: £599,356 ## 90% Young Gloucestershire – our holistic support Governance Percentage of Group Alongside the St. James’s Place Charitable Foundation, employees involved in SJP have been working with Young Gloucestershire, supporting our communities a charity which supports the needs of disadvantaged young people in the county. Our holistic support has and good causes enabled them to grow, develop and has changed 2021: 94% the lives of many young people for the better. The SJP community volunteer their skills and time – providing financial education, making up food parcels and acting as Trustees – and we have utilised the apprentice levy to support their staff training. Financial Statements Other Information “Young Gloucestershire really values the partnership with SJP: it is so much more than a funder-recipient relationship. The opportunity for the ongoing development of our staff through the apprenticeship offer, the engagement of SJP staff in volunteering to be a trustee and the offer of programmes to our young people, alongside ongoing discussions and debates with the Foundation team, have really added value to Young Gloucestershire and we are very grateful for this ongoing support.” Our community impact approach In 2021, we made community impact a strategic priority Tracy Clark, CEO Young Gloucestershire of our Framework to reflect its importance to us and to strengthen our commitment to support local communities and regeneration. In 2022, we continued to develop our approach through establishing clear goals and measures. We want to create lasting value in everything we do, and act to make a difference to those less fortunate through ## 2% our community work, financial education programmes and the support of the St. James’s Place Charitable Foundation. We believe economic independence is an enabler of ## Community investment choice, giving people the confidence, knowledge and Percentage of profit before tax attributable opportunity to make better decisions that positively to shareholders’ returns invested in supporting affect their future. Our community work is therefore our communities and good causes focused on supporting social mobility and inclusion because we believe that people cannot make informed 2021: 2% decisions if they are experiencing exclusion. An example of this in action is our work with Young Gloucestershire, a county-wide charity supporting the ## 11,012 physical and mental wellbeing of young people, giving them the confidence, motivation and skills to improve The total number of hours our employees their lives and cope with challenges. gave during working hours in support of community engagement activities 2021: 12,395 hours www.sjp.co.uk 54 Strategic Report # Our responsible business # Duke of Edinburgh (DoE) Award In 2022 we continued our strategic partnership with DoE to support social mobility in the UK. Funding of £450,000 was given to support the DoE's strategic aims of working with disadvantaged young people – over 85,000 to date. Both our organisations are dedicated to helping people define their own futures, and through the DoE young people can raise their aspirations and confidence, and meet their personal goals. This strategic partnership helped in promoting careers insight and work opportunities to DoE participants. In 2022, we continued to support hosting of virtual work experience events, involving young people, thereby supporting access to the industry. ![img-3.jpeg](img-3.jpeg) Image provided by The Duke of Edinburgh's Award (DoE) # Volunteering as a mark of our culture As a business we encourage all employees to volunteer for at least two days a year in work time, in addition to participating in a team challenge. This year we were able to get back to hands-on volunteering following the easing of COVID-19 restrictions, and 25% of employees volunteered for one day or more. We also encourage and recognise employees who volunteer in their own time, with 44 £300 grants given to the charities they supported, for example, Rising Stars football club which provides sport and recreational activities for over 200 people annually aged 5-16 whilst also supporting families and the local community by hosting family fun days, as well as providing individuals from troubled households with a safe environment to partake in sport. Our people supported a wide variety of causes during work time, including: - blood donations - marshalling at Her Majesty's funeral - delivering magic workshops at a youth zone in Manchester - NHS Responders - helping to set up at the Phoenix Festival - helping prepare goods for sale at a hospice charity shop - helping to load lorries for emergency relief in Ukraine Our community also came together to support humanitarian crises through volunteering and donations. For example, £1.4 million was raised by the community to support the humanitarian effort in Ukraine, and in addition individuals and SJP locations organised collections of goods to be transported to Ukrainian refugees, which continued through the year. The Pakistan floods also rallied our community and in addition to raising £100,000, members of the community went out to Pakistan to lend their support. We know that volunteering has a much broader impact than just supporting beneficiaries. In our annual impact survey, of the 358 employee volunteers who responded 43% report that volunteering improved at least one aspect of wellbeing, 70% developed a skill that helped either their personal or professional development and 47% said it increased their pride in St. James's Place. 778 # The total number of employees who volunteered in work time 2021: 746 St. James's Place plc Annual Report and Accounts 2022 55 # **Support through the St. James's Place Charitable Foundation** **A grant-making charity supported by the community of St. James's Place.** The St. James's Place Charitable Foundation (the Charitable Foundation) is an independent registered charity established by the founders of St. James's Place in 1992 to enable our community to give back to those less fortunate in the communities in which the SJP community work and live. The Charitable Foundation has grown alongside the St. James's Place Group and, according to the Giving Trends report 2021 from the Association of Charitable Foundations, is now the third largest corporate foundation in the UK. It provides support to small and medium-sized charities across the UK and overseas through a range of grant programmes and has supported in excess of 4,000 charities since it began. The Charitable Foundation focuses its grant-making in the following key areas: - children and young people who are disadvantaged or have a disability - hospices - cancer support - mental health - veterans The community of St. James's Place is generous in its support of the Charitable Foundation, through a variety of fundraising activities undertaken across the year. A key activity is monthly giving, and 82% of employees and Partners give monthly gifts, which in 2022 together represented 32% of the annual income raised. All monies raised for the Charitable Foundation are then matched by St. James's Place plc. 2022 was a busy year of fundraising by the SJP community: from golf days to cake bakes, and from taking on physical challenges such as marathons, cycle rides and treks to giving generously to the crises in the world such as Ukraine and the Pakistan flooding. An amazing £10.5 million was raised in the year through these fundraising activities and Company matching. A total of £10.1 million was then given out to 853 charities. The Charitable Foundation continues to provide a key cultural connection for all of us across the Group. £120.6m **Total amount raised for good causes since inception in 1992** 2021: £110.1 million £10.1m **Amount given out to charities in 2022** 2021: £6.2 million 853 **Number of individual charities supported in 2022** 2021: 578 82% **Percentage of UK Partners and employees who donate through a monthly covenant** 2021: 85% Strategic Report Governance Financial Statements ![img-4.jpeg](img-4.jpeg) ![img-5.jpeg](img-5.jpeg) ### 56 Strategic Report ### Our responsible business Thank you ## £10.5m The Charitable Foundation is grateful for the continued and generous support of the St. James’s Place Amount raised in 2022 community both in the UK and Asia, and the 2021: £8.0 million St. James’s Place Group, who year on year provide outstanding support in donations, fundraising and volunteering time. The ongoing enthusiasm, creativity and willingness to give back is inspiring and is an agent for positive change in our communities both in the UK and overseas. Focusing on strong outcomes through grant-making and sustainability Through our grant-making and wider support In 2022, the Charitable Foundation continued to focus on mechanisms, we will continue to: small to medium-sized charities, enabling them to deliver essential services at a grassroots level, helping them to  be responsive to both local and global crises transition back to usual provision following the impact of where we can effectively and safely direct funding; the COVID-19 pandemic, and as the year unfolded helping  build on our partnership funding model with key them to cope with the rising challenges of the cost-of-living supported charities; crisis affecting both their beneficiaries and their own running costs. Continuing to evaluate transformational  connect skills, knowledge and expertise to enable impact on the charities supported, they have also transformational change; and continued to add value to grantees; the 2022 Impact survey  inspire the St. James’s Place community to highlighted strong impact from the grant-making, with 64% continue their generous support to the Charitable of beneficiaries supported by the charities funded Foundation, so that together we can and will make reporting they had experienced substantive or a positive and lasting difference to people’s lives. transformational change. ## 64% Beneficiaries report a substantive or transformational impact on their life 2021: 66% ## “WellChild has enjoyed a long and successful ## partnership with SJP and the Charitable ## Foundation. From creating a lasting legacy of ## support in helping to establish WellChild nurses, ## to the ongoing support of our Helping Hands ## garden transformation programme.” Matt James, WellChild CEO Note: The Charitable Foundation is not controlled by the St. James’s Place Group, so the financial performance and position of the Charitable Foundation are not consolidated in the Group Financial Statements presented on pages 188 to 254. St. James’s Place plc Annual Report and Accounts 2022 ### 57 ## Strategic enablers Strategic Report ## Our people ### The following section reports against our material people themes. We are in the early Governance Financial Statements Other Information ### stages of reporting against our Responsible Business Framework, so some of the ### sections that follow have more detail than others. We are committed to leveraging technology to enhance learner engagement while simplifying access. Having launched the SJP House app to our Academy in 2021, the Here we cover our approach to: focus in 2022 was to integrate this with our existing system, Salesforce, enabling a richer experience. This integration Responsible relationships provides real-world data to assess the true impact of Inclusion and diversity learning, as well as providing a vast variety of learning content through bitesize videos, podcasts, workshops, Policy influence accreditations and ease of access to continuing Client satisfaction and retention professional development material. The SJP House app will be available to employees in 2023 and will drive a learner- led culture and foster the development mindset of continuous improvement. Virtual Reality (VR) role-play experience continues to play ### Responsible relationships an important part in our offering. We have expanded the offering with experiences that explore both vulnerability We invest in long-term relationships and know the and inclusion and diversity, as well as providing more importance of giving people the optimum environment in-depth feedback. Our focus for 2023 will be to expand to be the best version of themselves so we can create our VR and Augmented Reality (AR) offering to the wider success together. This section details the support Partnership, as well as employees. we gave our people in 2022. Delivering an industry-leading qualification Learning and development through our Academy programme Providing world-class learning experiences has continued Our Academy programme for 2022 continued to embed to differentiate us throughout 2022. We’ve created an the new programme redesign, providing flexible access innovative, evidence-based training curriculum that delivers to tailored learning solutions through cutting-edge content through virtual, digital and classroom channels. technology. Our technology-enabled approach has been designed to engage and challenge while providing extensive support from real-world industry leaders and mentors along the way. www.sjp.co.uk ### 58 Strategic Report ### Our responsible business Employee engagement Employee wellbeing Understanding our employees’ sentiment is crucial in Employee wellbeing remains a key focus for ensuring helping us build a thriving business and inclusive culture. responsible and successful relationships and it was In April 2022, we ran a short pulse survey which focused an area highlighted by our workforce engagement on wellbeing and rewards and benefits. We received representatives early in 2022 via our April pulse survey. strong engagement and good feedback from the survey We repeated some of the pulse survey questions in and it was clear that employees both understood and September’s biennial survey and were pleased to find were satisfied with their benefits package. We have a positive shift in sentiment. However, we recognise there subsequently identified areas where some employees is more to do to promote work-life balance and improve would like more support and this feedback is informing our in this important area. approach in 2023 and beyond. We ran our biennial Group- wide employee survey in September 2022, which asked We provide a range of initiatives to support and promote questions across a wide range of subjects. The results wellbeing and a healthy work-life balance. These include compared to our September 2021 pulse survey results an early intervention and occupational health service, as follows: Bupa private health insurance, an employee assistance programme, mental health first aiders, Babylon GP services  ‘I feel proud to work for this company’ – 87% (2021: 85%) and the services of two external doctors as well as holistic  ‘I would recommend this company as a great place wellbeing practitioners. Reassuringly, 88% of our employees to work’ – 84% (2021: 81%) reported in our September biennial survey that they can easily access the wide range of wellbeing support we  ‘I intend to still be working for this company in 12 months’ have available when they need it. Although this is very time’ – 82% (2021: 81%) encouraging, we still believe there is more to be done  ‘My work gives me a sense of personal achievement’ – to ensure consistency of the information available and 81% (2021: 81%) approach taken. Our future focus is to develop a proactive wellbeing strategy where employees feel supported Our engagement results are encouraging after a and valued. challenging 2021. We will continue to monitor employee sentiment through our ‘continuous listening’ approach in Reward and benefits 2023 which will include two pulse surveys to check in ‘little Reward and benefits are a core part of our employee value and often’ with employees on subjects important to us all. proposition, ensuring we remain market-competitive so we can attract and retain the talent we need to perform To further strengthen the sense of connection amongst at our best. We evaluate roles and build calibration and employees we continue to focus on embedding our moderation into our key reward processes to ensure fair, culture, a sense of belonging, and inclusion at SJP. In 2022, consistent outcomes and to protect against gender pay we developed materials for our ‘cultural conversations’ bias. During 2022 we committed to reporting our ethnicity to support leaders hosting informal team sessions to pay gap as well as maintaining our Living Wage Employer encourage employees to share experiences which can status for all our employees across the Group. further promote our culture and sense of connection. In 2022 we focused on how we could support employees During 2022, 77% of employees also took part in Impact, our through the cost-of-living crisis, which included a one-off recognition scheme launched in October 2021. The scheme payment to employees earning below £32,500 to assist enables employees to send e-cards or vouchers to with bills. We also developed a set of seminars and videos colleagues to acknowledge their positive impact, and in to provide guidance to all employees on managing their October 2022 we held our first employee Impact Awards finances and accessing our broad range of benefits. event to recognise those who are outstanding role models for our values and behaviours. To further strengthen our focus on performance we introduced performance-related balanced scorecard measures to our employee bonus plans based on our Company objectives. The measures replace embedded value as a metric and include the controllable expense ## 77% outcome, net inflows target and the underlying cash result. The resulting direct correlation of the company’s Of employees also took part in performance with each employee’s bonus has encouraged Impact, our recognition scheme awareness and interest in the financial and economic launched in October 2021 factors that affect the company’s performance. This has been complemented with regular update videos from the CEO and Executive team sharing insight on the external environment and progress. Despite difficult economic conditions we maintained 74% employee participation in our all-employee SIP and SAYE share schemes during our annual sign-up period in March 2022. Share participation creates a strong sense of ownership and interest in the performance of the business and enables all employees to share in the growth of the business. St. James’s Place plc Annual Report and Accounts 2022 ### 59 ### Inclusion and diversity (I&D) As at 31 December 2022 we employed 2,770 We want to create an inclusive environment where people across the world, including 2,517 in the UK Strategic Report diverse perspectives are valued and our people can be (31 December 2021: 2,673 people across the world, their true selves. This helps us to build connections with including 2,419 in the UK) and the breakdown of all our clients, attract talented people to work with us our workforce by gender is shown below. and deliver the best products, services and experiences. Board Directors Our approach to I&D is focused on attracting, retaining and developing diverse talent and fostering an inclusive environment where everyone can thrive. Progress is 7 7 overseen by the Inclusion and Diversity Steering Group, chaired by CEO Andrew Croft, with support from the Nomination and Governance Committee and our Board. 3 3 During 2022, all Executive Board members continued to take an active role in promoting I&D, through sponsorship, mentoring and reverse mentoring and signing up to Governance Financial Statements Other Information 2021 2022 2021 2022 individual plans and targets. Public commitments Executive 45 Board, We remain committed to our public diversity goals which 38 Company we announced in 2018, and although progress in our | industry can be variable in speed, every incremental | Secretary | | | | --- | --- | --- | --- | | change is an important step in the right direction. Female | and their | | | | | | 17 | 18 | | representation on the Board is 30% (but will rise to 37.5% | direct reports | | | following our AGM in May 2023), and in senior roles within our core employee base is 28.1%. Our minority ethnic representation is 6.3%, based on 71.3% of our core 2021 2022 2021 2022 employee base who voluntarily provided ethnicity data. MaleFemale A focus on training Managers and 229 233 decision- In 2022, we launched an I&D toolkit based on four core makers principles: being representative, accessible, inclusive and avoiding bias. The toolkit was shared across our employee base and our Partnership with live workshops 89 and self-serve content on how to apply the principles to 70 decision-making, projects, recruitment, communications and much more. The principles provide consistency of approach across the organisation and help our people 2021 2022 2021 2022 to embrace I&D across all they do. | Total | | 1,427 | | | | --- | --- | --- | --- | --- | | | 1,374 | | | 1,343 | | employees | | | 1,299 | | 2021 2022 2021 2022 1 Employees may appear in more than one of the graphs presented above. 2 ‘Managers and decision-makers’ are defined as employees who have responsibility for planning, directing or controlling activities of the company, or a strategically significant part of the company. 3 The Executive Board, Company Secretary and their direct reports excludes administrative and executive support staff such as personal assistants and executive assistants. 4 Gender information is an evolving area of reporting and there are a variety of different frameworks requiring disclosures under different definitions and calculation methodologies. As a result, not all of our gender statistics will align to each other. www.sjp.co.uk MaleFemale MaleFemale MaleFemale 60 Strategic Report # Our responsible business # Attracting diverse talent We continue to focus on how to attract diverse talent to the financial services industry and to our business, and we believe there is much to do to strengthen the external pipeline of talent and attract a greater range of people to work in our sector. At SJP we continue to use gender-coding software for our job adverts and aim for gender-balanced shortlists and interview panels. We undertook research on the demographic makeup of employees at our locations to understand how we can attract more diverse talent across the UK. We also launched a diversity data capture exercise in our Academy, so we are able to better track diversity amongst our newest advisers and Partners. Like many businesses, we are beginning to prepare for Ethnicity Pay Gap reporting and have recently held focus groups with some of our internal stakeholders to continue to identify barriers and opportunities for progress. For our early careers populations, we have continued to partner with organisations and charities to help encourage diverse young talent into our business – some into short-term work experience/internship opportunities, others into full-time roles through apprenticeship and graduate schemes. These include working with charities such as 10,000 Black Interns, and Patchwork for applicants with disabilities. We ran our 'Futures in Finance' initiative for the second time in 2022, giving students a non-traditional entry point into the industry in an effort to remove sociocultural barriers. It is non-negotiable that we give full and fair consideration to all applicants who approach SJP, having regard to an individual's aptitudes and abilities. When needed, we will consider modifications to the working environment so employees with disabilities can take up opportunities or enhance their role, and we aim to assist employees who become ill or disabled, for example, by arranging appropriate support and training. As part of this, we have increased our focus on disability and accessibility, continuing to partner with the Business Disability Forum and reviewing various aspects of our offering through an accessibility lens, including an upcoming workplace adjustments policy. We have also continued to grow the development of our internal talent pipeline. Building on our success with mentoring, (which is available to all SJP employees), we completed our fifth year with the 30% Club, offering 30 mentors and matching 30 female mentees with mentors from a cross section of industries and sectors. 2022 was also the second year of our in-house mentoring programme for talented women in the pipeline for senior roles. The programme supports 50+ women with mentoring by senior leaders as well as access to masterclasses and psychometric profiling. Earlier in 2022, we worked with the Aleto Foundation to sponsor a three-day minority ethnic leadership programme. The programme provided both Aleto alumni and SJP employees with skills workshops and an innovation challenge, the results of which were presented to a panel of SJP senior leaders including CEO Andrew Craft. In addition, participants also benefited from nine months of virtual mentoring with senior mentors from both SJP and Aleto. We believe programmes like this have the power to accelerate the drive for greater diversity in our sector, and this is why we have committed to sponsoring the EY Foundation's Sustainable Futures programme to begin in spring 2023. Here we break down the data collection results with overall population percentages, followed by a more in-depth breakdown for race and ethnicity as gender is covered on the previous page. # Gender ![img-6.jpeg](img-6.jpeg) - Female 92.4% - Male 46.3% - Non-binary 0.2% - Other 0.0% - Prefer not to say (PhS) 1.1% # Ethnicity ![img-7.jpeg](img-7.jpeg) - White 92.6% - Asian 3.9% - Mixed 1.6% - Black 0.7% - Other 0.1% - PhS 1.1% # Sexual orientation ![img-8.jpeg](img-8.jpeg) - Heterosexual 92.8% - Bisexual 2.7% - Gay/lesbian 1.4% - Other 0.3% - PhS 3.5% # Disability ![img-9.jpeg](img-9.jpeg) - Without a disability 85.1% - With a disability 12.4% - PhS 2.6% # Race and ethnicity Executive management¹ 92.2% White 2021: 93.6% 6.1% Asian, Black, Mixed, Other 2021: 4.8% 1.7% Prefer not to say 2021: 1.6% All other employees 92.7% White 2021: 92.3% 6.3% Asian, Black, Mixed, Other 2021: 6.5% 1.0% Prefer not to say 2021: 1.2% ¹ We have defined executive management as a combination of Board Directors and 'managers and decision-makers' as in the gender split graphs on the previous page. As a commitment to becoming a leading responsible business in the UK, we will be reporting on our ethnicity pay gap in 2023. St. James's Place plc Annual Report and Accounts 2022 ### 61 ### I&D engagement Policy influence Our thriving community of networks and groups are safe We aim to leverage our scale, influence and expertise to and collaborative spaces for members to share resources, Strategic Report position SJP as a trusted partner with policy stakeholders experiences, allyship and support, in addition to providing and help shape policy to enable strategic commercial input and feedback on strategy and policy change. objectives and societal good. Giving SJP a voice on the The groups collaborate on events and initiatives and issues that matter to us and to society will mitigate span the following areas: emerging risks, help us shape the policy agenda, and better enable us to drive change for society  LGBT+ including the SJPride network in line with our founding principle of ‘giving back’.  race and ethnicity, including the Embrace network Raising our voice to influence public policy means using  gender, including Unity, the professional women’s our scale and influence to help shape the future of our network, with over ten network chapters internationally industry for the better and have a positive impact on  disability and neurodiversity, a group with a growing the communities we live and work in. membership We continue to actively engage with our regulators,  parents, network established during the pandemic Governance Financial Statements Other Information government, parliament, and other policy stakeholders for increased connection and support where relevant, on issues where we have expertise and  smaller groups sharing interests such as military veterans, an interest. We are determined to be a prominent voice age, the menopause, wellbeing, religion and faith and in society to promote the value of financial advice and socio-economic background. financial resilience during a difficult economic period. Topics we have recently been proactively engaging on In 2022, we reviewed our networks and groups, working include the advice/guidance boundary and the labelling with external consultant Lumorous. The review helped us framework associated with sustainable investing. to develop and formalise governance, budget and best- practice support to help them grow and engage more fully in the areas of governance, impact and engagement. We continued to recognise and celebrate a full calendar of I&D events throughout 2022, including Mental Health Awareness Week, International Women’s Day, International Men’s Day and Black History Month. These are intended not only to raise awareness of a particular subject but to also provide the opportunity for open discussion and learning in a safe environment. Our strong desire to continue to learn and grow is underpinned by our Partnerships with external organisations who offer guidance, best-practice sharing, research and resources. These include: The Diversity Project, LGBT Great, Stonewall, the Valuable 500, the Aleto Foundation, Progress Together, the Business Disability Forum and Disability Confident. In 2022, we contributed to The Diversity Project’s new Progress and Goals disclosure tool to help expand visibility around the demographic makeup of our industry and contribute to a summary of actions being undertaken to diversify this for the future. www.sjp.co.uk www.sjp.co.uk ### 62 Strategic Report ### Our responsible business ### Client satisfaction and retention Trend 2022 detail We are committed to building meaningful, long-term relationships with satisfied clients who feel confident to Advocacy Advocacy make informed choices about their finances, to help our 93% 91% clients to achieve their financial goals. 87% 81% Our business is based on building meaningful long- ## 81% term relationships and the satisfaction of clients is very Recommend important to us. Retaining satisfied clients not only feeds into financial results but is also directly related to our long-term sustainability as a business. A recent survey of our client population, in relation to 2022, indicated good 50% Have recommended client sentiment with 81% clients strongly advocating for 2019 2020 2021 2022 31% Would recommend us and recommending SJP, 68% believing we offer excellent 19% Not comfortable or good value for money and 82% being very satisfied recommending with their overall experience with us. Whilst we believe macroeconomic uncertainty and therefore investment Value for money Value for money market performance weighed on client sentiment for 2022, we are pleased that a significant majority of our clients 87% remain very satisfied. 80% 72% 68% We engage with clients throughout the year via our ‘client ## 68% community’ group, which was established in 2020 and is Positive managed on our behalf by a third party. This enables us to better understand how clients feel, and gauge their views on key topics. We can also test their understanding of key communications, and ensure we continue to meet their 27% Excellent evolving needs. 2019 2020 2021 2022 41% 21% 7% 4% Poor ## 81% Overall satisfaction Overall satisfaction Positive advocacy 96% 89% 2021: 91% 86% 82% ## 82% Positive 44% Very satisfied 2019 2020 2021 38% 12% 4% 2% Very dissatisfied St. James’s Place plc Annual Report and Accounts 2022 2022 ### 63 ## Our governance Strategic Report ### The following section reports against our material governance themes. We are in ### the early stages of reporting against our Responsible Business Framework, so some ### of the sections that follow have more detail than others. ### Corporate governance We are committed to creating long-term, sustainable success for all our stakeholders by ensuring that SJP Here we cover our approach to: decision-making is fair and robust. We take the responsible Corporate governance running of our organisation seriously and understand the Risk management risks of not doing so; we embrace diverse perspectives, set well defined individual accountabilities and equip Governance Financial Statements Other Information Data privacy our people to uphold the principles of integrity, expertise Responsible procurement and compliance. Human rights The Board is collectively responsible for establishing the purpose, values and strategy of the Group and satisfying itself that these and its culture are aligned. This includes mechanisms to embed responsible practice across the business, in which the Board is supported by the Executive Board and a number of sub-committees as highlighted below: Managing Executive Responsibility committee Board member Remit Culture, Company Executive Board Andrew Croft To ensure the strength and maintenance of the unique and responsible SJP culture throughout our community, and to lead and business mission and manage our employees. employee wellbeing Responsible Business Executive Board Liz Kelly To oversee the Group’s responsible business strategy Advisory Group and approach, supported by various working groups covering specific areas such as environment, inclusion and diversity, corporate social responsibility and financial wellbeing. Responsible Investment Tom Beal To ensure robust monitoring and governance of our Investment Executive fund managers, in accordance with our investment Committee beliefs, which includes responsible investing. The St. James’s Place Charitable Foundation is an independent charity, managed by its Trustees who oversee grant- making and compliance with the charity’s objectives. www.sjp.co.uk ### 64 Strategic Report ### Our responsible business ### Risk management Responsible procurement We are committed to sustaining a strong risk culture that We are committed to managing our business in a supports our vision and purpose. Robust risk management, responsible, sustainable and ethical manner. This means underpinned by a strong risk culture, is a key driver of our upholding high standards in our supply chain, because success as a leading responsible business. An active through engagement, due diligence and ongoing oversight approach to risk management across the organisation we can advocate responsible practice throughout our ensures we make informed decisions, balancing the value chain. opportunities risk taking brings within our risk appetite. We recognise the benefits of building strong, mutually The inherent risk environment faced by the Group beneficial relationships with both new and existing develops over time, and therefore we continuously and suppliers, and sharing our aspirations and objectives to comprehensively identify and assess risks against our risk encourage them to similarly strive to make a positive and appetite. We then manage and monitor these accordingly. lasting difference to those less fortunate. We are delighted Under the leadership, direction and oversight of our Board that many provide support for the St. James’s Place and its committees, risks are carefully understood and Charitable Foundation through donations and participation managed, mitigated or accepted to enable us to achieve in fundraising events, and our 83% electric car fleet is a our strategic objectives. Our full risk and risk management great example of working strategically with suppliers to report can be found on pages 90 to 99. reduce environmental impact: 100% of our new fleet vehicle orders are for fully electric. ### Data privacy Our due diligence and ongoing oversight seek to provide confidence and secure evidence of good practice in We know how important it is to demonstrate responsibility respect of responsible business among our suppliers. as data custodians to protect the privacy of all those we We believe in treating all our stakeholders fairly, and our interact with. It is an essential part of our commitment to suppliers are part of that process. all our stakeholders and is integral to our success as a trustworthy organisation. Our process On 25 May 2018, the UK Data Protection Act 2018 and EU Our procurement process is designed to ensure we meet General Data Protection Regulation (GDPR) came into our regulatory and business obligations. Our Sourcing, effect across all (then) 28 countries of the European Union. Outsourcing and Supplier Management Policy requires Following Brexit, the UK continues to closely adhere to GDPR effective, risk-based due diligence to be conducted on requirements, and as such so do we. It is important we also all new suppliers. This includes an assessment of their demonstrate that any transfer of a data subject’s personal approach to compliant, responsible, and sustainable data outside the European Union to ‘third countries’ is in procurement, including but not limited to I&D, modern accordance with a comprehensive International Data slavery and gender pay gap reporting (where applicable). Transfer Policy. Regular oversight and periodic reassessment of the due diligence is required throughout the term of the relationship; In 2022, we appointed a Chief Data Officer to lead our the frequency of this activity depends on the materiality of approach to data governance, management and the supplier, or risk they may pose to SJP. utilisation across the organisation. As our data strategy continues to develop and evolve, we have also increased We have been a member of the Living Wage Foundation dedicated resource to focus on data quality and support since 2014, and encourage our suppliers to adopt the the wider programme of work. same approach or, where applicable, an overseas equivalent. In some cases, we have ensured our We aim to give our Partners and employees data and commercial agreements reflect this requirement and information they can trust. Looking ahead, in a world where provide the supplier with the correct support to do so. data plays an increasingly fundamental role in everything we do, this means we must update, improve and re-imagine We are also signatories of the Prompt Payment Code, what our data can do for us. In the short term our focus will which is encouraged by the Department for Business, be to update our corporate data architecture to better Energy and Industrial Strategy (BEIS) and demonstrates support our Partners and improve the management of our commitment to good payment practices between data across the Group. Our Data Policy can be found here: ourselves and our suppliers. www.sjp.co.uk/site-services/privacy-policy. As we continue working towards our vision of becoming a leading responsible business, we work closely to align ourselves with UNSDG 9 and its Target 9.2 of promoting inclusive and sustainable industrialisation through our work with suppliers. St. James’s Place plc Annual Report and Accounts 2022 ### 65 All employees have access to a copy of our code of ethics ### Human rights and our equal opportunities policy, which make clear that We are committed to managing our business in an ethical we oppose all forms of unfair discrimination or victimisation. Strategic Report manner, with no tolerance for the abuse of human rights, Our bullying and harassment policy sets out our approach and we collaborate with our stakeholders to strengthen in relation to allegations of harassment and/or bullying. and support the human rights movement. It is not possible Harassment, in general terms, is defined as unwanted to give people the confidence to create the futures they conduct affecting the dignity of people in the workplace. want without the basic rights and freedoms that belong It may be related to age, sex, race, disability, religion, to us all. We recognise that respecting human rights is nationality or any personal characteristic of the individual everyone’s responsibility and our practices and policies and may be persistent or an isolated incident. must reflect this whilst ensuring new areas of risk are identified and managed throughout our operations and Anti-bribery and corruption our supply chain. We have a zero-tolerance approach to bribery and Responsible management is important to all our corruption and aim to protect ourselves, our clients, stakeholders – shareholders, clients, the Partnership, shareholders, employees and other associated companies employees, suppliers and the communities in which we from any involvement. Our Board has responsibility for Governance Financial Statements Other Information operate. We do not tolerate or condone abuse of human oversight of the Group’s anti-bribery and corruption policy rights (including modern slavery) in any part of our and procedures and reviews these annually. Our employees business, and we are committed to minimising the risk of and advisers are provided with annual training on money slavery or human trafficking in all parts of our supply chain. laundering, financial crime, fraud, bribery and corruption Our due diligence and ongoing oversight seeks to secure through online training programmes which are mandatory evidence of good practice in relation to human rights. to complete. Our anti-bribery and corruption policy, which gives further detail, is available on our website at www.sjp.co.uk/about-us/corporate-governance. ### Non-financial and sustainability information statement This section of the Annual Report constitutes the St. James’s Place non-financial and sustainability information statement, produced to comply with sections 414CA and 414CB of the Companies Act 2006. The following table sets out where, within our Annual Report, we provide further detail on matters required to be disclosed under the sections above. In particular, it covers the impact we have on the environment, our employees, social matters, human rights, anti-corruption and anti-bribery matters, policies pursued and the outcome of those policies, and principal risks that may arise from the Company’s operations and how we manage these, to the extent necessary for an understanding of the Company’s development, performance and position and the impact of its activity. Reporting requirement Section(s) and page(s) Anti-corruption Our responsible business (page 65) and anti-bribery Business model Our business model (pages 20 and 21) Employees Developing employees (page 12), Building community (page 28), Our responsible business (pages 57 to 61), Risk and risk management (page 95), Section 172 statement (pages 104 to 110), Board composition, succession and evaluation (pages 119 and 121), Report of the Group Risk Committee (page 136), Report of the Group Nomination and Governance Committee (pages 139 to 142), Directors’ report (page 177) Environmental matters Our responsible business (pages 43 to 51), Risk and risk management (page 94) Non-financial key Our business model (pages 20 and 21), Our responsible business (pages 40 to 65) performance indicators | Principal risks | Risk and risk management (pages 94 to 96) | | --- | --- | | Respect for human rights | Our responsible business (page 65) | | Social matters | Our responsible business (pages 34 to 65), Corporate governance report (pages 106 | and 109), Report of the Group Nomination and Governance Committee (page 142) Climate-related Our responsible business (pages 46 and 47) financial disclosures www.sjp.co.uk 66 Strategic Report Chief Financial Officer's report # Record financial results 2022 presented a challenging operating environment, as a variety of macroeconomic and geopolitical factors led to significant investment market falls and eroded consumer confidence. Our business performed strongly against this backdrop, with our advisers attracting £17.0 billion (2021: £18.2 billion) of new client investments, our second-best year for new business flows in our history. With client retention rates remaining very high net inflows totalled £9.8 billion (2021: £11.0 billion), equivalent to 6.4% (2021: 8.5%) of opening funds under management (FUM). Despite this new business performance, investment market falls resulted in FUM closing at £148.4 billion (31 December 2021: £154.0 billion). In February 2021 we set out the planning assumptions that underpin our business plan through to 2025: 1. long-term new business growth of 10% per annum; 2. consistent retention of client investments above 95%; 3. containing controllable expense growth to 5% per annum; and 4. £200 billion of FUM by 2025. Our results for 2022 demonstrate further progress towards these goals; however, we recognised at the outset that our performance over this planning period would not be linear. 2021 was a very strong year across all metrics as investment markets and consumer confidence were buoyed by COVID-19 vaccination programmes, with the environment in 2022 being much more challenging. Despite this, our financial performance across IFRS, the Cash result and European Embedded Value (EEV) has reflected growth in average FUM during the year and the resulting growth in income and strong cost control in line with guidance despite the high inflationary environment. This has led to record results across each of our key IFRS, Cash and EEV metrics. We have always taken a simple and prudent approach to managing the balance sheet and our capital requirements. This continues to be the case, with both the Group and our life companies in a strong financial position. Our financial results are presented in more detail on pages 70 to 89 of the financial review, but there follows here a summary of financial performance on a statutory IFRS basis, as well as our chosen alternative performance measures (APMs). We also summarise key developments from a balance sheet perspective and provide shareholders with an overview of capital, solvency and liquidity. ## Financial results ### IFRS **IFRS profit after tax** was £405.4 million in 2022 (2021: £287.6 million), up 41%. This reflects growth in average FUM and the impact of **policyholder tax asymmetry**, which benefits the IFRS result in periods of weaker markets. Further detail on this asymmetry is included in the financial review on page 74. To address the challenge of policyholder tax being included in the IFRS results which distorts IFRS profit before tax, we focus on **IFRS profit before shareholder tax** as our pre-tax measure. On this basis the result was £501.8 million for the year (2021: £353.8 million), up 42% year on year. The IFRS result also includes the impact of non-cash accounting adjustments such as equity-settled share-based payment expenses, deferred income and deferred acquisition costs, so we continue to supplement our statutory reporting with the presentation of our financial performance using two APMs: the Cash result and the EEV result. ### Cash result The **Cash result**, and the **Underlying cash result** contained within it, are based on IFRS but adjusted to exclude certain non-cash items. They therefore represent useful guides to the level of cash profit generated by the business. All items in the Cash result, and in the commentary below, are presented net of tax. The **Cash result** of £410.1 million for 2022 (2021: £387.4 million) and the **Underlying cash result**, also of £410.1 million for 2022 (2021: £401.2 million) are up 6% and 2% respectively. These record results have been driven by average mature FUM being higher during 2022 than it was in 2021, despite investment market falls during the year, delivery of controllable expenses in line with our guidance, and increased shareholder interest on our working capital due to Bank of England base rate rises. More detail is set out below and in the financial review on pages 75 to 83. During the year, the **net income from funds under management** was £607.7 million (2021: £577.5 million), representing a margin within our range of 0.63% to 0.65% (2021: 0.63% to 0.65%) on average mature FUM, excluding Discretionary Fund Management (DFM) and Asia FUM, in line with prior guidance. It is this mature FUM that St. James's Place plc Annual Report and Accounts 2022 67 **Despite the challenging environment in 2022, the resilience of our business model means we have reported record results across each of our key financial metrics.** **Craig Gentle**, Chief Financial Officer Strategic Impact Governance Financial Statements contributes to the net income figure and at any given time it comprises all unit trust and ISA business, as well as life and pensions business written more than six years ago. The development of mature FUM year on year is therefore driven by four principal factors: 1. new unit trust and ISA flows; 2. the amount of life and pensions FUM that moves from gestation into mature FUM after a six-year period; 3. the retention of FUM; and 4. investment returns. As a result, growth in FUM is a strong positive indicator of future growth in profits, despite not all new business contributing to net income from funds under management for the first six years of its existence. At 31 December 2022, the balance of gestation FUM stood at £45.5 billion (31 December 2021: £49.3 billion). Once this current stock of gestation FUM has all matured, it will (assuming no market movements or withdrawals, and allowing for the corporation tax rate change in 2023) contribute in excess of a further £383 million to annual net income from funds under management and hence to the Underlying cash result, at no additional cost. St. James's Place also generates a **margin arising from new business** where initial product charges levied on gross inflows exceed new business-related expenses. The decrease in margin arising from new business in 2022 largely reflects the decrease in gross flows over the period, although the relationship between the two is generally directionally consistent rather than linear as the margin includes some expenses which do not vary with gross inflows. As part of the 2025 business plan, we set out our ambition to contain growth in **controllable expenses** to around 5% per annum. Controllable expenses are a key metric for the business and we have delivered against the plan with these costs increasing by 5% in 2022 to £277.9 million after tax, despite rapidly rising inflation. | | Year ended 31 December 2022 | Year ended 31 December 2021 | | --- | --- | --- | | | £'Million | £'Million | | Establishment expenses | 198.9 | 200.3 | | Development expenses | 67.4 | 54.0 | | Academy | 11.6 | 10.3 | | **Controllable expenses** | **277.9** | **264.6** | Other Information www.sjp.co.uk 68 Strategic Report # Chief Financial Officer's report # Financial results continued Growth in income, coupled with this delivery of controllable expenses in line with our guidance, has been the primary driver of a record Underlying cash result for the year of £410.1 million (2021: £401.2 million). There were no one-off items recognised during the year, resulting in the Cash result in 2022 also being £410.1 million (2021: £387.4 million). # EEV The EEV operating profit is sensitive to interest rates changes, and so the increase in the opening risk discount rate year on year, combined with a larger in-force book at the start of 2022 compared to the start of 2021, is the main factor behind the increase in EEV operating profit to £1,589.7 million (2021: £1,545.4 million). The EEV profit before tax for the period has been significantly impacted by the negative investment return variance of £1,314.0 million compared to the prior year (2021: positive £894.5 million). The negative return reflects decreased market values across our FUM compared to our expectation, as a result of investment market falls over the course of 2022. The EEV profit after tax of £371.4 million (2021: £1,452.7 million) reflects profit emergence as above. The EEV net asset value per share was £16.66 at 31 December 2022 (31 December 2021: £16.57). # Financial position Our IFRS Statement of Financial Position, presented on page 180, contains policyholder interests in unit-linked liabilities and the underlying assets that are held to match them. To understand the true assets and liabilities that the shareholder can benefit from, these policyholder balances, along with non-cash 'accounting' balances such as deferred income (DIR) and deferred acquisition costs (DAC), are removed in the Solvency II Net Assets balance sheet. This balance sheet is straightforward and demonstrates that the Group has liquid assets of £1,532.9 million (2021: £1,858.8 million), of which £1,271.7 million (2021: £1,605.3 million) is invested in AAA-rated money market funds. This deep liquidity represents 50% of total assets on the Solvency II Net Assets balance sheet (2021: 52%). Further information about liquidity is set out on page 82. Analysis of the key movements in the Solvency II Net Assets balance sheet during the year is set out on pages 80 to 83. # Solvency and capital We continue to manage the balance sheet prudently to ensure the Group's solvency is safely maintained. Given the simplicity of our business model, our approach to managing solvency remains to hold assets to match client unit-linked liabilities plus a management solvency buffer (MSB). At 31 December 2022 we held surplus assets over the MSB of £847.2 million (2021: £727.3 million). We also ensure that our approach meets the requirements of the Solvency II regime. Our UK life company, the largest insurance entity in the Group, targets capital equal to 10% of the standard formula requirement, as agreed with the Prudential Regulation Authority (PRA) since 2017. This is a prudent and sustainable policy given the risk profile of our business, which is largely operational. At 31 December 2022, the solvency ratio for our Life businesses was 130%. Whilst this solvency ratio has strengthened significantly from 115% at 31 December 2021, the ratio at 31 December 2022 benefits from two temporary effects arising from the significant investment market falls during the period: - a 8% positive impact from policyholder tax asymmetry, which benefits our own funds and hence solvency ratio in the same way as it benefits our IFRS result. For further details, refer to page 74; and - a 2% positive effect of the equity dampener depressing the market risk capital component. Excluding these temporary effects which will unwind as markets improve, the solvency ratio for our Life businesses was 120%, which is more closely aligned with prior periods. | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | Underlying solvency ratio for our Life businesses | 120% | 115% | | Impact of policyholder tax asymmetry | 8% | 7% | | Effect of the equity dampener | 2% | -7% | | **Solvency ratio for our Life businesses** | **130%** | **115%** | Taking into account entities in the rest of the Group, the Group solvency ratio at 31 December 2022 was 155% (2021: 134%), with this result also reflecting the positive impact of policyholder tax asymmetry and equity dampener effects noted above. # Dividends Our dividend guidance is to pay out around 70% of the Underlying cash result in dividends. The strong growth in our Underlying cash result for 2022 therefore drives a total dividend for 2022 of 52.78 pence per share, up c.2% on the total dividend for 2021, inclusive of a proposed final dividend for 2022 of 37.19 pence per share. The proposed final dividend will be paid, subject to approval by shareholders at our AGM, on 31 May 2023 to shareholders on the register as at the close of business on 5 May 2023. A Dividend Reinvestment Plan continues to be available. Craig Gentle, Chief Financial Officer 27 February 2023 St. James's Place plc Annual Report and Accounts 2022 ### 69 ## Summary financial information | | | Year ended | | Year ended | | Strategic Report | | --- | --- | --- | --- | --- | --- | --- | | | Page | 31 December | | 31 December | | | | reference | | | 2022 | | 2021 | | FUM-based metrics Gross inflows (£’Billion) 71 17.0 18.2 Net inflows (£’Billion) 71 9.8 11.0 Total FUM (£’Billion) 71 148.4 154.0 Total FUM in gestation (£’Billion) 72 45.5 49.3 IFRS-based metrics IFRS profit after tax (£’Million) 74 405.4 287.6 IFRS profit before shareholder tax (£’Million) 74 501.8 353.8 Underlying profit before shareholder tax (£’Million) 74 514.8 384.4 Governance Financial Statements Other Information IFRS basic earnings per share (EPS) (Pence) 74.6 53.3 IFRS diluted EPS (Pence) 73.9 52.5 IFRS net asset value per share (Pence) 231.6 207.1 Dividend per share (Pence) 52.78 51.96 Cash result-based metrics Controllable expenses (£’Million) 77 277.9 264.6 Underlying cash result (£’Million) 76 410.1 401.2 Cash result (£’Million) 76 410.1 387.4 Underlying cash result basic EPS (Pence) 75.6 74.6 Underlying cash result diluted EPS (Pence) 74.9 73.5 EEV-based metrics EEV operating profit before tax (£’Million) 84 1,589.7 1,545.4 EEV operating profit after tax basic EPS (Pence) 218.8 219.9 EEV operating profit after tax diluted EPS (Pence) 216.8 216.5 EEV net asset value per share (£) 16.66 16.57 Solvency-based metrics Solvency II net assets (£’Million) 88 1,379.9 1,245.3 Management solvency buffer (£’Million) 88 532.7 518.0 Solvency II free assets (£’Million) 89 1,921.4 1,323.4 Solvency ratio (Percentage) 89 155% 134% The Cash result should not be confused with the IFRS Consolidated Statement of Cash Flows, which is prepared in accordance with IAS 7. www.sjp.co.uk ### 70 Strategic Report ## Financial review ### This financial review provides analysis of the Group’s financial position and performance. It is split into the following sections: | Section 1 | Section 2 | | Section 3 | | --- | --- | --- | --- | | Funds under management (FUM) | Performance measurement | | Solvency | | 1.1 FUM analysis | 2.1 International Financial Reporting | | Section 3 addresses solvency, which is | | | | Standards (IFRS) | an important area given the multiple | 1.2 Gestation regulated activities carried out within 2.2 Cash result As set out on page 21 and below, FUM the Group. is a key driver of ongoing profitability 2.3 European Embedded Value (EEV) on all measures, and so information Section 2 analyses the performance on growth in FUM is provided in of the business using three different Section 1. bases: IFRS, the Cash result, and EEV. Find out more on pages 71 and 72 Find out more on pages 73 to 87 Find out more on pages 88 and 89 ## Our financial business model | Our financial business model is | can be found in Sections 1 and 2 of the | | these historic charges can be | | --- | --- | --- | --- | | straightforward. We generate revenue | financial review on pages 72 and 76. | | seen in Note 4 as amortisation | | by attracting clients through the value | | | of DIR. Initial product charges | | of our proposition, who trust us with | Initial and ongoing advice charges, | | contribute immediately to our | | their investments and then stay | and initial product charges levied | | Cash result through margin | | with us. This grows our funds under | when a client first invests into one | | arising on new business. | | management (FUM), on which | of our products, are not major drivers | | | | we receive: | of the Group’s profitability, because: | Our income is used to meet | | overheads, pay ongoing product  advice charges for the provision of  most advice charges received expenses and invest in the valuable, face-to-face advice; and are offset by corresponding business. Controllable expenses, remuneration for Partners, so an  product charges for our being the costs of running the increase in these revenue streams manufactured investment, pension Group’s infrastructure, the will correspond with an increase in and ISA/unit trust products. Academy and development the associated expense and vice expenses, are carefully managed versa; and | Further information on our charges | | in line with our 2025 business | | --- | --- | --- | | can be found on our website: www.sjp. |  under IFRS, initial product charges | plan ambition to limit their growth | | co.uk/charges. A breakdown of fee | are spread over the expected life | to 5% per annum. Other ongoing | | and commission income, our primary | of the investment through deferred | expenses, including payments to | | source of revenue under IFRS, is set | income (DIR – see page 74 for | Partners, increase with business | | out in Note 4 on page 205. | further detail). The contribution | levels and are generally aligned | | | to the IFRS result from spreading | with product charges. | The primary source of the Group’s profit is the income we receive from annual product management Gross inflows into FUM charges on FUM. As a result, growth Gross inflows Does not yet in FUM is a strong positive indicator for most generate of future growth in profits. However, Gestation investment annual product most of our investment and pension FUM and pension management products are structured so that business charges annual product management charges are not taken for the first six years after the business is written, Business moves from gestation so the ongoing benefit of these gross FUM to mature FUM after 6 years inflows into FUM for a given year will not be seen until six years later. This means that the Group always has six years’ worth of FUM in the ‘gestation’ period. FUM subject to annual product Gross inflows Generates management charges is known as for unit trust, Mature annual product ‘mature’ FUM. More information about ISA and DFM FUM management our FUM and the fees we earn on it business charges St. James’s Place plc Annual Report and Accounts 2022 ### 71 ## Section 1 Strategic Report ## Funds under management ### 1.1 FUM analysis Our financial business model is to attract and retain FUM, on which we receive an annual management fee. As a result, the level of income we receive is ultimately dependent on the value of our FUM, and so its growth is a clear driver of future growth in profits. The key drivers for FUM are:  our ability to attract new funds in the form of gross inflows;  our ability to retain FUM by keeping unplanned withdrawals at a low level; and  net investment returns. The following table shows how FUM evolved during 2022 and 2021. Investment return is presented net of all charges. Governance Financial Statements Other Information 2022 2021 Investment Pension UT/ISA and DFM Total Total £’Billion £’Billion £’Billion £’Billion £’Billion Opening FUM 35.95 74.83 43.21 153.99 129.34 Gross inflows 2.31 9.90 4.82 17.03 18.20 Net investment return (3.15) (7.68) (4.57) (15.40) 13.61 Regular income withdrawals and maturities (0.29) (1.72) – (2.01) (2.00) Surrenders and part-surrenders (1.53) (1.47) (2.24) (5.24) (5.16) Closing FUM 33.29 73.86 41.22 148.37 153.99 Net inflows 0.49 6.71 2.58 9.78 11.04 Implied surrender rate as a percentage of average FUM 4.4% 2.0% 5.3% 3.5% 3.6% Included in the table above is:  Rowan Dartington Group FUM of £3.29 billion at 31 December 2022 (31 December 2021: £3.52 billion), gross inflows of £0.44 billion for the year (2021: £0.55 billion) and outflows of £0.14 billion (2021: £0.14 billion); and  SJP Asia FUM of £1.52 billion at 31 December 2022 (31 December 2021: £1.57 billion), gross inflows of £0.28 billion for the year (2021: £0.36 billion) and outflows of £0.10 billion (2021: £0.10 billion). The following table shows the significant net inflows and the progression of FUM over the past six years. | | FUM as at | | Net | Investment | | | Other | | | FUM as at | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | 1 | 31 December | | | | 1 January | inflows | | | return | movements | | | | | | Year | £’Billion £’Billion £’Billion £’Billion £’Billion | | | | | | | | | | 2022 154.0 9.8 (15.4) – 148.4 2021 129.3 11.0 13.7 – 154.0 2020 117.0 8.2 4.1 – 129.3 2019 95.6 9.0 12.4 – 117.0 2018 90.7 10.3 (5.4) – 95.6 2017 75.3 9.5 6.2 (0.3) 90.7 1 Other movements in 2017 related to the matching strategy disinvestment. www.sjp.co.uk 72 Strategic Report ## Financial review ### 1.1 FUM analysis continued The table below provides a geographical and investment-type analysis of FUM at 31 December. | | 31 December 2022 | | 31 December 2021 | | | --- | --- | --- | --- | --- | | | £'Billion | Percentage of total | £'Billion | Percentage of total | | North American equities | 49.1 | 33% | 47.3 | 31% | | Fixed income securities | 23.1 | 16% | 25.4 | 16% | | European equities | 19.3 | 13% | 17.8 | 11% | | Asia and Pacific equities | 17.8 | 12% | 16.6 | 12% | | UK equities | 16.0 | 11% | 21.5 | 14% | | Alternative investments | 12.4 | 8% | 11.9 | 8% | | Cash | 5.7 | 4% | 5.9 | 4% | | Other | 2.8 | 2% | 3.0 | 2% | | Property | 2.2 | 1% | 2.6 | 2% | | **Total** | **148.4** | **100%** | **154.0** | **100%** | ### 1.2 Gestation As explained in our financial business model on page 70, due to our product structure, at any given time there is a significant amount of FUM that has not yet started to contribute to the Cash result. When we attract new FUM there is a margin arising on new business that emerges at the point of investment, which is a surplus of income over and above the initial costs incurred at the outset. Within our Cash result presentation this is recognised as it arises, but it is deferred under IFRS. Once the margin arising on new business has been recognised the pattern of future emergence of cash from annual product management charges differs by product. Broadly, annual product management charges from unit trust and ISA business begin contributing positively to the Cash result from day one, whilst investment and pensions business enters a six-year gestation period during which no net income from FUM is included in the Cash result. Once this business has reached its six-year maturity point, it starts contributing positively to the Cash result, and will continue to do so in each year that it remains with the Group. Approximately 54% of gross inflows for 2022, after initial charges, moved into gestation FUM (2021: 51%). The following table shows an analysis of FUM, after initial charges, split between mature FUM that is contributing net income to the Cash result and FUM in gestation which is not yet contributing, as at the year-end for the past five years. The value of both mature and gestation FUM is impacted by investment return as well as net inflows. | Position as at | Mature FUM contributing to the Cash result | Gestation FUM that will contribute to the Cash result in the future | Total FUM | | --- | --- | --- | --- | | | £'Billion | £'Billion | £'Billion | | 31 December 2022 | 102.9 | 45.5 | 148.4 | | 31 December 2021 | 104.7 | 49.3 | 154.0 | | 31 December 2020 | 85.9 | 43.4 | 129.3 | | 31 December 2019 | 76.8 | 40.2 | 117.0 | | 31 December 2018 | 62.1 | 33.5 | 95.6 | The following table gives an indication, for illustrative purposes, of the way in which the reduction in fees in the gestation period element of the Cash result could unwind, and so how the gestation balance of £45.5 billion at 31 December 2022 may start to contribute to the Cash result over the next six years and beyond, factoring in the change in the main rate of corporation tax to 25% from 1 April 2023. For simplicity it assumes that FUM values remain unchanged, that there are no surrenders, and that business is written at the start of the year. Actual emergence in the Cash result will reflect the varying business mix of the relevant cohort and business experience. | Year | Gestation FUM future contribution to the Cash result | | --- | --- | | | £'Million | | 2023 | 47.9 | | 2024 | 111.3 | | 2025 | 176.2 | | 2026 | 240.9 | | 2027 | 310.5 | | 2028 onwards | 383.5 | St. James's Place plc Annual Report and Accounts 2022 73 ## Section 2 ### Performance measurement In line with statutory reporting requirements we report profits assessed on an IFRS basis. The presence of a significant life insurance company within the Group means that, although we are a wealth management group in substance with a simple business model, we apply IFRS accounting requirements for insurance companies. These requirements lead to Financial Statements which are more complex than those of a typical wealth manager and so our IFRS results may not provide the clearest presentation for users who are trying to understand our wealth management business. Key examples of this include the following: - our IFRS Statement of Comprehensive Income includes policyholder tax balances which we are required to recognise as part of our corporation tax arrangements. This means that our Group IFRS profit before tax includes amounts charged to clients to meet policyholder tax expenses, which are unrelated to the underlying performance of our business; and - our IFRS Statement of Financial Position includes policyholder liabilities and the corresponding assets held to match them, and so policyholder liabilities increase or decrease to match increases or decreases experienced on these assets. This means that shareholders are not exposed to any gains or losses on the £148.1 billion of policyholder assets and liabilities recognised in our IFRS Statement of Financial Position, which represented over 97% of our IFRS total assets and liabilities at 31 December 2022. To address this, we developed APMs with the objective of stripping out the policyholder element to present solely shareholder-impacting balances, as well as removing items such as deferred acquisition costs and deferred income to reflect Solvency II recognition requirements and to better match the way in which cash emerges from the business. We therefore present our financial performance and position on three different bases, using a range of APMs to supplement our IFRS reporting. The three different bases, which are consistent with those presented last year, are: - International Financial Reporting Standards (IFRS); - Cash result; and - European Embedded Value (EEV). APMs are not defined by the relevant financial reporting framework (which for the Group is IFRS), but we use them to provide greater insight to the financial performance, financial position and cash flows of the Group and the way it is managed. A complete glossary of alternative performance measures is set out on pages 272 to 274, in which we define each APM used in our financial review, explain why it is used and, if applicable, explain how the measure can be reconciled to the IFRS Financial Statements. #### 2.1 International Financial Reporting Standards (IFRS) As referenced above, our IFRS results are impacted by policyholder tax balances which we are required to recognise as part of our corporation tax arrangements. This means that our Group IFRS profit before tax includes amounts charged to clients to meet policyholder tax expenses, which are unrelated to the underlying performance of our business. The scale and direction of these amounts can vary significantly: for example in 2022 we were required to refund £501.1 million to clients due to investment market falls which flowed through our IFRS profit before tax as an expense, whereas in 2021 we deducted £488.6 million from clients due to investment market gains, which flowed through as income. See Note 4 Fee and commission income for further information. This leads to substantial distortion within our IFRS profit before tax: for the year ended 31 December 2022 it was £0.7 million, compared to £842.4 million for the year ended 31 December 2021. To address the challenge of policyholder tax being included in the IFRS results we focus on the following two APMs, based on IFRS, as our pre-tax metrics: - IFRS profit before shareholder tax; and - underlying profit. Further information on these IFRS-based measures is set out below. #### Profit before shareholder tax This is a profit measure based on IFRS which aims to remove the impact of policyholder tax. The policyholder tax expense or credit is typically matched by an equivalent deduction or credit from the relevant funds, which is recorded within fee and commission income in the Consolidated Statement of Comprehensive Income. Policyholder tax does not therefore normally impact the Group's overall profit after tax. The following table demonstrates the way in which IFRS profit before shareholder tax is presented in the Consolidated Statement of Comprehensive Income on page 188. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 74 Strategic Report ### Financial review ### 2.1 International Financial Reporting Standards (IFRS) continued | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million IFRS profit before tax 0.7 842.4 Policyholder tax 501.1 (488.6) IFRS profit before shareholder tax 501.8 353.8 Shareholder tax (96.4) (66.2) IFRS profit after tax 405.4 287.6 However, in both the current and prior year IFRS profit before shareholder tax and IFRS profit after tax have been impacted by another nuance of life insurance tax, which has led to increases of over 40% in each of these balances year-on-year. As set out above, life insurance tax incorporates a policyholder tax element, and the financial statements of a life insurance group need to reflect the liability to HMRC and the corresponding deductions incorporated into policy charges. In particular, the tax liability to HMRC is assessed using IAS 12 Income Taxes, which does not allow discounting, whereas the policy charges are designed to ensure fair outcomes between clients and so reflect a wide range of possible outcomes. This gives rise to different assessments of the current value of future cash flows and hence an asymmetry in the Consolidated Statement of Financial Position between the deferred tax position and the offsetting client balance. The net balance reflects a temporary position, and in the absence of market volatility we expect it will unwind as future cash flows become less uncertain and are ultimately realised. Movement in the asymmetry is recognised in the Consolidated Statement of Comprehensive Income and analysed in Note 4 Fee and commission income. We refer to it throughout this Annual Report and Accounts as the impact of policyholder tax asymmetry. Under normal conditions this asymmetry is small, but market volatility can result in significant balances. Market falls in early 2020 led to positive movements in policyholder tax asymmetry. Strong market growth in 2021 then resulted in a substantial unwind of this asymmetry, which gave rise to a negative impact of £52.9 million on IFRS profit after tax and IFRS profit before shareholder tax in the prior year. 2022 has again seen significant market falls, resulting in a positive movement of £50.6 million. This leads to a £103.5 million year-on-year difference in both IFRS profit after tax and IFRS profit before shareholder tax. Ultimately the effect will be eliminated from the Consolidated Statement of Financial Position, and so it is temporary and we expect it to reverse as markets increase again. Shareholder tax reflects the tax charge attributable to shareholders and is closely related to the performance of the business. However, it can vary year-on-year due to several factors: further detail is set out in Note 7 Income and deferred taxes. Underlying profit This is IFRS profit before shareholder tax (as calculated above) adjusted to remove the impact of accounting for deferred acquisition costs (DAC), deferred income (DIR) and the purchased value of in-force business (PVIF). IFRS requires certain up-front expenses incurred and income received to be deferred. The deferred amounts are initially recognised on the Statement of Financial Position as a DAC asset and DIR liability, which are subsequently amortised to the Statement of Comprehensive Income over a future period. Substantially all of the Group’s deferred expenses are amortised over a 14-year period, and substantially all deferred income is amortised over a six-year period. The impact of accounting for DAC, DIR and PVIF in the IFRS result is that there is a significant accounting timing difference between the emergence of accounting profits and actual cash flows. For this reason, Underlying profit is considered to be a helpful metric. The following table demonstrates the way in which IFRS profit reconciles to Underlying profit. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million IFRS profit before shareholder tax 501.8 353.8 Remove the impact of movements in DAC/DIR/PVIF 13.0 30.6 Underlying profit before shareholder tax 514.8 384.4 St. James’s Place plc Annual Report and Accounts 2022 ### 75 The impact of movements in DAC, DIR and PVIF on IFRS profit before shareholder tax is further analysed as follows. Due to policyholder tax on DIR, the amortisation of DIR during the year and DIR on new business for the year set out below cannot be agreed to the figures provided in Note 8, which are presented before both policyholder and shareholder tax. Strategic Report | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Amortisation of DAC (79.6) (86.1) DAC on new business for the year 37.3 41.2 Net impact of DAC (42.3) (44.9) Amortisation of DIR 166.2 164.8 DIR on new business for the year (133.7) (147.3) Net impact of DIR 32.5 17.5 Amortisation of PVIF (3.2) (3.2) Governance Financial Statements Other Information Movement in year (13.0) (30.6) Net impact of DAC The scale of the £42.3 million negative overall impact of DAC on the IFRS result (2021: negative £44.9 million) is largely due to changes arising from the 2013 Retail Distribution Review (RDR). After these changes, the level of expenses that qualified for deferral reduced significantly, but the large balance accrued previously is still being amortised. As deferred expenses are amortised over a 14-year period there is a significant transition period, which could last for another two or three years, over which the amortisation of pre-RDR expenses previously deferred will significantly outweigh new post-RDR expenses deferred despite significant business growth, resulting in a net negative impact on IFRS profits. Net impact of DIR The reduction in new business in the year means income deferred in 2022 is lower than it was in 2021. Income released from the deferred income liability has remained broadly static. Together, these effects mean that DIR has had a positive £32.5 million impact on the IFRS result in 2022 (2021: £17.5 million positive). ### 2.2 Cash result The Cash result is used by the Board to assess and monitor the level of cash profit (net of tax) generated by the business. It is based on IFRS with adjustments made to exclude policyholder balances and certain non-cash items, such as DAC, DIR, deferred tax and equity-settled share-based payment costs. Further details, including the full definition of the Cash result, can be found in the glossary of alternative performance measures on pages 272 to 274. Although the Cash result should not be confused with the IAS 7 Consolidated Statement of Cash Flows, it provides a helpful supplementary view of the way in which cash is generated and emerges within the Group. The Cash result reconciles to Underlying profit, as presented in Section 2.1, as follows. Year ended 31 December 2022 Year ended 31 December 2021 Before Before shareholder shareholder tax After tax tax After tax £’Million £’Million £’Million £’Million Underlying profit 514.8 414.7 384.4 315.6 Equity-settled share-based payments 20.5 20.5 20.4 20.4 Impact of deferred tax – 30.5 – (0.5) Impact of policyholder tax asymmetry (50.6) (50.6) 52.9 52.9 Other 0.8 (5.0) 2.9 (1.0) Cash result 485.5 410.1 460.6 387.4 Equity-settled share-based payments have been static year on year, reflecting an increase in the number of shares and share options granted during the year, offset by lapse rate adjustments for expected performance against scheme conditions. The most significant impact of deferred tax is the recognition in the Cash result of the benefit from realising tax relief on capital losses and deferred expenses. This has already been recognised under IFRS, and hence Underlying profit, through the establishment of deferred tax assets. More information can be found in Note 7. www.sjp.co.uk 76 Strategic Report # Financial review ## 2.2 Cash result continued The **impact of policyholder tax asymmetry** is a temporary effect caused by asymmetries between fund tax deductions and the policyholder tax due to HMRC. Movement in the asymmetry can be significant in volatile markets such as were experienced in 2022. For further explanation, refer to page 74. **Other** represents a number of other small items, including the difference between the lease expense recognised under IFRS 16 Leases and lease payments made. The following table shows an analysis of the Cash result using two different measures: # - **Underlying cash result** This measure represents the regular emergence of cash from the business, excluding any items of a one-off nature and temporary timing differences; and # - **Cash result** This measure includes items of a one-off nature and temporary timing differences. ### Consolidated cash result (presented post-tax) | | Note | Year ended 31 December 2022 | | | Year ended 31 December 2021 Total | | --- | --- | --- | --- | --- | --- | | | | In-force £'Million | New business £'Million | Total £'Million | | | Net annual management fee | 1 | 961.0 | 59.6 | 1,020.6 | 1,001.6 | | Reduction in fees in gestation period | 1 | (412.9) | – | (412.9) | (424.1) | | **Net income from FUM** | 1 | 548.1 | 59.6 | 607.7 | 577.5 | | Margin arising from new business | 2 | – | 122.4 | 122.4 | 146.4 | | Controllable expenses | 3 | (19.9) | (258.0) | (277.9) | (264.6) | | Asia – net investment | 4 | – | (11.3) | (11.3) | (13.6) | | DFM – net investment | 4 | – | (10.9) | (10.9) | (9.6) | | Regulatory fees and FSCS levy | 5 | (4.0) | (36.0) | (40.0) | (37.8) | | Shareholder interest | 6 | 15.9 | – | 15.9 | 6.2 | | Tax relief from capital losses | 7 | 20.7 | – | 20.7 | 9.2 | | Miscellaneous | 8 | (16.5) | – | (16.5) | (12.5) | | **Underlying cash result** | | **544.3** | **(134.2)** | **410.1** | **401.2** | | Restructuring | 9 | – | – | – | (9.7) | | Change in capitalisation policy | 10 | – | – | – | (4.1) | | **Cash result** | | **544.3** | **(134.2)** | **410.1** | **387.4** | ### Notes to the Cash result #### 1. Net income from FUM The **net annual management fee** is the net manufacturing margin that the Group retains from FUM after payment of the associated costs: for example, investment advisory fees and Partner remuneration. Each product has standard fees, but they vary between products. Overall post-tax margin on FUM reflects business mix but also the different tax treatment, particularly life insurance tax on onshore investment business. As noted on page 70 however, our investment and pension business product structure means that these products do not generate net Cash result, after the margin arising from new business, during the first six years. This is known as the 'gestation period' and is reflected in the **reduction in fees in gestation period** line. **Net income from FUM** reflects Cash result income from FUM that has reached maturity, including FUM which has emerged from the gestation period during the year, and this line is the focus of our explanatory analysis. As with net annual management fees, the average rate can vary over time with business mix and tax. For 2022, our net income from FUM is within our range of 0.63% – 0.65%. As this is a post-tax margin, the increase in the main rate of corporation tax from 19% to 25% from 1 April 2023 will result in the net income from FUM margin moving to a range of 0.59% – 0.61% for 2023. There will be another, more modest impact in 2024 when the tax rate will be 25% for the full year. Net income from Asia and DFM FUM is not included in this line. Instead, this is included in the **Asia – net investment** and **DFM – net investment** lines. St. James's Place plc Annual Report and Accounts 2022 ### 77 2. Margin arising from new business This is the net positive Cash result impact of new business in the year, reflecting initial charges levied on gross inflows and new-business-related expenses. The majority of these expenses vary with new business levels, such as the incremental Strategic Report third-party administration costs of setting up a new policy on our back-office systems, and payments to Partners for the initial advice provided to secure clients’ investment. As a result, gross inflows are a key driver behind this line. However, the margin arising from new business also contains some fixed expenses, and elements which do not vary exactly in line with gross inflows. For example, our third-party administration tariff structure includes a fixed fee, and to provide some stability for Partner businesses, elements of our support for them are linked to prior-year new business levels. Therefore, whilst the margin arising from new business tends to move directionally with the scale of gross inflows generated during the year, the relationship between the two is not linear. 3. Controllable expenses | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | Governance Financial Statements Other Information £’Million £’Million Establishment expenses 198.9 200.3 Development expenses 67.4 54.0 Academy 11.6 10.3 Controllable expenses 277.9 264.6 As stated in the Chief Financial Officer’s report, as part of the 2025 business planning assumptions we set our ambition to contain growth in controllable expenses to around 5% per annum. Controllable expenses, which are the categories shown in the table above (stated after tax), are a key metric for the business and we are pleased to have delivered against our guidance despite the high inflationary environment, with these costs increasing by 5% to £277.9 million. Establishment expenses in 2022 were broadly flat year on year at £198.9 million (2021: £200.3 million). These costs predominantly relate to people, property and technology and hence are relatively fixed in nature. Development expenses were £67.4 million (2021: £54.0 million). Our investment in technology, alongside our commitment to making it easier to do business, is the driver behind the increase in our development expenses. We continue to improve our technology infrastructure and data quality, and to invest in Salesforce. We have also seen the successful phased launch of our new client app during the year. Reflecting its critical role in providing a source of future organic growth in our adviser population, we continue to invest in building our Academy programme. The transition to a hybrid format, where we combine in-class learning with greater digital content, has meant we have been able to scale up our Academy programmes efficiently. 4. Asia and DFM These lines represent the net income from Asia and DFM FUM. They include the Asia and DFM expenses set out in the reconciliation on page 79 between expenses presented separately on the face of the Cash result before tax and IFRS expenses. We have continued to invest in developing our presence in Asia, as well as in discretionary fund management via Rowan Dartington both in the UK and overseas. Whilst both have been impacted by the challenging market conditions in 2022, they have each achieved outcomes broadly in line with prior guidance and are positioned well for the years ahead. www.sjp.co.uk ### 78 Strategic Report ### Financial review ### 2.2 Cash result continued 5. Regulatory fees and FSCS levy The costs of operating in a regulated sector include regulatory fees and the Financial Services Compensation Scheme (FSCS) levy. On a post-tax basis, these are as follows: | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million FSCS levy 27.3 28.1 Regulatory fees 12.7 9.7 Regulatory fees and FSCS levy 40.0 37.8 Our position as a market-leading provider of advice means we make a very substantial contribution to supporting the FSCS, thereby providing protection for clients of other businesses in the sector that fail. Whilst the FSCS levy across the industry has fallen significantly for the current year, our charge has only reduced modestly due to substantial gains in our market share. 6. Shareholder interest This is the income accruing on the investments and cash held for regulatory purposes together with the interest received on the surplus capital held by the Group. It is presented net of funding-related expenses, including interest paid on borrowings and securitisation costs. It has increased significantly during the year following rises in the Bank of England base rate. 7. Tax relief from capital losses A deferred tax asset has been recognised under IFRS for historic capital losses which were regarded as being capable of utilisation over the medium term. The tax asset is ignored for Cash result purposes as it is not fungible, but instead the cash benefit realised when losses are utilised is shown in the tax relief from capital losses line. Utilisation during the year of £20.7 million tax value (2021: £9.2 million) arose due to the market conditions prevailing at 31 December 2022. The remaining tax value of capital losses stands at £2.1 million (31 December 2021: £26.8 million), which we expect to utilise in 2023. 8. Miscellaneous This category represents the net cash flow of the business not covered in any of the other categories. It includes Group contributions to the St. James's Place Charitable Foundation and movements in the fair value of renewal income assets. 9. Restructuring In 2021 we recognised the one-off cost of a restructuring exercise associated with an employee redundancy programme in the year. As expected, there were no such costs for 2022. 10. Change in capitalisation policy In 2021 we recognised a further one-off cost of £4.1 million as a result of the International Financial Reporting Standards Interpretations Committee providing additional guidance on the recognition of software configuration costs. In line with the wider industry we reflected this guidance in a change in capitalisation policy. Again as expected, there were no such costs for 2022. Reconciliation of Cash result expenses to IFRS expenses Whilst certain expenses are recognised in separate line items on the face of the Cash result, expenses which vary with business volumes, such as payments to Partners and third-party administration expenses, and expenses which relate to investment in specific areas of the business such as DFM, are netted from the relevant income lines rather than presented separately. In order to reconcile to the IFRS expenses presented on the face of the Consolidated Statement of Comprehensive Income on page 188, the expenses netted from income lines in the Cash result need to be added in, as do certain IFRS expenses which by definition are not included in the Cash result. In addition, all expenses need to be converted from post-tax, as they are presented in the Cash result, to pre-tax, as they are presented under IFRS. St. James’s Place plc Annual Report and Accounts 2022 ### 79 Expenses presented on the face of the Cash result before and after tax are set out below. Year ended 31 December 2022 Year ended 31 December 2021 Strategic Report Before tax Tax rate After tax Before tax Tax rate After tax £’Million Percentage £’Million £’Million Percentage £’Million Controllable expenses Establishment expenses 245.5 19.0% 198.9 247.3 19.0% 200.3 Development expenses 83.2 19.0% 67.4 66.7 19.0% 54.0 Academy 14.3 19.0% 11.6 12.7 19.0% 10.3 Total controllable expenses 343.0 277.9 326.7 264.6 Other costs presented separately on the face of the Cash result Regulatory fees and FSCS levy 49.4 19.0% 40.0 46.6 19.0% 37.8 Restructuring – – – 12.0 19.0% 9.7 Change in capitalisation policy – – – 5.1 19.0% 4.1 Governance Financial Statements Other Information Total expenses presented separately on the face of the Cash result 392.4 317.9 390.4 316.2 The total expenses presented separately on the face of the Cash result before tax then reconciles to IFRS expenses as set out below. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Total expenses presented separately on the face of the Cash result before tax 392.4 390.4 Expenses which vary with business volumes Other performance-related costs 160.4 145.0 Payments to Partners 1,011.8 988.0 Investment expenses 85.7 88.0 Third-party administration 135.0 128.0 Other 57.0 64.3 Expenses relating to investment in specific areas of the business Asia expenses 20.9 23.3 DFM expenses 35.7 31.0 Total expenses included in the Cash result 1,898.9 1,858.0 Expenses which are not included in the Cash result Amortisation of DAC and PVIF, net of additions 45.5 48.1 Equity-settled share-based payments expenses 20.5 20.4 Other 1.3 4.8 Total IFRS Group expenses before tax 1,966.2 1,931.3 Expenses which vary with business volumes Other performance-related costs, for both Partners and employees, vary with the level of new business and the operating profit performance of the business. Payments to Partners, investment expenses and third-party administration costs are met through charges to clients, and so any variation in them from changes in the volumes of new business or the level of the stock markets does not impact Group profitability significantly. Each of these items is recognised within the most relevant line of the Cash result, which is determined based on the nature of the expense. In most cases, this is either the net annual management fee or margin arising from new business lines. Other expenses include interest expense and bank charges, operating costs of acquired financial adviser businesses and donations to the St. James’s Place Charitable Foundation. They are recognised across various lines in the Cash result, including shareholder interest and miscellaneous. Expenses relating to investment in specific areas of the business Asia expenses and DFM expenses both reflect disciplined expense control during the year, whilst continuing to invest to support growth. Such investment will continue going forward. In the Cash result, Asia and DFM expenses are presented net of the income they generate in the Asia – net investment and DFM – net investment lines. www.sjp.co.uk ### 80 Strategic Report ### Financial review ### 2.2 Cash result continued Expenses which are not included in the Cash result DAC amortisation, net of additions, PVIF amortisation and equity-settled share-based payment expenses are the primary expenses which are recognised under IFRS but are excluded from the Cash result. Derivation of the Cash result The Cash result is derived from the IFRS Consolidated Statement of Financial Position in a two-stage process: Stage 1: Solvency II Net Assets Balance Sheet Firstly, the IFRS Consolidated Statement of Financial Position is adjusted for a number of material balances that reflect policyholder interests in unit-linked liabilities together with the underlying assets that are held to match them. Secondly, it is adjusted for a number of non-cash ‘accounting’ balances such as DIR, DAC and associated deferred tax. The result of these adjustments is the Solvency II Net Assets Balance Sheet and the following table shows the way in which it has been calculated at 31 December 2022. | | | | | Solvency II Net | | Solvency II Net | | | --- | --- | --- | --- | --- | --- | --- | --- | | | IFRS Balance | | | Assets Balance | | Assets Balance | | | | | | Sheet Adjustment 1 Adjustment 2 | | Sheet | | Sheet: 2021 | | 31 December 2022 Note | | £’Million £’Million £’Million £’Million £’Million | | | | | | Assets Goodwill 33.6 – (33.6) – – Deferred acquisition costs 337.3 – (337.3) – – Purchased value of in-force business 11.2 – (11.2) – – Computer software 33.3 – (33.3) – – Property and equipment 1 145.7 – – 145.7 154.5 Deferred tax assets 2 13.9 – (11.4) 2.5 5.0 Investment in associates 1.4 – – 1.4 1.4 Reinsurance assets 66.4 – (66.4) – – Other receivables 3 2,982.8 (1,604.8) (3.2) 1,374.8 1,587.6 Income tax assets 7 35.0 – – 35.0 – Investment property 1,294.5 (1,294.5) – – – Equities 103,536.0 (103,536.0) – – – Fixed income securities 4 27,552.7 (27,544.8) – 7.9 7.8 Investment in Collective Investment Schemes 4 5,735.4 (4,463.7) – 1,271.7 1,605.3 Derivative financial instruments 3,493.0 (3,493.0) – – – Cash and cash equivalents 4 6,432.8 (6,179.5) – 253.3 245.7 Total assets 151,705.0 (148,116.3) (496.4) 3,092.3 3,607.3 Liabilities Borrowings 5 163.8 – – 163.8 433.0 Deferred tax liabilities 2 162.9 – 2.2 165.1 624.4 Insurance contract liabilities 483.5 (414.9) (68.6) – – Deferred income 530.4 – (530.4) – – Other provisions 6 46.0 – – 46.0 44.1 Other payables 1, 3 2,198.6 (842.0) (19.1) 1,337.5 1,254.4 Investment contract benefits 106,964.7 (106,964.7) – – – Derivative financial instruments 3,266.3 (3,266.3) – – – Net asset value attributable to unit holders 36,628.4 (36,628.4) – – – Income tax liabilities 7 – – – – 6.1 Total liabilities 150,444.6 (148,116.3) (615.9) 1,712.4 2,362.0 Net assets 1,260.4 – 119.5 1,379.9 1,245.3 Adjustment 1 strips out the policyholder interest in unit-linked assets and liabilities, to present solely shareholder- impacting balances. For further information refer to Note 11 Investments, investment property and cash and cash equivalents within the IFRS Financial Statements. Adjustment 2 removes items such as DAC, DIR, PVIF and their associated deferred tax balances from the IFRS Statement of Financial Position to bring it in line with Solvency II recognition requirements. St. James’s Place plc Annual Report and Accounts 2022 81 #### Notes to the Solvency II Net Assets Balance Sheet ##### 1. Property and equipment, and other payables £114.4 million (2021: £120.3 million) of the property and equipment balance represents the right to use leased assets. It has decreased year-on-year as the leased assets are depreciated. Lease liabilities of £116.6 million are recognised within the other payables line (2021: £124.1 million). These have decreased as lease payments are made. Note 9 Property and equipment, including leased assets, Note 10 Leases and Note 13 Other payables to the IFRS Financial Statements provide further detail. ##### 2. Deferred tax assets and liabilities Analysis of deferred tax assets and liabilities, including how they have moved year on year, is set out in Note 7 Income and deferred taxes within the IFRS Financial Statements. ##### 3. Other receivables and other payables Detailed breakdowns of other receivables and other payables can be found in Note 12 Other receivables and Note 13 Other payables within the IFRS Financial Statements. Other receivables on the Solvency II Net Assets Balance Sheet have decreased from £1,587.6 million at 31 December 2021 to £1,374.8 million at 31 December 2022, principally reflecting the sale to a third-party of a portfolio of business loans to Partners. Further information on business loans to Partners and the sale during the year is set out overleaf and in Note 12 Other receivables. Within other receivables there are two items which merit further analysis: ##### Operational readiness prepayment asset One of the items within other receivables is the operational readiness prepayment asset. This arose from the investment we have made into our back-office infrastructure project, which was a complex, multi-year programme. In addition to expensing our internal project costs through the IFRS Statement of Comprehensive Income and Cash result as incurred, we capitalised Bluedoor development costs as a prepayment asset on the IFRS Statement of Financial Position. The asset, which stood at £278.3 million at 31 December 2022 (31 December 2021: £296.3 million) has been amortising through the IFRS Statement of Comprehensive Income and the Cash result since 2017 and will continue to do so over the remaining life of the contract, which at 31 December 2022 is 11 years. During 2022 a project to migrate our offshore business onto Bluedoor commenced, which added £6.7 million to the total operational readiness prepayment asset. We expect to add approximately £40 million to the total operational readiness prepayment over the course of the project. The movement schedule below demonstrates how the operational readiness prepayment has developed over the past two years. | | 2022 £Million | 2021 £Million | | --- | --- | --- | | **Cost** | | | | At 1 January | 413.5 | 406.6 | | Additions during the year | 6.7 | 6.9 | | **At 31 December** | **420.2** | 413.5 | | **Accumulated amortisation** | | | | At 1 January | (117.2) | (92.7) | | Amortisation during the year | (24.7) | (24.5) | | **At 31 December** | **(141.9)** | (117.2) | | **Net book value** | **278.3** | 296.3 | The amortisation expense is recognised within third-party administration expenses in the IFRS result, and within the net annual management fee and margin arising from new business lines of the Cash result. It is more than offset by the lower tariff charges on Bluedoor compared to the previous system, which grow as the business grows, benefiting both the IFRS and Cash results. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 82 Strategic Report # Financial review ## 2.2 Cash result continued ### Business loans to Partners Facilitating business loans to Partners is a key way in which we are able to support growing Partner businesses. Such loans are principally used to enable Partners to take over the businesses of retiring or downsizing Partners, and this process creates broad stakeholder benefits. First, clients benefit from enhanced continuity of St. James's Place advice and service over time; second, Partners are able to build and ultimately realise value in the high-quality and sustainable businesses they have created; and finally, the Group and, in turn, shareholders, benefit from high levels of adviser and client retention. In addition to recognising a strong business case for facilitating such lending, we recognise too the fundamental strength and credit quality of business loans to Partners. Over more than ten years, cumulative write-offs have totalled less than 5bps of gross loans advanced, with such low impairment experience attributable to a number of factors that help to mitigate the inherent credit risk in lending. These include taking a cautious approach to Group credit decisions, with lending secured against prudent business valuations. Demonstrating this, loan-to-value (LTV) information is set out in the table below. | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | Aggregate LTV across the total Partner lending book | 32% | 29% | | Proportion of the book where LTV is over 75% | 10% | 7% | | Net exposure to loans where LTV is over 100% (£Million) | 6.3 | 4.6 | If FUM were to decrease by 10%, the net exposure to loans where LTV is over 100% at 31 December 2022 would increase to £9.3 million (31 December 2021: increase to £6.6 million). Our credit experience also benefits from the repayment structure of business loans to Partners. The Group collects advice charges from clients. Prior to making the associated payment to Partners, we deduct loan capital and interest payments from the amount due. This means the Group is able to control repayments. During the year we have continued to facilitate business loans to Partners. However, the balance has decreased significantly due to the sale to a third-party of a portfolio of £262.5 million business loans to Partners previously recognised on the Consolidated Statement of Financial Position. Further information is provided in Note 12 Other receivables. | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | | £Million | £Million | | **Total business loans to Partners** | **315.6** | **521.6** | | *Split by funding type:* | | | | Business loans to Partners directly funded by the Group | 315.6 | 307.6 | | Securitised business loans to Partners | – | 214.0 | ### 4. Liquidity Cash generated by the business is held in highly rated government securities, AAA-rated money market funds, and bank accounts. Although these are all highly liquid, only the latter is classified as cash and cash equivalents on the Solvency II Net Assets Balance Sheet. The total liquid assets held are as follows. | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | | £Million | £Million | | Fixed interest securities | 7.9 | 7.8 | | Investment in Collective Investment Schemes (AAA-rated money market funds) | 1,271.7 | 1,605.3 | | Cash and cash equivalents | 253.3 | 245.7 | | **Total liquid assets** | **1,532.9** | **1,858.8** | The Group's primary source of net cash generation is product charges. In line with profit generation, as most of our investment and pension business enters a gestation period, there is no cash generated (apart from initial charges) for the first six years of an investment. This means that the amount of cash generated will increase year on year as FUM in the gestation period becomes mature and is subject to annual product management charges. Unit trust and ISA business does not enter the gestation period, and so generates cash immediately from the point of investment. Cash is used to invest in the business and to pay the Group dividend. Our dividend guidance is set such that appropriate cash is retained in the business to support the investment needed to meet our future growth aspirations. St. James's Place plc Annual Report and Accounts 2022 ### 83 Our most significant investment in the business in recent years has been the development of Bluedoor, which has had a substantial impact on our liquid assets and borrowings positions. This project and all associated decommissioning was completed in relation to our UK business in 2020. As noted on page 81, a project to migrate our offshore business Strategic Report onto Bluedoor commenced during the year. This is much smaller in scale than the migration of our UK business and so will have limited impact on liquidity and borrowings. 5. Borrowings The Group continues to pursue a strategy of diversifying and broadening its access to debt finance. We have done this successfully over time, including via the creation and execution of the securitisation vehicle referred to in previous years. For accounting purposes we are obliged to disclose on our Consolidated Statement of Financial Position the value of loan notes relating to the securitisation. Due to the sale during the year of a portfolio of business loans to Partners backing these loan notes, this balance was repaid in full during the year and so is negligible at 31 December 2022; but in the prior year the balance of £162.4 million inflated the reported level of borrowings. However, as the securitisation loan notes were secured only on the securitised portfolio of business loans to Partners, they were non-recourse to the Group’s other assets. This means that the senior tranche of non-recourse securitisation loan notes, whilst included within borrowing, were very different from the Group’s senior unsecured corporate borrowings, which are used to manage working capital and fund Governance Financial Statements Other Information investment in the business. Senior unsecured corporate borrowings reduced from £270.6 million at 31 December 2021 to £163.8 million at 31 December 2022, driven by the cash realised from the sale of the portfolio of business loans to Partners. Further information is provided in Note 16 Borrowings and financial commitments within the IFRS Financial Statements. 31 December 31 December 2022 2021 £’Million £’Million Corporate borrowings: bank loans – 106.8 Corporate borrowings: loan notes 163.8 163.8 Senior unsecured corporate borrowings 163.8 270.6 Senior tranche of non-recourse securitisation loan notes – 162.4 Total borrowings 163.8 433.0 During the year our revolving credit facility, one of our primary senior unsecured corporate borrowings facilities, was renewed. The facility increased from £340 million to £345 million, which is repayable at maturity in 2027. For further information see Note 16 Borrowings and financial commitments. 6. Other provisions Further information on other provisions, including how the balance has moved year on year, is set out in Note 15 Other provisions and contingent liabilities within the IFRS Financial Statements. 7. Income tax liabilities The Group has an income tax asset of £35.0 million at 31 December 2022 compared to a liability of £6.1 million at 31 December 2021. This is due to a current tax charge of £79.7 million, tax paid of £121.1 million and the impact of acquisitions and disposals of Group entities of a £0.3 million charge during the year. Further detail is provided in Note 7 Income and deferred taxes. Stage 2: Movement in Solvency II Net Assets Balance Sheet After the Solvency II Net Assets Balance Sheet has been determined, the second stage in the derivation of the Cash result identifies a number of movements in that balance sheet which do not represent cash flows for inclusion within the Cash result. The following table explains how the overall Cash result reconciles to the total movement. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Opening Solvency II net assets 1,245.3 1,218.6 Dividend paid (303.9) (329.9) Issue of share capital and exercise of options 14.5 29.0 Consideration paid for own shares (0.3) – Change in deferred tax (30.5) 0.5 Impact of policyholder tax asymmetry 50.6 (52.9) Change in goodwill, intangibles and other non-cash movements (10.9) (7.4) Non-controlling interests arising on the part-disposal of subsidiaries 5.0 – Cash result 410.1 387.4 Closing Solvency II net assets 1,379.9 1,245.3 www.sjp.co.uk ### 84 Strategic Report ### Financial review ### 2.3 European Embedded Value (EEV) Wealth management differs from most other businesses, in that the expected shareholder income from client investment activity emerges over a long period in the future. We therefore supplement the IFRS and Cash results by providing additional disclosure on an EEV basis, which brings into account the net present value of the expected future cash flows. We believe that a measure of the total economic value of the Group’s operating performance is useful to investors. As in previous reporting, our EEV continues to be calculated on a basis determined in accordance with the EEV principles originally issued in May 2004 by the Chief Financial Officers Forum (CFO Forum) and supplemented both in October 2005 and, following the introduction of Solvency II, in April 2016. Many of the principles and practices underlying EEV are similar to the requirements of Solvency II, and we have sought to align them as closely as possible. The table below and accompanying notes summarise the profit before tax of the combined business. | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Funds management business 1 1,725.8 1,662.9 Distribution business 2 (58.8) (24.4) Other (77.3) (93.1) EEV operating profit 1,589.7 1,545.4 Investment return variance 3 (1,314.0) 894.5 Economic assumption changes 4 235.1 4.2 EEV profit before tax 510.8 2,444.1 Tax (139.4) (578.7) Corporation tax rate change 5 – (412.7) EEV profit after tax 371.4 1,452.7 A reconciliation between EEV operating profit before tax and IFRS profit before tax is provided in Note 3 Segment Reporting within the IFRS Financial Statements. Notes to the EEV result 1. Funds management business EEV operating profit The funds management business operating profit has increased to £1,725.8 million (2021: £1,662.9 million) and a full analysis of the result is shown below. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million New business contribution 977.2 1,002.2 Profit from existing business – unwind of the discount rate 440.7 275.8 – experience variance 89.0 89.5 – operating assumption change 210.1 293.0 Investment income 8.8 2.4 Funds management EEV operating profit 1,725.8 1,662.9 The new business contribution for the year at £977.2 million (2021: £1,002.2 million) was 2.5% lower than the prior year, primarily reflecting the reduction in new business volumes. The unwind of the discount rate for the year was higher at £440.7 million (2021: £275.8 million), reflecting the larger in-force book at the start of 2022 compared to 2021, and an increase in the opening risk discount rate to 4.2% (2021: 3.4%). The experience variance during the year was £89.0 million (2021: £89.5 million). This reflects positive retention experience over the year partially offset by increased development expenses. St. James’s Place plc Annual Report and Accounts 2022 ### 85 The impact of operating assumption changes in the year was a positive £210.1 million (2021: positive £293.0 million). The change in the current year arises from a small improvement to the persistency assumptions for unit trust and ISA business, similar to the change in 2021 which arose due to a small improvement to the persistency assumptions for Strategic Report onshore bond and pension business. Both of the changes reflect positive retention experience over recent years. No further changes to persistency assumptions are expected in the short to medium term. 2. Distribution business The distribution loss includes the positive gross margin arising from advice income less payments to advisers, offset by the costs of supporting the Partnership and building the distribution capabilities in Asia. The gross margin has decreased year on year reflecting lower new business volumes and the fact that some elements of our support for the Partnership are linked to prior-year new business levels. The FSCS levy expense for our distribution business remained high at £23.8 million (2021: £23.6 million), impacting the reported loss. 3. Investment return variance The investment return variance reflects the capitalised impact on the future annual management fees resulting from the difference between the actual and assumed investment returns. Given the size of our FUM, a small difference can result Governance Financial Statements Other Information in a large positive or negative variance. The typical investment return on our funds during the year was negative 9% after charges, compared to the assumed investment return of positive 2%. This resulted in a negative investment return variance of £1,314.0 million (2021: positive £894.5 million). 4. Economic assumption changes The positive variance of £235.1 million arising in the year (2021: positive £4.2 million) reflects the positive effect from the increase in the risk-free rate, combined with a decrease in the expected long-term rate of inflation. 5. Corporation tax rate change In the UK Budget of 3 March 2021 it was announced that the main rate of corporation tax will increase from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on 24 May 2021 within the Finance Bill 2021 and as a result the relevant deferred tax balances were remeasured in the prior year. New business margin The largest single element of the EEV operating profit (analysed in the previous section) is the new business contribution. The level of new business contribution generally moves in line with new business levels. To demonstrate this link, and aid understanding of the results, we provide additional analysis of the new business margin (the margin). This is calculated as the new business contribution divided by the gross inflows, and is expressed as a percentage. The table below presents the margin before tax from our manufactured business. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | Investment New business contribution (£’Million) 148.2 153.0 Gross inflows (£’Billion) 2.31 2.62 Margin (%) 6.4 5.8 Pension New business contribution (£’Million) 495.3 512.0 Gross inflows (£’Billion) 9.90 9.86 Margin (%) 5.0 5.2 Unit trust and DFM New business contribution (£’Million) 333.7 337.2 Gross inflows (£’Billion) 4.82 5.72 Margin (%) 6.9 5.9 Total business New business contribution (£’Million) 977.2 1,002.2 Gross inflows (£’Billion) 17.03 18.20 Margin (%) 5.7 5.5 Post-tax margin (%) 4.3 4.2 The overall margin for the year was 5.7% (2021: 5.5%). The improvement year on year is due to a combination of the positive impact of the change in persistency for unit trust and ISA business, and controlled expenses. www.sjp.co.uk ### 86 Strategic Report ### Financial review ### 2.3 European Embedded Value (EEV) continued Economic assumptions The principal economic assumptions used within the cash flows at 31 December are set out below. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | Risk-free rate 3.9% 1.1% Inflation rate 3.6% 4.0% Risk discount rate 7.0% 4.2% Future investment returns: – Gilts 3.9% 1.1% – Equities 6.9% 4.1% – Unit-linked funds 6.2% 3.4% Expense inflation 3.9% 4.4% The risk-free rate is set by reference to the yield on ten-year gilts. Other investment returns are set by reference to the risk-free rate. The inflation rate is derived from the implicit inflation in the valuation of ten-year index-linked gilts. This rate is increased to reflect higher increases in earnings-related expenses. EEV sensitivities The table below shows the estimated impact on the reported value of new business and EEV to changes in various EEV-calculated assumptions. The sensitivities are specified by the EEV principles and reflect reasonably possible levels of change. In each case, only the indicated item is varied relative to the restated values. Change in European Change in new business Embedded contribution Value Pre-tax Post-tax Post-tax Note £’Million £’Million £’Million Value at 31 December 2022 977.2 739.2 9,064.7 100bp reduction in risk-free rates, with corresponding change in fixed interest asset values 1 (16.9) (12.9) (77.5) 10% increase in withdrawal rates 2 (75.7) (57.1) (479.5) 10% reduction in market value of equity assets 3 – – (865.3) 10% increase in expenses 4 (15.7) (11.9) (90.6) 100bps increase in assumed inflation 5 (20.8) (15.8) (104.0) Notes to the EEV sensitivities 1. This is the key economic basis change sensitivity. The business model is relatively insensitive to change in economic basis. Note that the sensitivity assumes a corresponding change in all investment returns but no change in inflation. 2. The 10% increase is applied to the withdrawal rate. For instance, if the withdrawal rate is 8% then a 10% increase would reflect a change to 8.8%. 3. For the purposes of this sensitivity all unit-linked funds are assumed to be invested in equities. The actual mix of assets varies and in recent years the proportion invested directly in UK and overseas equities has exceeded 70%. 4. For the purposes of this sensitivity only non-fixed elements of the expenses are increased by 10%. 5. This reflects a 100bps increase in the assumed RPI underlying the expense inflation calculation. St. James’s Place plc Annual Report and Accounts 2022 87 | | Change in new business contribution | | Change in European Embedded Value | | --- | --- | --- | --- | | | Pre-tax | Post-tax | Post-tax | | | £'Million | £'Million | £'Million | | 100bps reduction in risk discount rate | **124.8** | **94.1** | **720.6** | Although not directly relevant under a market-consistent valuation, this sensitivity shows the level of adjustment which would be required to reflect differing investor views of risk. ### Analysis of the EEV result The table below provides a summarised breakdown of the embedded value position at the reporting dates. | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | | £'Million | £'Million | | Value of in-force business | 7,684.8 | 7,712.1 | | Solvency in net assets | 1,379.9 | 1,245.3 | | **Total embedded value** | **9,064.7** | **8,957.4** | | | 31 December 2022 | 31 December 2021 | | --- | --- | --- | | | £ | £ | | **Net asset value per share** | **16.66** | **16.57** | The EEV result above reflects the specific terms and conditions of our products. Our pension business is split between two portfolios. Our current product, the Retirement Account, was launched in 2016 and incorporates both pre-retirement and post-retirement phases of investment in the same product. Earlier business was written in our separate Retirement Plan and Drawdown Plan products, targeted at each of the two phases separately, and therefore has a slightly shorter term and lower new business margin. Our experience is that much of our Retirement Plan business converts into Drawdown Plan business at retirement, but, in line with the EEV guidelines, we are required to defer recognition of the additional value from the Drawdown Plan until it crystallises. If instead we were to assess the future value of Retirement Plan business (beyond the immediate contract boundary) in a more holistic fashion, in line with Retirement Account business, this would result in an increase of approximately £340 million to our embedded value at 31 December 2022 (31 December 2021: £395 million). Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 88 Strategic Report # Financial review ## Section 3 ### Solvency St. James's Place has a business model and risk appetite that result in underlying assets being held that fully match our obligations to clients. Our clients can access their investments 'on demand' and because the encashment value is matched, movements in equity markets, currency markets, interest rates, mortality, morbidity and longevity have very little impact on our ability to meet liabilities. We also have a prudent approach to investing shareholder funds and surplus assets in cash, AAA-rated money market funds and highly rated government securities. The overall effect of the business model and risk appetite is a resilient solvency position capable of enabling liabilities to be met even during adverse market conditions. Our Life businesses are subject to the Solvency II capital regime which applied for the first time in 2016. Given the relative simplicity of our business compared to many, if not most, other organisations that fall within the scope of Solvency II, we have continued to manage the solvency of the business on the basis of holding assets to match client unit-linked liabilities plus a management solvency buffer (MSB). This has ensured that not only can we meet client liabilities at all times (beyond the Solvency II requirement of a '1-in-200 years' event), but we also have a prudent level of protection against other risks to the business. At the same time, we have ensured that the resulting capital held meets with the requirements of the Solvency II regime, to which we are ultimately accountable. For the year ended 31 December 2022 we reviewed the level of our MSB for the life businesses, and chose to maintain it at £355.0 million (31 December 2021: £355.0 million). The Group's overall Solvency II net assets position, MSB, and management solvency ratios are as follows. | | Life^{1} £'Million | Other regulated £'Million | Other^{2,3} £'Million | Total £'Million | 31 December 2021 total £'Million | | --- | --- | --- | --- | --- | --- | | 31 December 2022 | | | | | | | Solvency II net assets | 377.7 | 323.2 | 679.0 | 1,379.9 | 1,245.3 | | MSB | 355.0 | 177.7 | – | 532.7 | 518.0 | | **Management solvency ratio** | **106%** | **182%** | | | | 1 After payment of year-end intra-Group dividend. 2 Before payment of the Group final dividend. ### Solvency II Balance Sheet Whilst we focus on Solvency II net assets and the MSB to manage solvency, we provide additional information about the Solvency II free asset position for information. The presentation starts from the same Solvency II net assets, but includes recognition of an asset in respect of the expected value of in-force (VIF) cash flows and a risk margin (RM) reflecting the potential cost to secure the transfer of the business to a third party. The Solvency II net assets, VIF and RM comprise the 'own funds', which are assessed against our regulatory solvency capital requirement (SCR), reflecting the capital required to protect against a range of '1-in-200' stresses. The SCR is calculated on the standard formula approach. No allowance has been made for transitional provisions in the calculation of technical provisions or the SCR. St. James's Place plc Annual Report and Accounts 2022 89 An analysis of the Solvency II position for our Group, split by regulated and non-regulated entities at the year-end, is presented in the table below. | | UN^{1} | Other regulated | Other^{2} | Total | 31 December 2022 total | | --- | --- | --- | --- | --- | --- | | 31 December 2022 | £'Million | £'Million | £'Million | £'Million | £'Million | | Solvency II net assets | 377.7 | 323.2 | 679.0 | 1,379.9 | 1,245.3 | | Value of in-force (VIF) | 5,580.4 | – | – | 5,580.4 | 5,640.1 | | Risk margin | (1,516.4) | – | – | (1,516.4) | (1,622.9) | | **Own funds (A)** | **4,441.7** | **323.2** | **679.0** | **5,443.9** | **5,262.5** | | Solvency capital requirement (B) | (3,404.5) | (118.0) | – | (3,522.5) | (3,939.1) | | **Solvency II free assets** | **1,037.2** | **205.2** | **679.0** | **1,921.4** | **1,323.4** | | **Solvency ratio (A/B)** | **130%** | **274%** | | **155%** | **134%** | 1 After payment of year-end intra-Group dividend. 2 Before payment of the Group final dividend. The solvency ratio after payment of the proposed Group final dividend is 149% at the year-end (31 December 2021: 128%). We continue to target a solvency ratio of 110% for St. James's Place UK plc, our largest insurance subsidiary, as agreed with our regulator the PRA. The combined solvency ratio for our life companies, after payment of the year-end intra-Group dividend, is 130% at 31 December 2022 (31 December 2021: 115%). ### Solvency II sensitivities The table below shows the estimated impact on the Solvency II free assets, the SCR and the solvency ratio from changes in various assumptions underlying the Solvency II calculations. In each case, only the indicated item is varied relative to the restated values. The solvency ratio is not very sensitive to changes in experience or assumptions, and, due to the approach to matching unit-linked liabilities with appropriate assets, can move counter-intuitively depending on circumstances, as demonstrated by the sensitivity analysis presented below. | | Note | Solvency II free assets £'Million | Solvency II capital requirement £'Million | Solvency ratio % | | --- | --- | --- | --- | --- | | **Value at 31 December 2022** | | **1,921.4** | **3,522.5** | **155%** | | 100bps reduction in risk-free rates, with corresponding change in fixed interest asset values | 1 | 1,839.6 | 3,527.9 | 152% | | 10% increase in withdrawal rates | 2 | 1,959.0 | 3,287.5 | 160% | | 10% reduction in market value of equity assets | 3 | 2,088.6 | 2,929.3 | 171% | | 10% increase in expenses | 4 | 1,866.6 | 3,518.8 | 153% | | 100bps increase in assumed inflation | 5 | 1,867.1 | 3,523.3 | 153% | ### Notes to the Solvency II sensitivities 1. This is the key economic basis change sensitivity. The business model is relatively insensitive to change in economic basis. Note that the sensitivity assumes a corresponding change in all investment returns but no change in inflation. 2. The 10% increase is applied to the lapse rate. For instance, if the lapse rate is 8% then a 10% increase would reflect a change to 8.8%. 3. For the purposes of this sensitivity all unit-linked funds are assumed to be invested in equities. The actual mix of assets varies and in recent years the proportion invested directly in UK and overseas equities has exceeded 70%. The sensitivity reflects the impact of changes in the equity dampener on market risk capital. 4. For the purposes of this sensitivity all expenses are increased by 10%. 5. This reflects a 100bps increase in the assumed RPI underlying the expense inflation calculation. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information ### 90 Strategic Report ## Risk and risk management ## Effective risk management Overview and culture Under the leadership, direction and oversight of our Board, these risks are carefully assessed and managed in order to The business activities and the industry within which the achieve our strategic objectives, as set out on pages 25 to 33. Group operates expose us to a wide variety of inherent risks. Therefore, effective risk management, underpinned We do not, and cannot, seek to eliminate risk entirely; by a good risk culture, is critical to our success. We rather we aim to understand our risks and deal with comprehensively identify and assess risks, agree our them appropriately. The emphasis is on applying effective appetite for those risks, and then manage them risk management strategies, so that all material risks are accordingly. When assessing risks and deciding on the identified and managed within the agreed risk appetite. appropriate response we consider the potential impacts Risk management is embedded within our culture and on our key stakeholders: clients, advisers, shareholders, therefore is a core aspect of decision-making. regulators, employees and society. Risk management forms a key part of the business planning The inherent risk environment faced by the Group process, including decisions on strategic developments changes over time as emerging factors and trends affecting our client and Partner propositions, investments, (including political risks such as changes in taxation, and dividend payments. macroeconomic factors, cyber-crime and climate change) may impact on our short- and/or longer-term profitability. Our Risk Management and Control Framework The internal control environment is built upon a strong On behalf of the Board, the Group Audit Committee control culture and organisational assignment of takes responsibility for assessing the effectiveness of the responsibility. The ’first line’ business is responsible Group’s risk management and internal control systems, and accountable for risk management. This is then covering all material controls, including financial, combined with oversight from the ’second line’ risk, operational and compliance controls. It does this via an controls and compliance functions, and assurance annual review of risk and control self-assessments and from the ‘third line’ internal audit to form a ‘three lines monitoring of the effectiveness of the internal control of defence’ model. model throughout the year. The systems have been in place for the year under review and up to the date of The Risk Management and Control Framework is a approval of the Annual Report and Accounts. combination of processes by which the Group identifies, assesses, measures, manages and monitors the risks The Board receives regular reports from the Group Risk that may impact on the successful delivery of its Committee and Group Audit Committee and approves strategic objectives. Based upon our risk appetite, key aspects of the Group’s Risk Management and the risks identified are either accepted or appropriate Control Framework including the Risk Appetite Statement actions are taken to mitigate them. and Group ORSA. The Board, through the Group Risk Committee, takes The diagram on the right depicts our Risk Management an active role in overseeing the Risk Management and and Control Framework. Control Framework, for which it is responsible. As part of this the Board robustly assesses its principal and emerging risks, which are considered in regular reporting and summarised annually in the Own Risk and Solvency Assessment (ORSA); further information on this is provided overleaf. St. James’s Place plc Annual Report and Accounts 2022 ### 91 Strategic Report Our risk appetite The Group Risk Appetite Statement includes a risk appetite scale. This scale has several risk acceptance levels, ranging The Board carefully sets its appetite for taking risk against from no appetite for taking risks at all, through to acceptance the Group’s strategic objectives. These choices are set out of risk. The level of risk we are willing to accommodate will in detail in our Group Risk Appetite Statement, which is Governance Financial Statements Other Information vary depending on individual risk scenarios. Risk appetite reviewed at least annually by the Group Risk Committee, can and will change over time, sometimes rapidly as senior risk owners and the Executive Board before being economic and business environment conditions change, approved by the Board. The Group Risk Appetite Statement and therefore the statement is an evolving document. also provides clarity over ownership, enabling us to identify the key individuals within the Group who have responsibility A comprehensive suite of Key Risk Indicators (KRIs) is for managing particular risks. The Group Risk Appetite reported regularly, alongside qualitative information, Statement informs the risk appetite statements prepared to enable the Group Risk Committee, on behalf of the for and approved by the regulated subsidiary boards within Board, to monitor that the Group remains within its the Group. accepted appetite. Strategy – Key outcomes Risk Capital Risk Management and Control Framework Risk Governance Board | | r | | I d | | Group Risk and | | --- | --- | --- | --- | --- | --- | | | o | | | e | | | i t | | | | n | Audit Committees | | n | | | | t i | | | o | | 112 | | f | | y Regulatory M ### assessment 211 Risk culture Executive Board ### Insights 310 communicated Subsidiary Boards to inform further activity ### 49 Risk Oversight Group ### Own 8 5 M | assessment | a | | | | s | | | --- | --- | --- | --- | --- | --- | --- | | | n | | | | s | | | | | a | 67 | e | | | | | | g | | s | | | | | | e | | s | | | | | | | | A | | Other ExCos | Risk escalation | 1. Loss event reporting | 4. Risk and controls self- | | 7. Own Risk and Solvency | 10. Regular risk reporting | | --- | --- | --- | --- | --- | | 2. Emerging risk assessment | | assessment | Assessment | 11. Key Risk Indicators | | 3. Stress and scenario testing | 5. Operational risk assessments | | 8. Recovery and resolution | 12. Risk relationship meetings | | | 6. Reverse stress testing | | planning | | 9. Risk registers www.sjp.co.uk ### 92 Strategic Report ### Risk and risk management Own Risk and Solvency Assessment (ORSA) We are classified as an insurance group and are subject As a result, a five-year projection period is a prudent view to Solvency II insurance regulation. A key part of this of the Group’s viability as for pension and investment regulation requires a consistent approach to risk business we consider ongoing revenues generated on management across the Group, supported by the existing business only. The ORSA is particularly useful production of an annual ORSA. in assessing viability, as it involves a comprehensive assessment of risks and capital requirements for the The ORSA process follows an annual cycle, which applies business. For example, consideration is given to factors comprehensive risk assessments to the business’s or events that impact on our income from funds under activity, and ensures the Group is resilient to stresses management such as market movements, retention of in both the short term and over a five-year period. clients and ability to attract new clients. We also consider The ORSA cycle is depicted in the diagram below. factors which impact our costs such as inflation, non-inflationary expense increases and operational The Solvency Capital Requirement for insurers allows for event-related losses. Combinations of these factors at least a ’1-in-200-year’ risk event over a one-year time are used to form scenarios which are tested, providing horizon. In addition, severe stresses and scenarios are for more extreme combinations of events. used to help provide insight into the ability to maintain the regulatory capital in such conditions. Our results The scenarios are used to assess both the immediate show that it would be possible to maintain regulatory impact of an event and the impact over the longer term capital across the Group under all stresses for the (in the wake of the event). In addition to a standard set business planning horizon. This assists us when of extreme ‘combination’ scenarios which we test every considering the calculations and allocation of risk year, assessments are also completed based on more capital to all major risks in the Group, and the adequacy current/topical or emerging risk exposures affecting of capital positions. This process also ensures our the Group or financial services more generally. continued confidence that the regulated subsidiaries remain strongly capitalised. The ORSA assists decision-making by bringing together the following processes: The ORSA uses a five-year projection period for the  strategic planning; medium term. Due to the gestation period across some of our pension and investment product ranges we do  risk appetite consideration; not earn annual management fees on these in the first  risk identification and management; and six years.  capital planning and management. The ORSA continues to evolve and further strengthen risk management processes throughout the Group. Update ORSA Update related policies risk profile Assess changes to risk Agree final ORSA, profile, emerging update policies risks; agree scenarios Confirm Determine Annual risk appetite solvency business capital plan refresh requirement / own solvency assessment Mid-year Annual Present results / results / Assess draft ORSA dividends dividends sensitivities and own solvency needs Agree Monitor risk own needs, exposure Stress thresholds and and capital and scenario recovery plans adequacy testing ORSA summary report St. James’s Place plc Annual Report and Accounts 2022 ### 93 Current risk environment  As interest rates rise, annuities could become more attractive for clients relative to remaining in drawdown. There was a complex and rapidly evolving macroeconomic This could lead to an increase in withdrawals and hence risk picture through 2022, which was exacerbated in the UK Strategic Report a reduction in funds under management for the Group. by political turmoil. We expect to see significant challenges However, whilst annuities are now relatively cheaper at a national level in 2023 and beyond as people and than they have been for some time, clients may be businesses adjust to a higher interest rate environment reluctant to crystallise funds to purchase an annuity and the higher cost of living. We are mindful of potential in a market downturn. Furthermore, keeping funds in a risks relating to changes in tax policy which could affect the drawdown pension continues to offer valuable flexibility. amount our clients have available to save and how much tax they pay on income and investments. However, we also  Business loans to advisers will have higher interest recognise an opportunity for our advisers, through ongoing payments. This may come at a time where adviser financial advice, to support clients in managing their income is under pressure due to negative market financial affairs in a volatile market; to combat the effects impacts on funds under management. However, we of inflation on the standard of living they are aiming for in have operated careful lending criteria, which we are retirement; and to remain tax-efficient in their savings as confident will limit the number of advisers who could the tax landscape changes. We are also mindful of the require support, and we maintain the capacity to do so. Governance Financial Statements Other Information potential for geopolitical tensions to escalate, which could Our field management team work with advisers to help have relevance to the Group through impacts on financial them develop their businesses and, if required, SJP is markets and through heightened cyber risk. able to provide targeted financial assistance. Overall we remain confident in our ability to withstand Despite the potential macroeconomic risks we believe further challenges that may or may not emerge from the there are good reasons to be optimistic about continued risk environment described in more detail below. Timely investment and growth of net flows to the Group. and targeted risk-based information has been provided to In particular, our advisers are well placed to advise clients the Board to continue to support decision-making and help on the benefits of taking a long-term view and investing the understanding of key issues. or continuing to invest when markets are relatively low. Macroeconomic Regulatory change The macroeconomic risks associated with high inflation, Regulatory change is a constant, and amongst the the unwinding of 14 years of low interest rates and the significant regulatory change agenda for 2023 the FCA threat of increasing geopolitical tension are not to be has launched the new Consumer Duty regulation. This is under-estimated. However, the Group’s business model intended to set higher and clearer standards of consumer has demonstrated resilience and continues to be well protection across financial services and require firms to positioned to survive extreme conditions and continue act to deliver good outcomes for customers. In line with to invest for long-term growth. the whole of the industry we are engaging proactively with this important regulatory initiative. While we believe Some examples of the key challenges for the that we already achieve good outcomes for our clients, business presented by the current macroeconomic we are nonetheless reviewing all our client focused activities conditions include: and reflecting on how we can develop them to meet ever increasing expectations. Ahead of Consumer Duty coming  Asset prices could fall further as interest rates rise into force, there will be aspects of the way we operate and the economic outlook deteriorates. Asset price falls which will need to change in order to meet regulatory reduce future profitability but, counterintuitively, improve expectations. The FCA is expecting action and where we the Group’s solvency position in the short to medium identify this is required, we will respond to improve client term because our capital requirement reduces at a experience and reduce any risk of poor client outcomes. quicker rate than our own funds. The Group’s financial resilience is demonstrated through stress and scenario testing and we remain highly confident in our ability to weather further extreme market falls, although such scenarios would negatively impact cash generation.  In a higher inflationary environment our strategic targets of both limiting growth in controllable expenses to 5% per annum and investing in the business to support future growth become more difficult to jointly achieve. A key strategic consideration for the business is maintaining capacity for development expenditure and focusing investment on developments which will best support long-term growth in net client inflows. www.sjp.co.uk ### 94 Strategic Report ### Risk and risk management Current risk environment continued Whilst recognising the unique ways in which climate change can affect individual investments, our approach Climate change to managing this risk is very similar to how we manage Tackling climate change is an issue of high importance. other drivers of market-related risk, namely through our We aim to grow in a sustainable way, taking a long-term investment management approach (IMA) and within view which ensures we are a force for good for our clients that our approach to responsible investing. Through this and the wider world. As an example of how we are putting we aim to take account of climate risks whilst seeking to this into practice we have pledged that our operations will deliver returns for clients in line with their risk appetite and become climate positive by 2025 and our investments will increasing the value of FUM. Further, to ensure our resilience be net zero by 2050. More information on the actions we as a Group to market movements, our liabilities to clients are taking can be found on pages 46 to 51. are fully matched by our invested assets. Climate change-related risks affect companies in different We also consider physical risks on our operations as we ways and we have carefully considered how climate look to enhance our operational resilience. Generally, change could impact the Group to identify risks and through the nature of our operations and the geography in opportunities. Climate change is a driver of market-related which we operate, the physical risks to our direct operations risk, be that through physical climate events or impacts are low. We further work to understand the risk to our from transitioning away from fossil fuels. The invasion of material third parties’ operations and engage with Ukraine and rapid reduction in Russian oil and gas supplied them to share and remediate material concerns. to Europe has driven inflation and put focus on domestic energy security. We recognise that this presents a risk to A key residual risk to the Group is meeting the views and the climate as western countries seek replacement fossil expectations of current and potential clients around our fuel resources in the short term, but also an opportunity approach to the challenges presented by climate change. in relation to accelerating the speed of transition to We aim to be as transparent as possible on what we are renewable energy sources. doing and have to accept that our approach will be too little for some and too much for others. Principal risks and uncertainties Our business priorities Whilst the risk landscape evolved over the course of the year, the inherent Building community principal risk areas that the business faces remain consistent with the previous year. An example of this is that security and resilience remains a principal risk area and within this cyber risk continues to be a key risk. Nevertheless, we Being easier to recognise that the cyber environment continues to develop, particularly with do business with State-sponsored threats, which increases the inherent cyber risk to the business. Delivering value to advisers The business priority areas which our principal risks impact are set out in and clients through our the tables in the following pages, together with the high-level controls and investment proposition processes through which we aim to mitigate them. Reputational damage Building and protecting and impacts to shareholders and other stakeholders are a likely consequence our brand and reputation of any of our principal risks materialising. Our culture and being a The symbols on the right are used to indicate which primary business priorities leading responsible business our principal risks could impact, while recognising that they could also have a secondary impact on other business priorities. Continued financial strength Business Risk description priority Key risks Example controls/mitigation Client Our product  Investments provide poor  Monitoring of asset allocations across proposition fails to returns relative to their portfolios to consider whether they are proposition meet the needs, benchmarks and/or performing as expected in working objectives and do not deliver expected towards long-term objectives expectations of our client outcomes  Monitoring funds against their objectives clients. This includes  Range of solutions does mindful of an appropriate level of poor relative not align with the product investment risk investment and service requirements  Ongoing assessment of value delivered by performance and of our current and potential funds and portfolios versus their objectives poor product design. future clients  Where necessary, managers are changed  Failure to meet client in the most effective way possible expectations of a sustainable  Continuous development of the range business, not least in respect of services offered to clients of climate change and responsible investing  Engagement with fund managers around principles of responsible investment St. James’s Place plc Annual Report and Accounts 2022 ### 95 Business Risk description priority Key risks Example controls/mitigation Conduct We fail to provide  Advisers deliver poor-quality  Licensing programme which supports the Strategic Report quality, suitable or unsuitable advice quality of advice and service from advisers advice or service  Failure to evidence the  Technical support helplines for advisers to clients. provision of good-quality  Timely and clear responses to client service and advice complaints  Robust oversight process of the advice provided to clients delivered by business assurance, compliance monitoring, field risk and advice guidance teams Financial We fail to effectively  Failure to meet client liabilities  Policyholder liabilities are fully matched manage the  Investment/market risk  Excess assets generally invested in business’s finances. high-quality, high-liquidity cash and  Credit risk cash equivalents  Liquidity risk  Direct lending to the Partnership is secured Governance Financial Statements Other Information  Insurance risk  Reinsurance of insurance risks  Expense risk  Ongoing monitoring of all risk exposures and experience analysis  Setting and monitoring budgets  Implementing new systems to enable future cost reductions  Monitoring and management of subsidiaries’ solvency to minimise Group interdependency Partner Our proposition  Failure to attract new members  Focus on providing a market-leading solution fails to meet to the Partnership Partner proposition proposition the needs, objectives  Failure to retain advisers  Adequately skilled and resourced and expectations population of supporting field managers  Failure to increase adviser of our current productivity  Reliable systems and administration and potential support future advisers.  Available technology falls short of client and adviser  Expanding the Academy capacity and expectations and fails to supporting recruits through the Academy support growth objectives and beyond  The Academy does not  Market-leading support to Partners’ adequately support growth businesses of the Partnership People We are unable  Failure to attract and retain  Measures to maintain a stable population to attract, retain personnel with key skills of employees, including competitive total and organise the reward packages  Poor employee engagement right people to run  Monitoring of employee engagement  Failure to create an inclusive the business. and satisfaction and diverse business  Employee wellbeing is supported through  Poor employee wellbeing various initiatives, benefits and services  Our culture of supporting social  Corporate incentives to encourage value is eroded social value engagement, including matching of employee charitable giving to Charitable Foundation  Whistleblowing hotline Regulatory We fail to meet  Failure to comply with existing  Compliance functions provide guidance current, changing regulations and carry out extensive assurance work or new regulatory  Failure to comply with changing  Strict controls are maintained in highly and legislative regulation or respond to regulated areas expectations. changes in regulatory  Maintenance of appropriate solvency expectations capital buffers, and continuous monitoring  Inadequate internal controls of solvency experience  Clear accountabilities and understanding of responsibilities across the business  Fostering of positive regulatory relationships www.sjp.co.uk ### 96 Strategic Report ### Risk and risk management Principal risks and uncertainties continued Business Risk description priority Key risks Example controls/mitigation Security and We fail to adequately  Internal or external fraud  Business continuity planning for SJP secure our physical and its key suppliers resilience  Core system failure assets, systems  Focus on building operational resilience  Corporate, Partnership, and/or sensitive or third-party, information  Mandatory ‘Cyber Essentials Plus’ information, or security and cyber risks accreditation for Partner practices or to deliver critical use of an SJP ‘Device as a Service’ solution business services  Disruption in key business to our clients. services to our clients  Clear cyber strategy and data protection roadmap for continuous development  Data leakage detection technology and incident reporting systems  Identification, communication, and response planning for the event of cyber crime  Executive Board level cyber scenario work to test strategic response  Internal awareness programmes  Identification and assessment of important and critical business services Strategy, Challenge from  Increased competitive pressure  Clear demonstration of value competitors and from traditional and disruptive delivered to clients through advice, competition impact of (non-traditional) competitors service and products and brand reputational damage.  Cost and charges pressure  Investment in improving positive brand recognition  Negative media coverage  Ongoing development of client  Failure to meet our and Partner propositions commitments to net zero  Proactive engagement with external agencies including media, industry groups, shareholders and regulators  Clear interim targets to be tracked towards meeting our long-term net zero targets Third parties Third-party  Operational failures by material  Oversight regime in place to identify outsourcers’ outsourcers prudent steps to reduce risk of operational activities impact our failures by material third-party providers  Failure of critical services. performance and Significant areas include:  Ongoing monitoring, including risk management. assessment of operational resilience – investment administration  Due diligence on key suppliers – fund management  Oversight of service levels of our – custody third-party administration provider – policy administration – cloud services Emerging risks Examples of emerging risks which have been considered during the year include: Emerging risks are identified through conversations and workshops with stakeholders throughout the business,  inflation; reviewing academic papers, attending industry events  consequences of the invasion of Ukraine; and other horizon scanning by the Group risk team.  climate change and ESG-related risks; The purpose of monitoring and reporting emerging risks is  employee-related risks; to give assurance that we are well positioned to manage the risks to our future strategy, which is the primary risk  shareholder activism; and management tool for longer term strategic risks. The Group  risk of energy blackouts. Risk Committee reviewed emerging risks on a quarterly basis during 2022 and more detail is provided on this in the Chair of the Group Risk Committee’s report on pages 132 to 138. St. James’s Place plc Annual Report and Accounts 2022 ### 97 Viability statement How we assess our viability Strategic Report The business considers five-year financial forecasts when developing its strategy. These incorporate our budget for ### Example scenarios the next financial year and four further years of forecasts A diverse selection of stresses and scenarios is applied based on reasonable central assumptions around the to test all material drivers in a variety of ways to provide development of business drivers. understanding of dynamic impacts. Recently we have considered a number of onerous scenarios for our key At the core of assessing our viability we seek to understand financial drivers based on the 2022 year-end financial how different principal risks could materialise. We consider position. This included a scenario which explored how risks which might present either in isolation or in combination the 2022 Bank of England Annual Cyclical Scenario test and which could result in acute shocks to the business or for banks might impact the key financial variables for long-term underperformance against forecasted business the Group. In order to do this, we carefully considered drivers. We consider that a five-year time horizon is how the prescribed economic variables might translate sufficiently long to assess potential impacts and aim for the Group. Our conclusion is that whilst this scenario to ensure that the business remains viable, noting that would significantly reduce profitability it would be not identified management actions could also be enacted cause any solvency concerns. to restore the business’s prospects. As a further example, as part of the dividend When considering how the principal risks previously considerations in February 2022 we assessed the described might impact the business, we consider our direct financial implications of a significant increase ability to deal with particular events which may impact in the implied inflation curve, particularly over the next one or more of the following key financial drivers: 1-3 years though also remaining significantly above  reduction in client retention; expectations over the 4-10 year projection. We then used this inflation stress in two further scenarios of  reduction in new business relative to forecasts; varying severity which also stressed the value of funds  market stresses; under management and new business relative to our base projections. In all scenarios, the Group was  increases in expenses; and expected to remain adequately capitalised and have  direct losses through operational risk events. sufficient liquid resources, albeit the Group’s profits, and therefore future dividends, would diminish. In the We carry out stress and scenario testing on these key context of the 2022 dividend decision, however, these financial drivers, alongside operational risk assessments. scenarios gave confidence that, after payment of the To provide comfort over viability over the next five years, proposed dividend, the Group would remain within the scenarios and assessments look at events which the Board’s financial risk appetite. would be extreme, whilst still remaining plausible. This work demonstrates that, although there would be impacts It is also worth noting that when extreme events on profitability, the Group is resilient and could continue materialise, or the level of uncertainty in the to meet regulatory capital requirements over five years external environment increases, management reacts should even the more extreme risks materialise. accordingly by taking appropriate and measured Other InformationFinancial StatementsGovernance actions. For example, following the initial uncertainty As well as robust scenario testing, the Directors have around COVID-19, the Board decided to withhold given consideration to assessments of the current risk around one-third of the proposed 2019 final dividend environment, including how risks are managed through until March 2021, when the impacts of COVID-19 had controls relative to the risk appetite and emerging risks. become clearer and the dividend was released. This prudent judgement ensured we were comfortable in our resilience and ability to protect clients while continuing strategic investment in the business to increase shareholder value. We remain confident that the Group is able to respond to unforeseen events to ensure the Group remains viable. www.sjp.co.uk ### 98 Strategic Report ### Risk and risk management Resilience over different time horizons The table below provides an indication of which risks are relevant over different timeframes and why the Group is considered to be resilient over these timeframes. Over the next year Risks Resilience Over the short term, key risks are most likely to be operational, such The Group generates relatively steady cash profits on new business as cybercrime or failure of operational processes. The cost-of-living and existing funds under management which increase each year crisis and higher interest rates are also key risks to business as funds in gestation ‘mature’. performance if they lead to downturns in markets and/or new investments, or to continued people-related risks which impact In stress and scenario testing the Group demonstrates a high on our operations. degree of resilience in its solvency level to falls in markets and new business. If severe risks materialised over the year, the Group’s Strategic risks which could have a shorter term impact relate to: profitability would reduce and, whilst other options would be managing expenses in a high inflationary environment whilst explored first, curtailing investment or reducing dividends would investing for growth; maintaining high engagement with the be obvious ways to protect the financial strength of the business. Partnership and supporting them through a tough macroeconomic The business benefits from higher interest rates on cash reserves environment; the pace of regulatory change; and talent and has significant financial resources to support Partner management. businesses if required and where appropriate, though the need is likely to be limited due to the application of careful lending criteria Of the significant regulatory change due in 2023, including the for business loans to Partners. new FCA Consumer Duty coming into force, there will be aspects of the way we operate which need to be evolved in order to continue Changing regulatory expectations including Consumer Duty to meet changing regulatory expectations and ultimately benefit are being considered in depth. We are a client focused business our clients. and so any changes we make should be positive for our business, reducing regulatory and reputational risk and supporting good It is not expected that solvency will be an issue in the short term client outcomes. due to our matching approach on liabilities. Liquidity risks would be relevant for this time window since they tend to be short term Operational resilience and business continuity are also important in nature. However, we do not anticipate there being liquidity risks risks which might cause severe business disruption and are given the approach to Group and subsidiary entity dividends and carefully managed. liquidity management in general. These risks are also relevant for the longer time periods. There are not considered to be any material uncertainties over the ability of the Group to survive over the one-year time horizon. Over the next five years Risks Resilience Over the medium term key risks are: investor sentiment; market In counteracting the medium-term risks, there is more time to impacts; changes to regulation or regulatory expectations respond and take actions to manage the Group’s prospects. particularly relating to advice; and further tax changes to tackle the As already referenced, stress and scenario testing takes place, UK’s increased national debt. which provides comfort over the Group’s ability to weather storms over a five-year time horizon and adapt. The Group’s The importance of technology in the client proposition is only likely strategy is designed to navigate the threats and keep our to grow, and risks may materialise from non-traditional competitors proposition attractive for both existing and potential clients. seeking to disrupt the UK financial advice market. As the largest wealth manager in the UK, the Group is well resourced to respond effectively to regulatory change and An example of a strategic risk relates to ensuring we continue to deal with increased regulatory complexity. provide the best proposition for advisers at each stage of their journey with SJP, to support productivity and retention. Whilst the importance of technology in the advice space will grow, we believe that overall our target market will continue to value human interaction in discussing sensitive financial matters. Delivery of our technology strategy will however support clients and advisers in making the most of their interactions and drive efficiency in the back office. Ensuring that we have an excellent proposition for Partners is a core focus for the Group, and careful consideration is given to how we should evolve our proposition over time to ensure we develop and retain excellent advisers in the Partnership. St. James’s Place plc Annual Report and Accounts 2022 ### 99 Beyond 2027 Risks Resilience Strategic Report Most of the shorter term risks will remain relevant; however, We are exploring opportunities in relation to machine learning over the longer term, the impact of artificial intelligence and and other technology solutions as part of our technology strategy. machine learning in both investment management and advice This is being done cautiously to manage potential risks, but failure will become greater. to build capabilities in this space may present a greater competitive risk. Risks from climate change relating to investor sentiment and political change are already relevant now, but the consequences We have been developing our responsible investing proposition of failure to act will be felt more and more over time. We are for some years and welcome the focus in this area, as it is the right committed to be climate positive in our operations by 2025, thing to do and provides an opportunity to maximise client benefit net zero in our supply chain by 2035 and net zero in our investments through our active investment management approach. by 2050. If we fail to deliver on these commitments, then this could have a significant reputational impact within this time horizon. We are increasing the governance and measurement of delivery against our responsible business commitments to ensure confidence of delivery. Governance Financial Statements Other Information Finally, when we look five or six years ahead all current funds in ‘gestation’ will be expected to be contributing to profits and therefore increasing our expected financial resilience. Conclusion In accordance with the UK Corporate Governance Code (Provision 31), the Directors have assessed the Group’s current financial position and prospects over the next five-year period and have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due. The Directors believe that the Group’s risk planning, management processes and culture allow for a robust and effective risk management environment. ## Approval of the Strategic Report The Directors consider that the report, comprising pages ### As part of the Annual Report by the 2 to 99 of this document, meets the statutory purpose ### Directors it is a statutory requirement and objectives of the Strategic Report. ### to produce a Strategic Report. On behalf of the Board: The purpose of the report is: Andrew Croft, Chief Executive  to inform members of the Company and help them assess how the Directors have performed their duty under section 172(1) of the Companies Act 2006 Craig Gentle, Chief Financial Officer (duty to promote the success of the Company). 27 February 2023 The objective of the report is to provide shareholders with an analysis of the Company’s past performance, to impart insight into its business model, strategies, objectives and principal risks and to provide context for the Financial Statements in the Annual Report. www.sjp.co.uk ### 100 ## Governance Board of Directors 102 Corporate governance report (including section 172(1) statement) 104 Report of the Group Audit Committee 122 Report of the Group Risk Committee 132 Report of the Group Nomination and Governance Committee 139 Report of the Group Remuneration Committee 143 Directors’ report 175 Statement of Directors’ responsibilities 178 101 # Corporate governance If we are to live up to our commitment to be a leading responsible business, we must be able to demonstrate that we operate the highest standards of corporate governance, balancing the interests of all our stakeholders in our decision-making. Robust and proportionate governance will not only provide the Board and its stakeholders with reassurance but is also critical to the successful delivery of a strategy that takes account of our wider societal purpose and the interests of all of our stakeholders. Our aim within this report has been to consolidate our reporting on governance, providing context that explains how the Company's governance arrangements, and the Board's activities, have contributed to the delivery of our strategy. As a result, you will find reporting that may be found elsewhere in other companies' reports, including the section 172(1) statement. We have structured our corporate governance report (see the navigation bars at the top of the pages) so that it aligns with the sections of the UK Corporate Governance Code, as these provide a useful basis for readers' navigation. Links between elements of this report and more detailed examples in the Strategic Report that seek to outline our approaches to themes within the Code are highlighted throughout. **Paul Manduca, Chair** 1. Board leadership and Company purpose (section 172(1) statement) - See pages 104 to 111 2. Role of the Board and its responsibilities - See pages 112 and 113 3. Board composition, succession and evaluation - See pages 114 to 121 and also the Report of the Group Nomination and Governance Committee on pages 139 to 142 ## The UK Corporate Governance Code The corporate governance report on pages 104 to 121 explains how the Board leads the Company's approach to corporate governance, including an explanation of how the principles of the Financial Reporting Council's UK Corporate Governance Code (the Code) have been applied in practice. As stated in last year's Report, pension contribution rates for Executive Directors will align with the wider workforce from 1 January 2023. As this alignment did not take effect until this date, the Company did not meet the requirements of Provision 38 of the Code during 2022. The Board considers that the Company has complied with all of the other principles and provisions of the Code (available at: www.frc.org.uk) during 2022. Detailed reporting on remuneration, as required by the Code, can be found in the Directors' Remuneration Report. ## Audit, risk and internal control - See the Report of the Group Audit Committee and Report of the Group Risk Committee on pages 122 to 138 ## Remuneration - See the Report of the Group Remuneration Committee on pages 143 to 174 www.sjp.co.uk Strategic Report Governance Financial Statements Other Information ### 102 Governance ### 1 2 3 4 5 Board leadership and company purpose ## Board of Directors | Paul Manduca | NC | Craig Gentle | Emma Griffin | RK | RM | | --- | --- | --- | --- | --- | --- | | Chair of the Board | | Chief Financial Officer | Independent Non-executive Director | | | | Date of appointment | | Date of appointment | Date of appointment | | | | Chair May 2021. Non-executive Director | | Chief Financial Officer January 2018. | Non-executive Director February 2020. | | | January 2021. | | Joined St. James’s Place 2016 and appointed | Experience | | --- | --- | --- | | Experience | to the Board January 2018. | Emma has previously been a non-executive | | Paul joined from Prudential plc, where he | | director of AIMIA Inc and Enterra Holdings. | Experience was chairman for eight and a half years. From 2002-2013, Emma was a founding partner Craig joined the Company in 2016 as the of the stockbroking firm Oriel Securities, which Other previous appointments include the Chief Risk Officer. Prior to this, Craig spent was sold to Stifel Corporation. In her early chairmanships of Aon UK Limited and JPM 22 years at PricewaterhouseCoopers LLP, career Emma worked at HSBC James Capel European Smaller Companies Investment Trust 12 of which were as a Partner. During his time and Schroders. | Plc. Paul was the senior independent director | at PricewaterhouseCoopers LLP, Craig held | | | --- | --- | --- | | of WM Morrison Supermarkets Plc, a non- | a number of roles, including as a senior | External appointments | | executive director of KazMunaiGas Exploration | audit partner. Craig qualified as a Chartered | Emma is currently a non-executive director | | & Production and chairman of Henderson | Accountant in 1993. | of EDF Man Holdings Ltd and SDCL Energy | | Diversified Income Limited. Prior to this, he | | Efficiency Income Trust plc. She is also a | External appointments served as founding CEO of Threadneedle Asset non-executive director and chair of the Member of the Board, Trustee and Honorary Management Limited, global CEO of Rothschild Investment Committee of Industrial Alliance Treasurer for the Bristol Music Trust. Asset Management, director of Eagle Star and Financial Group, one of Canada’s largest Allied Dunbar, CEO, Europe of Deutsche Asset insurance and wealth management Management, chairman of Bridgewell Group companies, listed on the TSX. She is also plc and was a director of Henderson Smaller a non-executive director of the private Companies Investment Trust plc. investment companies Claridge Inc. and Solotech Inc. External appointments Chairmanships of Templeton Emerging Markets Investment Trust plc, Majid Al Futtaim Trust and W.A.G Payment Solutions Plc. | Andrew Croft | Dominic Burke | AC | RK | Rosemary Hilary | AC | RK | NM | RM | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Chief Executive | Independent Non-executive Director | | | Independent Non-executive Director | | | | | | Date of appointment | Date of appointment | | | Date of appointment | | | | | | Chief Executive January 2018. | Non-executive Director November 2022. | | | Non-executive Director October 2019. | | | | | | Joined St. James’s Place 1993 and appointed to | Experience | | | Experience | | | | | | the Board September 2004. | Dominic has significant experience in the | | | Rosemary was Chief Internal Auditor at TSB | | | | | | | financial sector and has spent his career in | | | Bank from 2013 to 2016 and previously held | | | | | Experience the insurance industry. In 2000, Dominic joined senior positions at the Financial Services Andrew joined the Company in 1993 and was the Jardine Lloyd Thompson Group plc following Authority and the Bank of England. Rosemary Chief Financial Officer from 2004 to 2017. Having the acquisition of the Burke Ford Group of is a Chartered Certified Accountant, FCCA. trained as an accountant with Deloitte Haskins companies that he had co-founded, and and Sells (now part of PricewaterhouseCoopers Rosemary was formerly a non-executive from 2005 he took on the role of group chief LLP) he then worked in the financial services director and chair of the Audit and Risk executive until the company’s 2019 sale to sector. Since joining St. James’s Place he has Committee of Record plc and of the Pension Marsh & McLennan Companies, Inc. Dominic held a number of roles within the finance Protection Fund, and a Trustee of Shelter. held the position of vice chair of Marsh & department, assuming the role of Finance External appointments McLennan until January 2022. Director in 2002 and being appointed as Rosemary is a non-executive director and the Chief Executive Officer in January 2018. External appointments chair of the Audit Committee of Willis Ltd; and He is a Trustee of the St. James’s Place Non-executive chairman of Newbury a non-executive director and chair of the Risk Charitable Foundation. Racecourse plc. Honorary treasurer Committee of Vitality Life and Vitality Health. of The Injured Jockey Fund. In 2021 she became a Trustee of the Prince’s Foundation and chair of its Audit and Risk Committee. She joined the board of the Scottish Building Society in 2022. St. James’s Place plc Annual Report and Accounts 2022 ### 103 Strategic Report Financial Statements Other Information Committee key AC Member of Group Audit Committee RK Member of Group Risk Committee NC Member of Group Nomination and Governance Committee RM Member of Group Remuneration Committee | John Hitchins | AC | RK | Lesley-Ann Nash | RK | RM | | Denotes Chair of Committee | | --- | --- | --- | --- | --- | --- | --- | --- | | Independent Non-executive Director | | | Independent Non-executive Director | | | | | | Date of appointment | | | Date of appointment | | | Full biographical details of each Director | | | Non-executive Director November 2021. | | | Non-executive Director June 2020. | | | can be found on our corporate website at | | Governance www.sjp.co.uk | Experience | Experience | | --- | --- | | John has extensive experience of the financial | Lesley-Ann has stepped down from her | | services industry gained through his career as | position as a director in the Cabinet Office | | a senior audit partner and his non-executive | of HM Government, where she spent six years | | directorships. John spent 38 years with | leading a range of large-scale commercial | | PricewaterhouseCoopers, specialising in | and consumer programmes. | financial services auditing and advisory Lesley-Ann was a managing director at Morgan services, before retiring in 2014. Since retiring Stanley from 1998-2009, having previously from PricewaterhouseCoopers he has worked at UBS and Midland Bank. She is a Fellow undertaken a number of non-executive of the Chartered Institute of Management director roles with financial services Accountants (CIMA). She was a Trustee of companies alongside a role as a senior the North London Hospice for nine years. adviser to the Financial Reporting Council. External appointments External appointments Lesley-Ann is a non-executive director of Non-executive director and chair of the audit Workspace Group plc, BusinessLDN and committee of Aldermore Group PLC and Senior Homes England. Adviser to the Financial Reporting Council. ### Simon Jeffreys AC RK NC RM Roger Yates AC RK NC RM Independent Non-executive Director Senior Independent Non-executive Director (SID) Date of appointment | Non-executive Director January 2014. | Date of appointment | | --- | --- | | Experience | Senior Independent Non-executive Director | | Simon brings experience of the auditing world | October 2018. | | and financial services. He chaired AON UK | Non-executive Director January 2014. | Limited and Henderson International Income Experience Trust plc until 2023, and was senior audit Roger brings over 30 years of investment partner with PricewaterhouseCoopers LLP from management experience. He started his career 1986 to 2006 where he also led their Global with GT Management Limited in 1981 and has Investment Management practice. Between subsequently held positions at Morgan Grenfell, 2006 and 2014, Simon was CFO and chief Invesco and Henderson Group plc, where administrative officer at Fidelity International he was chief executive officer. Most recently, and then CFO and chief operating officer at he was chair of Electra Private Equity plc and the Wellcome Trust. a non-executive director of IG Holdings plc External appointments and of J.P. Morgan Elect plc. Non-executive director and chair of the Audit External appointments and Risk Committees of Templeton Emerging Senior independent non-executive director Markets Investment Trust plc, SimCorp A/S, a of Mitie Group plc, non-executive director and listed Danish financial services software chair of the Remuneration Committee of Jupiter company, and the Crown Prosecution Service. Fund Management plc and chair of The Biotech Growth Trust plc. www.sjp.co.uk ### 104 Governance ### 1 2 3 4 5 Board leadership and company purpose ## Section 172(1) statement Section 172 of the Companies Act 2006  monitoring financial performance ### Purpose and leadership | requires a director to act in the way he | | | and reporting, and approving/ | | --- | --- | --- | --- | | or she considers, in good faith, would | A focus on long-term success | | recommending payments of | | most likely promote the success of | | | dividends; | | | Section 172 factor: | A | | their company for the benefit of its Our purpose and values (see page 8)  setting the Company’s risk members as a whole. In doing this emphasise the long-term focus of appetite, assessing the principal section 172 requires a director to have the business. The Board’s focus is on and emerging risks facing the regard, amongst other matters, to the ensuring that the Company generates Company and ensuring that following factors: and preserves value over the long adequate controls are in place term for all of its stakeholders. The to manage risk effectively; A Likely consequences of any core of our strategy is the long-term decisions in the long term;  ensuring that appropriate and relationship St. James’s Place and the effective succession planning B Interests of the company’s Partnership have with our clients, and arrangements and remuneration employees; this is what ultimately drives long- policies are in place; term value (financial and non- C Need to foster the company’s financial) for shareholders and other  implementing and ensuring the business relationships with stakeholders. The Company’s purpose effective operation of corporate suppliers, customers and others; and values influence decision-making governance procedures; and D Impact of the company’s across the business, and processes  ensuring that good client operations on the community support the Board’s aim to make sure outcomes are delivered through and environment; that decisions are consistent with the combination of the Group’s strategic objectives and the long- E Desirability of the company distinctive investment management term success of the Company. Our maintaining a reputation for high approach and the provision of culture continues to be vital to the standards of business conduct; high-quality ongoing advice. continued success of the Group and and the Board recognises it has an The strategy, and performance F Need to act fairly as between essential role in setting an appropriate against the strategy, are discussed members of the company. tone from the top, monitoring the throughout the Chair’s report, Chief business and seeking to both protect Executive’s report and Strategic In discharging our section 172 duty it and add value. Report, and a summary of significant we have regard to the factors set out topics considered by the Board during above and also other factors which Our governance framework, explained 2022 is set out on pages 108 to 111 we consider relevant to the decisions in more detail on pages 112 and 118, below, together with details of how the being made. We are also clear that is designed to ensure that the Board, Directors had regard for factors A to F decisions may impact stakeholders led by the Chair, is able to monitor the in their considerations. in different ways and so the Directors sustainability of the business model, aim to weigh up the impacts and performance against strategy and make balanced decisions. We have Reputation and standards opportunities and threats as they | set out below practical examples, | arise. When reviewing performance | of business conduct | | | --- | --- | --- | --- | | including the effect on decisions taken | against strategy, the Board looks to | | | | | | Section 172 factor: | E | | during 2022. Whilst each of the factors | ensure it continues to align with the | | | Our business exists to support presents important considerations, Group’s culture and its commitment clients to plan, grow and protect their they may not always align and we to being a leading responsible financial futures. Our ability to achieve acknowledge that not every decision business, and delivers long-term this would be materially impacted we make will necessarily result success to St. James’s Place and if we were unable to demonstrate in a positive outcome for all of its stakeholders, by focusing on: standards of business conduct our stakeholders.  providing entrepreneurial that meet clients’ and society’s leadership and direction to the (and regulators’) expectations. Failure Group in setting out its strategic to maintain appropriate standards of aims, vision and values and conduct could inevitably lead to poor overseeing delivery against client outcomes, regulatory sanctions these, including approving and/or adverse media coverage that major transactions and initiatives; could damage St. James’s Place’s reputation and the value placed on St. James’s Place plc Annual Report and Accounts 2022 ### 105 it by all of our stakeholders. Conduct and reputation are prominent in our list of principal risks (see pages 94 to Strategic Report Financial Statements Other Information 96) and we seek to minimise the risk of Inclusion and diversity case study harm to clients due to conduct issues ### through a robust control environment. The Board is clear that inclusivity is key to SJP’s future The Board looks to its Risk Committee ### success and growth and that inclusive environments to monitor conduct risks and provide ### an appropriate level of assurance to will provide foundations for diverse thought that will support the Board’s decision-making. ### in turn encourage innovation and creativity. Our reputation is best protected and improved by ensuring good client outcomes and avoiding conduct A diverse community of people from a wide variety of backgrounds, and issues. Our reputation is also shaped with a range of experiences, skills and approaches, will help us better by the image we project. With this in understand and meet the needs of clients. We embrace inclusion and mind, the Board continues to monitor diversity, not just because it’s the right thing to do, but because it makes the brand and public relations activities our company stronger. Governance to ensure they align with our purpose and long-term aims, and accurately During 2022 the Board approved updated versions of the Board Diversity depict our culture (see further Policy and the Group Inclusion and Diversity Policy. Both policies aim to information on page 8). consider diversity in the widest sense rather than focusing only on specific aspects. A primary purpose of the Inclusion and Diversity Policy is the embedding of inclusive working practices across the business, in line with Our stakeholders a framework of core principles: Section 172 factors: B C D F  Representative – Showcasing the diversity of our business and industry, The Group’s principal stakeholders are disrupting stereotypes and enhancing our talent pipeline covered in more detail on pages 9 to 14 in the Strategic Report. Whilst each  Accessible – Enabling and empowering everyone to engage; stakeholder has different drivers and eliminating barriers through adjustments expectations, success for each is not  Inclusive – Creating an environment where everyone feels they belong, mutually exclusive, as illustrated by and their input is valued the alignment between the interests of the Partnership, clients and  Avoiding bias and group-think – Actively seeking out and engaging employees when it comes to a range of voices and perspectives, taking steps to recognise and delivering successful client outcomes. mitigate bias and blind spots from the start. We explain on pages 25 to 33 how successfully implementing our In 2020 SJP set public commitments to achieve 33% female representation strategy will ensure the Company on the Board, 30% in senior roles and 10% ethnic minority representation will continue to act in accordance across all UK roles by September 2023. While progress in recent years has with its purpose and values and presented some challenges, including the weakness in the wider industry achieve its vision. Successful pipeline, we have seen some of the actions taken by management implementation will also deliver bearing fruit. Changes to policy and practice within the business – for against the expectations of all our example, improved recruitment initiatives, increased mentoring and stakeholders and we provide more networking opportunities and flexible working policies – have gained detail on how we engage with each traction. We are now on track to meet our female representation overleaf, together with an indication commitments, and during 2022 there was an increase in minority of where more detail can be found ethnic hires (see page 60 for further information). However, the Board throughout this Annual Report. acknowledges that further work is needed in this area. Not all engagement is directly As outlined on page 142, during 2022 the FTSE Women Leaders targets were between stakeholders and the Board. updated. The FCA also introduced updated Listing requirements requiring Where engagement is not with the a ‘comply or explain’ statement in relation to the following revised diversity Board, the output informs business- targets: at least 40% of the Board being women; at least one senior board level decisions made by management, position being held by a woman; and at least one member of the board an overview of which is fed back to the being from a minority ethnic background. The new disclosure requirement Board through regular reporting and will be mandatory from 2023 and the Group Nomination and Governance focus on strategic topics. Committee is already taking this into account in its succession planning. Overall, the Board is pleased with progress and sees evidence that inclusion and diversity is embedded in SJP’s culture, forming a part of everyday language. Inclusion and diversity will remain at the forefront of the Board’s thinking in 2023 as we continue to strive for a diverse and inclusive culture that enables SJP to attract, retain and develop talented people from all walks of life. www.sjp.co.uk 106 Board leadership and company purpose ## Section 172(l) statement continued ### Advisers Communication and engagement with our advisers is delivered through a range of different approaches, from ongoing relationship management and development events to specific consultations. We utilise digital communication platforms but place great importance on face-to-face engagement through corporate-led or locally arranged events, including individual meetings, regional and national conferences and our Annual Company Meeting. During 2022 we expanded the calendar of events for our communities where they can network, share best practice and/or develop their skills and knowledge. Given the scale of our adviser base, we recognise that a blended approach to consultation will provide us with a greater depth of engagement and insight. In 2022 our consultations with advisers included deep dive interviews in relation to key projects, workshops with advisers and their support staff, and the introduction of a platform enabling us to understand the views of our advisers at scale. We have also continued to carry out surveys across our entire adviser population, which enable us to measure sentiment over time. ► Further information on advisers in this Annual Report can be found on pages 6, 10, 18, 20-21, 24, 28, 95, 108-110, 117, 119, 129, 136, 151, 163 and throughout the our responsible business section on pages 34-65. ### Employees Effective and timely engagement with employees has always been an integral part of St. James's Place's culture. In 2019 we established our first formal workforce engagement committee to support the Board's engagement with our employees. During 2021 we reviewed the effectiveness of the Board's chosen mechanism for workforce engagement. Our review concluded that there were opportunities to enhance the two-way engagement, and so in 2021 we established, in place of the previous workforce engagement committee, a panel of employee-nominated representatives to assist our designated Non-executive Director responsible for workforce engagement. The role of this panel was embedded further during 2022 and the panel met quarterly to cover issues such as remuneration, communication, inclusion and diversity and hybrid working; they gave input to pulse survey themes and made recommendations to address some of the main employee survey findings. The Panel is engaged in ensuring an effective two-way dialogue with the Board. Part of the responsible Non-executive Director's role is to report back to the Panel on the Board's discussions, which Lesley-Ann does at each meeting. Panel members are charged with relaying and discussing the key areas of activity and focus with the workforce in their own areas. The engagement overseen by the Panel also provides management with valuable insight to support key decisions it makes. ► Further information on employees in this Annual Report can be found on pages 7, 12, 18, 28, 95, 108-110, 117, 121, 129, 136, 151, 163, 177, and throughout the our responsible business section on pages 34-65. ### Clients Engagement with clients is largely driven through their ongoing relationship with their adviser, and this provides the primary means of sharing information with St. James's Place's clients. Regular client meetings provide an opportunity for clients to share their views and to ask any questions they may have. To enable us to get closer to clients' views and understand their experiences and expectations we have established a client community. This client community enables us to seek client input to inform developments, explore their views on key topics, and test their understanding of key client-facing material or regulatory letters. Our understanding of clients' interests is further enhanced by regular client surveys and targeted market research. Whilst no organisation likes to receive complaints, the Board and the Group Risk Committee regularly consider complaints reporting, which provides a further client lens. Going forward the Board will be required to approve annually an assessment of whether SJP is delivering good outcomes for clients consistent with the FCA's new Consumer Duty. Our engagement with clients will provide valuable insight and evidence to support these assessments. ► Further information on clients in this Annual Report can be found on pages 4, 11, 16, 18, 20-21, 24, 30, 94, 108-110, 117, 121, 129, 135, 151, 163 and throughout the our responsible business section on pages 34-65. ### Society St. James's Place has advisers, clients, shareholders and employees, but we also care deeply about the role we play in wider society. 'Society' can be defined broadly and includes, government, regulators, suppliers, research and academic bodies, the third sector and consumer groups, as well as the wider communities in which we operate. Cultivating strong and mutually beneficial relationships with these groups has ensured our values and aims are aligned and we seek to build and maintain long-term relationships with all groups, based on mutual trust. We are currently stepping up our efforts to engage with a range of stakeholders and to ensure we have a voice on the issues in society where we can most constructively contribute, such as exploring the themes around the value of advice to society. Amongst other things, this involves working with academic and research institutions, being as helpful as we can in supporting governments and regulators to achieve their policy goals, and engaging meaningfully with our suppliers and local communities. Our activities range from proactive meetings, supporting policy initiatives, sharing our technical expertise to help solve societal problems, responding to consultations, and ultimately learning from and teaching the many stakeholders we engage with. ► Further information on society in this Annual Report can be found on pages 7, 13, 19, 20-21, 24, 32, 96, 108-110, 117, 129, 138, 152, 163, 183 and throughout the our responsible business section on pages 34-65. St. James's Place plc Annual Report and Accounts 2022 107 ## Shareholders We continue to maintain close relationships with institutional shareholders through direct dialogue and frequent meetings, and we also meet regularly with the Group's brokers who in turn facilitate meetings with investors and their representatives. Regular dialogue is an important way of staying informed of the views of investors, and periodic meetings with them provide an insight into the considerations that drive their views of us an organisation. Examples of how we engage are set out below. | How we address your needs of you | Opportunity management | | --- | --- | | **Institutional shareholder roadshows and conferences** | 2022 saw a return to a fuller programme of in-person shareholder roadshows and investor conferences, supplemented by virtual engagement. We conducted roadshows in the UK and overseas, meeting shareholders in the United States, Australia and various European destinations. Some roadshows were arranged to specifically give investors the opportunity to discuss our full-year and half-year results, whereas others were scheduled away from key reporting periods, leading to discussion of a broader range of strategic and operational topics. We attended conferences organised by a number of brokers, again both in the UK and overseas, providing shareholders with further opportunity to engage with senior management via one-to-one and group meetings. We also had a number of ad-hoc engagement events with shareholders. Together, these engagements provided the Directors with opportunities to gain insight into institutional shareholder views and expectations, and to address specific queries. | | **Investor studies** | Whilst we did not commission any further studies in 2022, the findings of the investor study commissioned in 2018 and the insight from the studies carried out in relation to our brand review in 2021 have provided valuable insight from existing and potential investors. We will continue to use investor studies to deliver data that provides the Board with an opportunity to assess in more detail its investor base, investor behaviour, drivers of share price performance and investors' perception of a number of key aspects of our business model. | | **Individual shareholder meetings** | The Group's largest institutional investors continue to meet regularly with the Executive Directors and the Chair, providing an opportunity for them to raise specific queries. The Chair, Senior Independent Director and other Non-executive Directors are available for consultation with shareholders on request, and contact major shareholders at least annually to offer opportunities to meet. During 2022, the Chair and the Chair of the Group Remuneration Committee have met with a number of shareholders as part of regular engagement activity and in response to requests from investors to discuss specific matters of interest to them. | | **Direct correspondence with major shareholders** | As suggested in the Code, the Chair, Senior Independent Director and Committee chairs seek engagement with major shareholders on significant matters as they arise. The Chair of the Group Remuneration Committee wrote to shareholders during the year to explain proposed changes to the Remuneration Policy for Executive Directors, and subsequently met and/or corresponded with a number of shareholders who provided feedback (further information can be found in the Directors' Remuneration Report on page 144). | | **Annual General Meeting** | Subject to the circumstances prevailing at the date of the meeting, all Directors will be available to meet with shareholders after the Company's Annual General Meeting, which will be held on 18 May 2022 and of which further details are set out in the Notice of Annual General Meeting. | ► Further information on shareholders in this Annual Report can be found on pages 14, 108–110 and 144. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 108 Governance ### 1 2 3 4 5 Board leadership and company purpose ## Section 172(1) statement continued ### What the Board did in the year Each year we provide an overview of the key areas of the Board’s focus. This is incorporated within our section 172(1) statement which enables us to explain better how each topic aligns with our strategy and how the Board considered stakeholder interests in its decision-making. The Board’s activities are not limited to the formal Board meetings at which decisions are made. The Board’s decision-making is supported by a much wider range of engagements with the business which include training, development and focus sessions, further details of which can be found under the Planning and preparing and Directors’ development sections later in the corporate governance report. Although not an exhaustive list of the Board’s activity in 2022, we have included below examples of significant topics that were considered. Stakeholder | Board topic | interests Engagement Outcomes/influence | | | | --- | --- | --- | --- | | Operational excellence – 2022 represented the | Shareholders, | The focus of investment | The Board has been appraised | | second year of our five-year plan to invest in | advisers, | (both in terms of finance and | of the insight gained from our | | operational excellence. Operational excellence is | employees | resource) has been informed | engagement with advisers, | | about leveraging technology to make it easier to | and clients | by engagement with and | employees and clients and | | do business, whether that be for clients, advisers, | | feedback received from | this enabled it to encourage | | employees or third parties, and our 2025 journey | | our advisers, clients and | management to focus on | | will ensure we are beyond ‘levelled up’ in terms of | | employees – both through | how it prioritises both the | | technology and are able to offer a leading digital | | informal interactions and via | areas chosen and the pace of | | platform. The 2025 technology roadmap will | | surveys and research. Pilots | investment. Feedback received | | provide a ‘next generation’ client, adviser and | | have also been important | throughout the year has helped | | employee experience, and during the year the | | exercises across all elements | us to learn how we can improve | | Board was presented with an enhanced | | of the operational excellence | our communication during this | | technology dashboard which allows members | | programme and have helped | and other significant | | to track progress with projects more closely as | | guide the development of new | programmes of work in the | | well as business-as-usual technology operations. | | functionality and systems and | future, as well as how to ensure | | One such project is the new SJP app which | | the design of user interfaces, | we proactively manage roll-out | | launched in 2022. It aims to provide an on- | | including the new SJP app. | to stakeholders in ways that | | demand portal for clients, supporting our | | | minimise disruption and | | advisers to manage and service them. Further | | | maximise engagement. | developments have included the recruitment of a Chief Data Officer who is accountable for data leadership and the establishment of a business improvement and automation programme which aims to enhance working practices to achieve greater efficiency, assurance and added value for stakeholders. | Administration – The migration of our back- | Shareholders, | Our back-office administration | Feedback from advisers, in | | --- | --- | --- | --- | | office administration systems to Bluedoor was | advisers, | has a direct impact on our | particular, emphasised to the | | a critical part of setting SJP up for the future. | employees | advisers and clients and the | Board the significant impact | | Since migration of the core UK business has been | and clients | Board receives both direct | the administration has on their | | completed, functionality that the system can | | and indirect feedback on | day-to-day work. The Board | | provide has begun to be utilised. This includes | | challenges that can arise. As | is clear that administration | | functionality to support advisers such as straight- | | much of the administration is | should remain a key area of | | through processing and self-service mechanisms, | | carried out by our strategic | focus and continues to monitor | | as well as refining manual processes and using | | partner SS&C it is important to | both service levels and the | | automation to drive efficiencies. We have also | | work closely with them, and | delivery of enhancements. | | introduced enhanced case tracking for advisers | | during the year the Board met | Our engagement with SS&C | | and are launching an advice assistance AI driver | | with representatives of SS&C, | provided the Board with | | to augment the advice process, to make tasks | | gaining greater insight not only | assurance that both | | quicker for advisers and provide assurance | | into SS&C as an organisation | management and SS&C | | over quality of advice by design. This has been | | but also cultural alignment and | were committed to delivering | | piloted with advisers, having been developed | | the practicalities of working | the best outcomes for clients | | in partnership between SJP and SS&C, together | | with SJP. | and advisers both now and | | with Intellect and Salesforce. During 2022, | | | into the future, focusing in | | the planned migrations of the core platforms | | | particular on reducing the | | for our international and Rowan Dartington | | | number of cases that are not | | businesses to SS&C also progressed. | | | processed correctly first time. | It also helped provide the Board comfort that the teams of employees working within SS&C were culturally aligned with SJP. St. James’s Place plc Annual Report and Accounts 2022 ### 109 Stakeholder Board topic interests Engagement Outcomes/influence Strategic Report Financial Statements Other Information Investment proposition and performance – Shareholders, Our clients, advisers and fund Whilst the expectations of During the year the Board continued to monitor advisers, managers provide us with our clients and advisers helped the investment management strategy, which employees, regular feedback in a range to shape the planned future focuses on improving investment performance, clients and of ways that help guide our evolution of the IMA, the creating capacity and responsible investment. society focus on meeting client needs. feedback we receive from The Value Assessment Statement (VAS), now in The VAS also provides an stakeholders also delivers its third year, remains a helpful tool for the Board important reference point for insight into shifts in client to keep an eye on progress. The appointment our stakeholders, including our expectations and requirements, of Tom Beal as Director of Investments during regulators, and helps to clarify and provides a key indication the latter half of the year was a key point client and adviser expectations. that the changes we are for the Board to ensure the strategy remained It also helps shape our making are having the desired appropriate. For our investment management reporting to enable clients impact. Engagement with our approach (IMA) to deliver the right outcomes for and advisers to monitor regulators has also helped clients we believe it is important to be clear on and evaluate the performance inform our consideration of the value it creates for them. To support Partners of our funds. where further development Governance and clients, we believe it is essential for us to is required in our reporting simplify our investment offering and provide to clients. a compelling single SJP investment proposition that delivers the flexibility to support clients’ needs as their plans or circumstances change. | Responsible business (including net zero) – | Shareholders, | Year on year we have seen | There has been a clear shift | | --- | --- | --- | --- | | As disclosed in last year’s report, we | advisers, | increased interest from all | in recent years in expectations | | acknowledge that what is perceived as being | employees, | stakeholders in what many | for businesses and society to | | a responsible business is constantly evolving, | clients and | term environmental, social | demonstrate that they are | | and 12 months on from agreeing our Responsible | society | and governance (ESG) issues. | committed to addressing | | Business Framework, the external environment | | Our Responsible Business | today’s biggest systemic | | has changed dramatically. What it means to | | Framework is the culmination | issues, including climate | | be a responsible business will differ between | | of over 100 engagements | change and social inequality. | | organisations but for SJP it means being | | with internal and external | We disclosed last year that the | | committed to helping our clients and | | stakeholders and a Responsible | Board agreed a responsible | | communities to create the futures they want. | | Business Advisory Group was | business strategy, and in | | In recent years we have openly recognised that | | established in 2022 with the | 2022 the Board endorsed the | | the most significant influence we can have is | | aim of driving progress. Our | underlying goals and narrative. | | via the management of the funds we oversee | | regulators and shareholders | These goals have been shaped | | for our clients. Our ambition to be a leading UK | | continue to provide valuable | by the expectations of our | | responsible business is a long-term aspiration, | | guidance on their expectations | stakeholders and we expect | | one which requires us to develop a deep | | via direct engagement and | them to continue to evolve over | | understanding of our material topics, establish | | the publication of their | time with ongoing engagement | | initial goals, develop these and track our | | own statements. | informing our decisions. Further | | progress. This year we have concentrated on | | | details on our commitments | | developing our goals, which represent good | | | can be found on page 35 of | | practice and align to each of the four strategic | | | the our responsible | | priorities. More information can be found in | | | business section. | the our responsible business section. Advisers – The face-to-face financial advice that Shareholders, The challenges we, like many The feedback and insight is provided to SJP’s clients is delivered exclusively advisers, businesses, have faced in the provided by advisers and by our advisers, with whom we enjoy a symbiotic employees last couple of years have employees assisted relationship. Supporting our advisers is the and clients spotlighted areas that require management in refining and, key function of our business but as it has grown the focus of the Board and where necessary, revising the in size and matured over time, the needs of management. Although not all support model with a view to advisers have also developed. Partner businesses challenges have been driven delivering the quality of service vary significantly in terms of scale, experience, by the impact of the pandemic, provision and business growth focus and motivations and it is critical that the impact that it had on our required to achieve our SJP continues to evolve its approach to ensure ‘high-touch’ relationship with strategic objectives. Directors’ that every Partner business receives the support our advisers helped to highlight own engagement with advisers necessary for it to continue to deliver best-in- the need to develop an agile and the results of formal class service to clients. and flexible approach to engagement activities helped support them and take to provide the Board with account of their varied needs assurance that the support and requirements. Via surveys model would meet the and direct engagement our needs of our advisers and advisers have delivered insight Partner businesses, whilst that has informed changes also underpinning our to our support model. medium- and long-term strategic objectives. www.sjp.co.uk ### 110 Governance ### 1 2 3 4 5 Board leadership and company purpose ## Section 172(1) statement continued ### What the Board did in the year continued Stakeholder | Board topic | interests Engagement Outcomes/influence | | | | --- | --- | --- | --- | | Culture – Having articulated clearly our vision, | Shareholders, | The Board receives regular | Ongoing insight from | | purpose and values during 2021, there was focus | advisers, | updates on the ongoing | management, coupled with | | in 2022 on specific culture objectives which | employees, | ‘culture programme’ which | ‘deep dive’ reviews, has helped | | spanned employees, suppliers, advisers, | clients and | we established to support the | the Board to hone in on what | | shareholders and society. The Board received | society | embedding of the culture vision | matters to our key stakeholders | | updates on these objectives which included | | within the business and to | from a culture perspective. | | embedding and monitoring the culture vision | | determine the means for | Although we appreciate the | | among all our employees, engaging with key | | monitoring the evidence of our | need to be sensitive to the | | suppliers to set our expectations, and developing | | culture in action. Our workforce | cultures of individual Partner | | a cultural contract with our advisers. The Board | | engagement activity has also | businesses, engaging with | | has been able to monitor the current culture | | provided important employee | our advisers in relation to SJP’s | | at SJP against the vision set out in our values | | and cultural indicators, with | own culture is helping us | | of doing the right thing, being the best version | | Lesley-Ann Nash’s role as the | to not only establish what | | of ourselves and investing in long-term | | nominated Non-executive | should be expected from | | relationships. | | Director for Workforce | us, but also to understand | | | | Engagement providing the | whether their experiences | | | | Board with a direct means of | align with our culture. | engagement. We have also continued to engage and set expectations with key suppliers and plan to introduce a new supplier code of conduct. | Partner business financing – Supporting the | Shareholders, | The importance of Partner | Engagement with advisers | | --- | --- | --- | --- | | development of Partner businesses and | advisers and | lending is appreciated by our | together with clear messaging | | facilitating the sale and purchase of businesses | clients | long-standing shareholders, | on the importance of | | to other advisers within the Partnership through | | but we continue to engage with | succession planning has | | the provision of finance has always been a core | | all shareholders to help them | assisted in the development of | | part of the Group’s business model. This ensures | | understand how fundamental it | an approach to Partner lending | | continuity of advice provision, which is directly | | is to our business model. | and financing that is longer | | in the interests of clients and the long-term | | Continuous engagement with | term in nature and supports | | sustainability of the Group. The Partnership is | | the Partnership also allows us | the ongoing advice to and | | made up of over 2,500 Partner businesses that | | to assess demand and trends | servicing of clients. It has | | vary in terms of scale and focus. As we have | | in Partner businesses that may | also provided the Board with | | grown, so have many of these businesses and | | impact the future demand for | assurance that the existing | | inevitably those Partners who have been with us | | lending. Our approach to | Partner lending plan is robust | | the longest will contemplate their own retirement | | Partner lending supports | and aligned to our strategic | | at some point. During 2022, the Board saw not | | regular lending and also | objectives. Further engagement | | only excellent identification and management | | continues to develop to meet | during 2022 has helped us to | | of capacity to support Partner lending, but also | | the longer-term requirements | also shape our thinking around | | improvements in the processes and disciplines in | | for Partners in larger or more | succession planning, which has | | place to manage transactions. This has benefited | | complex businesses. Alongside | in turn allowed us to explore | | both Partners and SJP. | | the provision of finance, | how the provision of financing | | | | feedback from clients helps | could expand to encompass | | | | shape how we support Partners | different methods to suit | | | | to deliver continuity for clients | specific needs. | and employees of Partner practices when ownership of businesses transfers. St. James’s Place plc Annual Report and Accounts 2022 ### 111 Strategic Report Financial Statements Other Information Governance Consumer Duty case study ### The FCA’s Consumer Duty (the Duty) comes into force on a phased ### basis on 31 July 2023, and has been a key focus for both the Board ### and the wider SJP community during 2022, as the Duty has ### implications not only for our clients but for all of our stakeholders. The Board considers SJP’s culture to be already aligned with the aims of the Duty, but is clear that there are areas for improvement that would support the Board’s ongoing assessment of how the Duty is being met. Both the Group Risk Committee and the Board have received regular updates throughout the year on progress in assessing the implications of the Duty for SJP and establishing an implementation plan that will enable the Board and its subsidiaries to meet their ongoing reporting obligations. In consultation with the boards of its impacted subsidiaries, the Board concluded that it was appropriate to approach implementation of the new rules from a Group perspective and in October 2022 the Board approved an implementation plan. The Board has also appointed a designated Consumer Duty Non-executive Director Champion, John Hitchins, who is responsible for ensuring that the Duty is being discussed regularly and raised in all relevant discussions at meetings of the Board and its committees, as well as challenging management on how the Duty is being embedded and how SJP is focusing on customer outcomes. The Board recognised at an early stage that the Duty would be a significant development and has been keen to ensure that Directors and subsidiary directors are kept appraised of developments and provided with context and insight that will help provide assurance that SJP remains on the right track. Board development sessions have helped to increase the Directors’ understanding and knowledge of the subject, focusing in depth on the rules and associated guidance of the Duty, the expectations of the FCA and how these translate to the Board’s oversight responsibilities. The Board has also received guidance from external consultants on the wider implications of the rules and emerging practices from across the industry. At SJP, we believe we are starting from a solid base to deliver the requirements of the Duty, as one of our key priorities, and a central pillar of our culture, has always been to put clients first and to deliver good client outcomes, which is echoed in our Company values to do the right thing and invest in long-term relationships. The Duty sets a clear and high standard for firms in dealing with retail customers and we welcome this desire to increase the reputation of, and trust in, the financial services industry. We are committed to ensuring compliance with the Duty. www.sjp.co.uk ### 112 Governance ### 1 2 3 4 5 Role of the Board and its responsibilities ## The role of the Board ## and its responsibilities ### Powers of Directors ### Division of responsibility The powers of the Directors are set out in the Company’s Articles of The job descriptions of each Director, including the Chair and Chief Association (the Articles), prescribed Executive, and the division of responsibilities between them are clearly by Special Resolutions of the Company defined and agreed by the Board. The responsibilities of each of the and codified in UK company law. The Directors and the role of Secretary are summarised below. Articles contain, for example, specific provisions and restrictions concerning The Board the Company’s power to borrow money. They also provide Directors Leadership Independent oversight with authority to allot unissued shares, Chair Senior Independent up to pre-determined levels set and Responsible for the leadership Non-executive Director approved by shareholders in general of the Board and its continuing Responsible for providing a sounding meetings. The Articles can be effectiveness; and for ensuring board for the Chair; for serving as an amended by a special resolution of that the Board is satisfied that intermediary for the other Directors, the members of the Company, and a the Group’s purpose, values when necessary; for leading the copy can be found on the Company’s and strategy align with its culture appraisal of the performance of website. Our shareholders have and that communication between the Chair; and for being available to granted the Directors authority to the Executive and Non-executive shareholders as a point of contact make charitable donations, and Directors, as well as with if they have concerns which contact | further details on the donations | shareholders generally, is effective. | through normal channels has failed | | --- | --- | --- | | made can be found on page 177. | | to resolve or for which such contact | | | Chief Executive | is inappropriate. | At the 2022 Annual General Meeting Responsible for the development (AGM), shareholders granted authority and communication of the Group’s Independent Non-executive to the Directors for the purchase by strategy; for developing and Directors the Company of its own shares, with achieving the business objectives; Responsible for contributing to the such authority expiring at the end for leading and motivating an entrepreneurial leadership of the effective senior management of the 2023 AGM, or 30 June 2023, Group, within a framework of prudent team; and for ensuring an whichever is the earlier. The Company and effective controls. Non-executive appropriate culture is adopted did not purchase any of its own Directors provide independence, in the day-to-day management impartiality, experience, specialist shares during 2022 but the Directors of the Group. knowledge and other diverse personal will propose the renewal of this skills and capabilities. In some cases authority at the 2023 AGM. Chief Financial Officer Non-executive Directors take on additional oversight responsibilities Responsible for providing Further to the powers granted above, as is the case in relation to workforce leadership and direction for, the Board maintains a full schedule engagement and championing the and oversight of, the financial, of matters reserved to it together with Consumer Duty. accounting, tax, capital, liquidity a Group Management Responsibilities and unit pricing activities of the Map which sets out the senior Group; and for maintaining manager functions, prescribed effective investor relations. responsibilities and control functions Company Secretary within each subsidiary of the Group Responsible for guiding the Board in The Chief Executive has appointed an (as applicable). The Group meeting the requirements of relevant executive committee (the Executive Management Responsibilities Map legislation and regulation and for Board) to support him in fulfilling his ensuring that Board procedures are includes, inter alia, terms of reference responsibilities for developing strategy both followed and regularly reviewed. for the various Board Committees, a for the Board’s approval, communicating schedule of the Company’s policies and implementing the Group’s business Directors have access to the advice plan objectives, ensuring that the and detailed job descriptions for each of the Company Secretary at all times, necessary resources are in place in of the Directors. as well as independent professional order to achieve the strategy and those advice where needed, in order to objectives, and managing the day-to- assist them in carrying out their duties. day operational activities of the Group. The Executive Board comprises the Executive Directors of the Board and other members of senior management. St. James’s Place plc Annual Report and Accounts 2022 ### 113 ### Planning and preparing The Chair is responsible for setting the Board agenda together with the Chief Executive and the Company Secretary. The Group’s strategy and business plan provide the basis for the forward Board agenda for the year and this is refined Strategic Report Financial Statements Other Information as key topics and strategic priorities emerge. The Board’s forward agenda is coordinated with those of its Committees to ensure that topics are given sufficient coverage in the most appropriate forums. The Chairs of the various Committees and material subsidiaries report on their activity at each Board meeting and liaise with the Chair to ensure items escalated from the Committees get sufficient time and focus on Board meeting agendas. The Board and other key Director forums are explained in more detail below. The work undertaken by the Board Committees is covered in more detail in the individual Committee reports. See pages 122 to 174 Scheduled Board meetings follow an agreed format with the final agenda being set by the Chair, Scheduled Chief Executive and Company Secretary by reference to the forward agenda and having considered Board key developments since the previous meeting. This approach ensures that coverage of the Board’s meetings Governance key responsibilities is balanced against the need to focus on strategic priorities and address topical matters. The papers for each meeting, which include an Executive Report covering key developments in the business and performance indicators, are sent to the Board a week ahead of the meeting. This ensures that the information is timely and that the Directors are able to prepare for the meetings. From time to time, the Board is required to hold meetings outside of its planned schedule, to consider Ad-hoc Board topics that require immediate attention or to approve Board appointments or transactions. meetings Meetings are held on an ad-hoc basis, when topics arise that warrant an informal discussion or Non- where the Chief Executive wants to provide an update on performance where the gaps between executive formal Board meetings are longer. Director performance updates The Board regularly has working dinners, usually on the nights before Board meetings, to allow the Board Directors greater time to consider topics that warrant a more discursive approach. From time to time working and where relevant, additional internal and external participants are invited to the dinners to present dinners on these topics. Focused strategy meetings are held each year to enable the Board and management to reflect on, Strategy debate, refine and agree the Group’s strategy. meetings The independent Non-executive Directors meet privately with the Chair during the year, to consider Non- matters arising from Board meetings. They also meet without the Chair to consider his performance. executive Director meetings Directors are provided with development sessions on specific topics during the year. Further details Development can be found on page 117. sessions The Board also appoints ad-hoc committees from time to time to manage procedural matters Other relating to decisions it has made. meetings www.sjp.co.uk 114 Governance Board composition, succession and evaluation # Board composition, succession and evaluation The Board and its committees have a combination of skills, experience and knowledge. Our succession plans aim to promote gender, social, ethnic and cognitive diversity. ## Composition As explained on page 142, embracing diversity is one of our core cultural values and in 2022 the Board updated its Board Diversity Policy which aims to consider diversity in the widest sense rather than focusing only on specific aspects of diversity, to ensure that the Board composition features a range of perspectives, insights and the cognitive diversity needed for good decision-making. The Board recognises that it is on a journey towards improving diversity but made progress during 2022. The Board met the target set by the Parker Review throughout 2022 and as at the date of this report. Following the resignation of Ian Gascogne in March 2022, the Board was also meeting the target set by the Hampton-Alexander Review although the appointment of Dominic Burke in November 2022 means that the proportion of women on our Board will be below the 33% target for a short period. However, when appointing Dominic, the Board was fully aware that the proportion of women would rise to 37.5% when both Simon Jeffreys and Roger Yates step down after the AGM in May 2023. The Board is clear that it has a key role in overseeing and supporting the drive for diversity at all levels of the organisation. The benefit of diversity of thought is not achieved simply by meeting targets, however, and the Board and Group Nomination and Governance Committee are cognisant that the underlying committees and subsidiary boards will broadly be reflective of the overall diversity across the Group. Each of those committees and boards will have smaller memberships (where individual changes could have material impacts on diversity ratios) and could require specific skills or experience which are vested in a smaller subset of existing Directors and managers. We are also aware that diversity based on demographic factors can be easier to demonstrate than the diversity of backgrounds and cognitive diversity which help to shape the multi-dimensional conversations and the debates we experience in Board meetings. The broad range of backgrounds and experiences, gained both within and outside the financial services sector, on our Board, supports wide-ranging conversations that reflect and recognise the interests of all of our stakeholders. Further information on inclusion and diversity can be found in the Nomination and Governance Committee Report on page 142. ## Independence The Board determined that the Chair was independent on appointment and believes that all of the Non-executive Directors continue to demonstrate their independence. When determining independence, the Board considers each individual against the criteria set out in the Code and also considers how they conduct themselves in Board meetings, including how they exercise judgement and independent thinking. Notwithstanding the Board's determination that all of the Non-executive Directors are independent, it notes that Simon Jeffreys and Roger Yates had notified it of their intentions to retire from the Board following the 2023 AGM, by which time they will have served nine years on the Board. The Board notes that Paul Manduca and Simon Jeffreys are both currently directors of Templeton Emerging Markets Investment Trust plc but it is satisfied that the common directorship does not impair either Directors' independence. Further information can be found in the Nomination and Governance Committee Report on page 139 and 142 ### Gender ![img-10.jpeg](img-10.jpeg) Female 3 Male 7 ### Ethnicity ![img-11.jpeg](img-11.jpeg) White 9 Minority Ethnic 1 ### Tenure ![img-12.jpeg](img-12.jpeg) 0-3 years 4 4-7 years 3 8+ years 3 St. James's Place plc Annual Report and Accounts 2022 ### 115 ### Board and Committee structure and attendance Our Non-executive Board Strategic Report Financial Statements Other Information Committees There are four wholly Non-executive Committees of the Board. The Chair of the Board is a member of, and chairs, Group Audit Group Risk Group Nomination Group the Group Nomination and Committee Committee and Governance Remuneration Governance Committee. All of the Committee Committee other members of these Committees Chair: Chair: Chair: Chair: are independent Non-executive Simon Jeffreys Rosemary Hilary Paul Manduca Roger Yates Directors. Further information on these Committees can be found in their Report on Report on Report on Report on separate reports on pages 122 to 174. page 122 page 132 page 139 page 143 Attendance in 2022 Governance Nomination and Remuneration Director Board (total 6) Audit (total 6) Risk (total 6) Governance (total 4) (total 5) Dominic Burke (appointed 1 November 2022) – – Andrew Croft (CEO) – – – – Ian Gascoigne (stepped down | 31 March 2022) | – – – – | | --- | --- | | Craig Gentle | – – – – | | Emma Griffin | – – | | Rosemary Hilary | (Chair) | | John Hitchins | – – | | Paul Manduca (Chair) | – – (Chair) – | | Simon Jeffreys | (Chair) | Lesley-Ann Nash – – Roger Yates (SID) (Chair) Attendance Non-attendance This table provides details of scheduled meetings held in the 2022 financial year and the attendance at each meeting of the members of each Board/Committee. Rosemary Hilary joined the Group Remuneration Committee on 1 August 2022. Dominic Burke joined the Group Audit and Risk Committees on 1 November 2022. Other forums reporting to the Board In addition to the wholly Non-executive Committees, the Board has also delegated specific responsibilities to three further Committees. The terms of reference of these forums are regularly reviewed and are included in the Group Management Responsibilities Map. Forum Purpose Comprises the Chair, Senior Independent Director, Chief Executive and Chief Financial Officer Group Defence and its purpose is to monitor dealing in the Company’s shares with a view to being prepared Committee in the event of a formal bid for ownership of the Company and to oversee engagement with activist investors. Comprises the Chief Executive and Chief Financial Officer and is responsible for identifying Group Disclosure matters to be disclosed to the market. Committee Comprises the Executive Directors and its purpose is to assist the Board in fulfilling its Group Share Scheme responsibilities for operating and administering executive, employee, adviser and restricted Committee share plans. www.sjp.co.uk ### 116 Governance ### 1 2 3 4 5 Board composition, succession and evaluation ### Directors’ appointments The Board has a responsibility to ensure that appropriate succession plans are in place for the Board and senior management. Details of progress made in the year can be found in the Report of the Group Nomination and Governance Committee. A summary of key aspects of Directors’ appointments are set out below: Appointment, The Articles permit Directors to appoint additional Directors and to fill casual vacancies. Any Directors appointed must stand for election at the first AGM following their appointment. All other Directors will stand for re-election replacement at each AGM. Directors can be removed from office by an ordinary resolution of shareholders or in certain other and re-election circumstances as set out in the Articles. of Directors Before a Director is proposed for re-election by shareholders, the Chair considers whether his or her performance continues to be effective and whether he or she demonstrates commitment to the role. After careful consideration, the Chair is pleased to support the re-election of all Directors at the forthcoming AGM. Each Director brings significant skills to the Board as a result of their varied careers and we believe that this diversity is essential to the mix of skills and experience needed by the Board and its Committees in order to protect the interests of the Company’s shareholders. As in previous years, the Board is recommending to shareholders that all the Directors retiring at the forthcoming AGM be re-elected, and further information can be found in the Notice of Meeting for the forthcoming AGM. Duration of Non-executive Directors, other than the Chair, are appointed for a specified term and the Executive Directors have service contracts. Copies of the terms and conditions of appointment of all Directors are available for inspection appointments at the registered office address and will be available for inspection at the Company’s AGM. Terms of The Executive Directors have service contracts with the Company that provide for termination on 12 months’ notice from either the Company or the Director (except in certain exceptional recruitment situations where a shorter or appointment longer notice period from the Company may be set, provided it reduces to a maximum of 12 months within a specified time limit). Service contracts do not contain a fixed end date. The Company does not have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a takeover, except that provisions in the Company’s share schemes may, in certain circumstances, cause share awards granted to employees under such schemes to vest on a takeover. Time Non-executive Directors are expected to commit sufficient time to enable them to undertake their responsibilities and, as explained in the Report of the Group Nomination and Governance Committee, their capacity to fulfil their commitments responsibilities is reviewed on an ongoing basis so that the Board can be satisfied that each Non-executive Director commits sufficient time to the business of the Company. Paul Manduca was appointed as Chair in May 2021 and devotes a significant proportion of his time to the role. In conjunction with the Senior Independent Director, he regularly assesses his commitments and continues to manage his portfolio of other activities to ensure that he has sufficient time to meet the requirements of the position. He currently also chairs Templeton Emerging Markets Investment Trust plc, Majid Al Futtaim Trust and W.A.G Payment Solutions Plc. He had a full attendance record at the Company’s Board meetings in 2022 and also attended all Board Committee meetings in addition to spending a substantial amount of time engaging with the business outside formal Board and Committee meetings. Whilst Paul is the chair of three quoted company boards, the time that he is required to commit to his role on the investment company Templeton Emerging Markets Investment Trust plc is significantly lower than would be the case for a trading company. The Board is satisfied that he commits sufficient time to the business of the Company and will be able to do so throughout the remainder of his tenure. Conflicts The Board has in place procedures for the management of conflicts of interest. In the event a Director becomes aware of an actual or potential conflict of interest, they must disclose this to the Board immediately. The Board of interest then considers the potential conflict of interest based on its particular facts, and decides whether to authorise the existence of the potential conflict and/or impose conditions on such authorisation if it believes this to be in the best interests of the Company. Internal controls also exist to conduct regular checks to ensure that the Directors have disclosed material interests appropriately. No Director has, or has had during the year under review, any material interest in any contract or arrangement with the Company or any of its subsidiaries. Directors’ The Company has taken out insurance covering Directors and officers against liabilities they may incur in their capacity as Directors or officers of the Company and its subsidiaries. The Company has granted indemnities to and officers’ all of its Directors in their capacities as Directors of the Company and, where applicable, subsidiary companies indemnity on terms consistent with the applicable statutory provisions. Qualifying third-party indemnity provisions for the and insurance purposes of section 234 of the Companies Act 2006 were accordingly in force during the course of the financial year ended 31 December 2022, and remain in force at the date of this report. St. James’s Place plc Annual Report and Accounts 2022 ### 117 ### Directors’ development Inductions for new Directors Strategic Report Financial Statements Other Information An appropriate induction programme is designed to enable all new Directors to meet senior management, understand the business and future strategy, visit various office locations and speak directly to advisers and staff around the country, as well as being introduced to other key stakeholders. Induction plans are tailored to meet the specific requirements of incoming Directors. Continuing professional development The Chair and Company Secretary ensure continuing professional development for all Directors, based on their individual requirements, and this is achieved through a wide range of approaches: Approach Examples in 2022 Specific development Specific development sessions and events have been provided for the Directors during the sessions and training year and these have included further training on climate risks, the FCA’s Consumer Duty, Governance SJP’s data strategy, SM&CR and future technology trends. The sessions are led by a mixture of internal and external subject matter experts, as was the case with the September session on Consumer Duty co-presented with an external subject matter expert (which was one of two Director development sessions on Consumer Duty that took place in the year). The development sessions provide Directors with opportunities to engage with employees from departments across the business to augment their knowledge of the business, the marketplace and the regulatory environment. The Group Audit Committee also holds development sessions to support the Committee’s understanding of topics relevant to it, including developments in audit and corporate governance reform and how these would impact St. James’s Place, which are outlined in the Report of the Group Audit Committee on page 123. Visits to head office, During 2022 the business was able to return to a more typical schedule of in-person visits other locations and and events that had not been possible during the two previous years due to the pandemic. service providers to The Directors were also able to attend an increased number of Partner conferences and other events that were hosted in regional offices, including employee engagement events. meet with employees and members of the Partnership Attendance at During the year, Non-executive Directors periodically attended meetings of the boards subsidiary board of subsidiary companies to gain further insight. They were also invited to attend Directors’ meetings, executive lunches hosted by senior management as part of the workforce engagement programme. committees and management forums Attendance at seminars Directors receive invitations from time to time to attend seminars and conferences that or other events which provide opportunities to network and enhance their knowledge and experience. In 2022, assist Directors in many of these events returned to taking place in person rather than virtually, providing Directors with greater opportunity to make connections. carrying out their duties www.sjp.co.uk ### 118 Governance ### 1 2 3 4 5 Board composition, succession and evaluation Directors’ induction Induction programmes typically run for around three to six months for new Directors and are tailored to meet their individual needs based on their existing knowledge and experience and specific aspects relevant to the roles they will be taking up. The programmes are centred on three key elements which are summarised below: Element What the element provides Information Directors are provided with a comprehensive library of key documents covering the Group’s history, and materials constitution, governance framework, corporate reporting, policies, key business areas and much more. This helps Directors to build their knowledge of St. James’s Place, highlights areas of further interest and provides a reference library to consult as and when appropriate. Individual Meetings are arranged with specific employees to explore in more detail significant aspects of the meetings business and to provide the opportunity to build relationships that will support the Directors going forward. Where a Director will be carrying out a role on a specific board or committee, additional meetings and development sessions will be set up to support the Director’s understanding of significant matters relevant to that role. Meeting Directors are invited to attend meetings of committees of the Board that they do not sit on, the boards attendance of material subsidiaries and, where appropriate other corporate events and forums that will support their understanding of the Group. Attendance at these meetings provides an opportunity for Directors to observe the Group’s governance in action and familiarise themselves with some of the key and emerging themes across the Group. Where possible, meetings are scheduled to take place in person at an SJP office location; however, in some instances the flexibility to convene meetings virtually has been beneficial. The transition from hard-copy papers to a secure Board portal in recent years has also enabled us to build a comprehensive reference library for new Directors which not only supports their induction but can prove useful throughout their tenure. St. James’s Place plc Annual Report and Accounts 2022 119 ## 2022 Board effectiveness review ### Reflecting on the 2021 review During 2021, the Board carried out an externally facilitated review, and following a formal selection process appointed Independent Audit to carry out the review. The review identified several areas of focus which are summarised below, together with updates on the progress made in 2022. | Area of focus | Update on progress | | --- | --- | | **Focus on people** | Updates on our people forms part of the Chief Executive's report at each Board meeting and the Board has received quarterly updates on the work of the Workforce Engagement Panel. The nominated Non-executive Director for Workforce Engagement also now has the opportunity to update the Board at every Board meeting. During 2022 our new People Director was appointed and she will bring fresh insight and a renewed focus on many of our people policies and practices so that we continue to offer a great place for people to build their careers. Wellbeing remains an important topic and has been covered regularly, in particular as part of the responsible business and culture deep dives presented to the Board. The Group Risk Committee considers people risks regularly and this includes remuneration and wellbeing as specific areas of focus. As part of its ongoing monitoring of emerging risks it frequently gets updates on aspects that impact people, including recruitment and retention. | | **Macro trends** | The Board's recognition of the changing needs and expectations of clients, Partners and employees is reflected in a number of its key strategic initiatives and reporting thereon. Examples include: - The Board's Strategy Day in June 2022 provided an opportunity to consider the implications of macro trends on wealth management and wider society, with external speakers invited. - Regular updates on the technology/digital journey are reported to the Board with the Chief Operations and Technology Officer attending every other Board meeting to update on technology and digital strategy. - NED development sessions have focused on data and innovation in technology and updates from the Technology Advisory Group are brought to the Board regularly. The Group Risk Committee has also considered a deep dive on responsible business risks (including ESG) and has continued to monitor ESG as part of its monitoring of emerging risk. The Board received an update on the responsible business strategy and plans which set out how ESG will be embedded in our strategy. | | **IT security/cyber risk** | Following the 2021 review the Directors received an overview of the current cyber landscape and, supported by advisers, undertook a detailed review of cyber simulations carried out by management and the key learnings and actions arising therefrom. The Group Risk Committee has had specific deep dives on general cyber risks, cyber-related administration and third party risks, and also receives a regular scorecard covering security and resilience, whilst continuing to monitor emerging risks in this area. Further information on the Board's focus on technology, cyber and data can be found in the case study on page 120. | | **Focus and impact** | The Board and Committee forward agendas and development plans for 2022 provided formal engagement points with the business and have focused the Board on key matters. Regular informal engagement and location visits have helped to increase engagement levels. Lesley-Ann Nash's work with the Workforce Engagement Panel in her role as nominated Non-executive Director for workforce engagement has also strengthened the line of sight and extent of engagement with the workforce. | | **Culture** | Following the conclusion of the 2021 review, the Board received a full update on the progress made on embedding our culture vision during 2021, including the culture KPIs and dashboard, and the 2022 culture objectives. Updates on aspects of culture are included in executive reporting and where relevant in deep dives presented to the Board. Culture progress is also reflected in reporting to the Group Risk Committee. A formal culture update was presented to the Board in November 2022, where goals and narrative were endorsed by it. | Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 120 Governance ### 1 2 3 4 5 Board composition, succession and evaluation Technology, cyber and data case study ### Technology, cyber and data are areas of significance ### for all businesses, and we are no different. As a Board we are careful to maintain the generalist capabilities, skills and experience that underpin the effectiveness of the unitary board, and provide the most effective base from which Non-executive Directors can provide meaningful challenge. Striking the right balance is a challenge in its own right, however, the Board, supported by the Nomination and Governance Committee, continues to evaluate the best means of capturing insight and expertise in areas such as technology, cyber and data to inform discussion and debate. We established a Technology Advisory Group (TAG) in 2021 to help advise and educate the Board, and in 2022 we took the opportunity to review its effectiveness in meeting its purpose. The TAG is chaired by the Chief Operations and Technology Officer and is attended by a Non-executive Director, members of the senior leadership team and independent advisers with cyber and technology expertise. The review acknowledged that, whilst the TAG had provided a valuable forum to explore technology, cyber and data landscapes in more detail, there was scope for enhancing the means of keeping the Board appraised of developments and key themes. We agreed that the Board would continue to have representation and receive updates from the TAG at each Board meeting, but that additional focus and deep dives should form a part of the Board’s focus in this area, alongside regular reporting and management information. The executive report to the Board now includes an enhanced technology dashboard at each meeting, with the Chief Technology and Operations Officer attending to present focused updates regularly each year. The dashboard informs the Board on strategic technology projects and the operational excellence programme, as well as a status update on technology operations to give the Board assurance on service availability, security and key technology risks. Specific development sessions for Directors were also identified as an important means of keeping them abreast of the external environment and internal developments. The Board received development sessions on data and the future of technology in 2022. The data session, held with the Chief Data Officer, focused on the internal data strategy and key successes of the team during the year, as well as providing an opportunity for the Directors to ask questions and discuss wider data topics such as artificial intelligence and data and behavioural science. The future of technology session was delivered by external subject matter experts and centred on key trends in technology that were likely to have a meaningful impact on the financial services sector in the coming years. St. James’s Place plc Annual Report and Accounts 2022 ### 121 The 2022 review Although the Board was not required to carry out an externally facilitated review in 2022, the Board chose to appoint Independent Audit to provide support in carrying out its review. The aim of the 2022 review was to narrow the focus Strategic Report Financial Statements Other Information around some key areas, in particular the effectiveness of the committee structure and oversight and assurance in relation to Group subsidiaries. Themes emerging The 2022 review identified several themes that highlighted areas of strength (see below) and also areas for the Board to focus on going forward. Overall, the Board concluded that there were no significant areas for concern and the Board and its Committees were operating effectively, albeit there will always be opportunities for further improvement. The Board’s The Board is well chaired and clear on the importance of its stakeholders. As new Directors contribution have settled in, the Board has been able to increase its influence, particularly with regard to strategy development. The Board recognises that the Risk Management and Control framework in place is Governance Risk management deeply embedded in the organisation’s culture and operations. This provides Directors with assurance but also ensures that the dialogue between the Board and management is open and invites constructive challenge. Committees The Board’s committee structure is working well, with a clear understanding of what and subsidiaries it aims to deliver. Committees are well organised and have appropriate compositions. The wider governance framework was also well understood and provided the Board with adequate oversight of the operation of subsidiaries, as well as a mechanism for two-way engagement. Areas for focus The areas identified for the Board to focus on in 2023 and beyond are summarised below, together with an overview of the action already taken. Area of focus Summary People As with many businesses, the working environment has evolved rapidly in the last few years and employees and the business have had to adapt to the changes. Following the pandemic, 2022 has seen even more pressure placed on society with fuel prices and inflation contributing to a cost-of- living crisis that has had far-reaching impacts. Whilst the Board has been encouraged by how management has responded to our employees, it also recognises that our people are a critical part of our strategy and therefore this is an area that must remain prominent in our thinking. Overseeing The Board has recognised the progress made with regard to our culture in recent years (see page culture 119) and acknowledges its own role in setting the tone and monitoring culture. Deep dive reviews continue to provide valuable insight, but the Board would also like to sharpen its focus on the indicators that highlight our impact on stakeholders. Big trends This is an area that is prominent on the radar of most organisations as they seek to anticipate how macro changes will impact their business models in the future. We are no different and the Board is clear that it needs to keep one eye on the horizon if our proposition is to remain relevant and capable of responding to the changing needs and expectations of our stakeholders, in particular our clients and Partners. Investment 2022 has been a volatile year for global markets and we have continued to see significant progress performance made in the ongoing development of SJP’s own investment management approach. The ongoing and client evolution of our Value Assessment Statement has driven an improvement in our reporting of investment performance, and this is an area the Board wants to continue to prioritise in line outcomes with regulatory expectations and our desire to deliver good outcomes to clients. By order of the Board: Paul Manduca, Chair 27 February 2023 www.sjp.co.uk ### 122 Governance ### 1 2 3 4 5 Audit, risk and internal control Dear Shareholder, I am pleased to present the ## Report of the Group Committee’s report for the year ended 31 December 2022. The report provides insight into our work over the year, and ## Audit Committee details how we have discharged the responsibilities delegated to us by the Board. The Committee fulfils a vital role in the Group’s governance framework, providing valuable independent challenge and oversight across the Group’s financial reporting, audit and Simon Jeffreys internal control procedures. The Committee is conscious of the environment we are reporting in and is comfortable that appropriate procedures are in place to ensure this has been taken into account as part of the year-end process, which included consideration of the accounting judgements and Group Audit Committee Key objective of actuarial assumptions. membership the Committee Member and date joined Committee The Committee’s primary purpose In carrying out its remit, the is to oversee financial reporting, Committee paid particular attention Simon Jeffreys (Chair) the internal and external audits to the Government response to 1 January 2014 and the Group’s systems of internal the BEIS consultation on Audit control, and to provide guidance and Corporate Governance Reform Dominic Burke and advice on these areas to (BEIS consultation). At the beginning 1 November 2022 the Board and, where applicable, of the year, management initiated a other boards and committees project to review the results of the BEIS Rosemary Hilary in the Group. consultation and plan our response. 17 October 2019 Management kept the Committee Regular attendees regularly updated throughout the John Hitchins at meetings year on the various pieces of work 1 January 2022 being undertaken. During these Chair of the Board; Chair of the updates, the Committee gave focus Roger Yates SJPUK Board; Chief Financial Officer; to the evidencing of the effectiveness 1 July 2014 Chief Risk Officer; Internal Audit of key internal controls, which were Director; Chief Actuary; Director, not just limited to financial controls, The terms of reference of the Financial Reporting; and Senior and the mapping of the current Committee set out the Committee’s Statutory Auditor. assurance landscape on all aspects role and authority as Committee for of key corporate reporting across the the Company and certain subsidiaries. business. The Committee is pleased They can be found on the corporate with management’s progress website at www.sjp.co.uk/about-us/ and will closely monitor the corporate-governance. implementation of the reforms and associated consultations. Management has also kept the Committee appraised of the FRC publications and thematic reviews released throughout the year, which included topics regarding discount rates, EPS, deferred tax asset disclosures, judgements and estimates; this provided the Committee with reassurance that management was giving due consideration to each. St. James’s Place plc Annual Report and Accounts 2022 ### 123 Looking ahead to next year, the Operation and performance The Committee evaluated its own Committee will continue to focus performance and effectiveness over of the Audit Committee | on the implementation of the IFRS 17 | | the course of the year and carried | | | --- | --- | --- | --- | | | The Chair of the Committee discussed | | Strategic Report Financial Statements Other Information | | Insurance Contracts Standard | | out an annual review of its terms | | agendas and significant matters and preparation and activities in of reference. The Committee’s separately with the external auditor response to the BEIS consultation, effectiveness was also reviewed and the Internal Audit Director in paying close attention to the by the Board as part of its overall advance of each meeting, with each developing requirements. assessment of its own effectiveness of the six scheduled meetings (see pages 119 to 121). The Board and focusing on the key topics set out in its Finally, following changes to the the Committee remain satisfied that forward work programme. Attendance composition of the Committee, the Committee operated effectively by Committee members at these I would like to welcome Dominic Burke. and has the experience and meetings is shown on page 115. The As announced during October 2022, qualifications necessary to perform Committee also welcomed I will be retiring from the SJP Board at its role successfully, noting in attendance from the other Non- the conclusion of the 2023 AGM having particular that the Chair of the executive Directors, who attended served as a Director for nine years. Committee is a qualified accountant Committee meetings as part of their In accordance with succession plans, and former Senior Audit Partner, and Governance ongoing development. Private it is the Board’s intention, subject to that other members also have recent sessions were held regularly with the regulatory approval, to appoint John and relevant experience and expertise Internal Audit Director and the external Hitchins as my successor. I would like in the financial services sector. auditor, providing an opportunity for to take this opportunity to thank the matters to be discussed in the Committee members, management The Committee was responsible for absence of management. and external auditors for their support carrying out the function required during my tenure. under the FCA’s Disclosure and Development sessions are held Transparency Rule DTR7.1.3R (Audit regularly to further enhance the Committees) and complied with Committee’s understanding of key Simon Jeffreys the Statutory Audit Services for and emerging topics, and to provide a On behalf of the Group Large Companies Market Investigation platform for the Committee to discuss Audit Committee (Mandatory Use of Competitive Tender and consider any impact on the Group. Processes and Audit Committee 27 February 2023 Committee members also attended Responsibilities) Order 2014 throughout external briefings and technical the year ended 31 December 2022. updates, for example those given by the major accounting firms. The development session topics from 2022 are summarised in the table below. Topic Outcome gained An understanding of PwC’s audits of the St. James’s Place unit trusts in the UK Unit Trust Audits and and the broader perspectives of the financial reporting environment for UK funds. Funds Audit Industry An understanding of the TCFD scenario testing in the context of the Group’s TCFD and Investment overall approach and commitment to reach net zero by 2050. Scenarios Met with the key members of the investment division to gain a clearer insight Investment Division into the division’s operations. An understanding of the impact of IFRS 17 on the Group. IFRS 17 Insurance Contracts Standard An understanding of the key reforms and work being undertaken by BEIS Audit and Corporate management to ensure the Group is prepared for implementation. Governance Reform An overview of the advances being made in enhancing the existing Digital Transformation operating model, including the increased use of automation within of Finance Function the SJP finance function. An update on progress to enhance SJP’s internal controls financial reporting Controls Framework framework. An understanding of the new actuarial system that will be fully rolled out Actuarial System in early 2023. Transformation www.sjp.co.uk ### 124 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Audit Committee continued ### The Committee’s activities are centred on a rolling cycle of key areas ### of focus and events as summarised in this timeline: July  Management present the Half-Year Report and Accounts O c y t o l  External auditors present their u b J e r half-year review report  Internal audit present their interim Internal Controls Evaluation May  Management present their  Internal Audit present their review of the year-end process annual review and quality assessment of their y  The Committee reviews the performance as an operational a result of the annual evaluation of M function, including the the external auditors, and effectiveness of their delivery considers whether the external of the audit plan auditors continue to be appropriately independent and  The Whistleblowers’ Champion objective, and effective in the presents their annual report, role of external auditor providing an overview of the operation and effectiveness of  External auditors present their the systems and controls in internal control findings from the relation to whistleblowing year-end audit  The Committee reviews their  The MLRO presents their annual terms of reference and evaluate F MLRO report and annual review e their performance b y r r of systems and controls over u a a u r n bribery and fraud y a J February  Management present the final  Internal audit present their draft Annual Report and Accounts, Internal Controls Evaluation TCFD Report and Solvency II  External auditors present their reporting, along with the year- findings from the audit and end control and compliance their Auditor’s Report, providing reporting, for the Committee confirmation of independence, to consider recommending and the Committee considers to the Board for approval recommending to the Board the  Group Risk present their reappointment of the external year-end assessment of auditors at the Company’s risk and controls next AGM St. James’s Place plc Annual Report and Accounts 2022 ### 125 In addition to the items set out in the diagram below, the Committee also received regular updates on the following: Strategic Report Financial Statements Other Information Fraud and whistleblowing Capital Progress against Developments activity and External auditor management the Internal Internal control in corporate reports from Key policies independence and financial Audit Plan reporting the Money control breaches Laundering Reporting Officer Governance O October c y t o l u b  Internal audit present their J e r internal audit plan for the following year  External auditors present their year-end plan N o v e m November b  Management present their plan  The MLRO presents their financial e r for the year-end process, crime report, covering the including any technical operation and effectiveness of considerations as well as key the Group’s systems and judgements controls regarding anti-money laundering, counter-terrorist  External auditors provide a financing, financial sanctions year-end progress update on compliance, facilitation of tax the audit evasion, fraud prevention and  Group Risk present their findings anti-bribery and corruption. from the year-end internal  Management present the tax controls process strategy for approval F e b y r r u a a u r n y a J January  Management provide a year-  External auditors provide a end progress update, including year-end progress update on key accounting issues and the audit judgements, presenting drafts of  Internal audit present their draft narrative sections of the Annual Internal Controls Evaluation Report and Accounts, TCFD Report and Solvency II reporting  Management present an overview of the unit trust audits www.sjp.co.uk ### 126 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Audit Committee continued Matters considered during the year The Committee focused on a number of matters which can be grouped under four broad headings: corporate reporting, external audit, internal audit, and internal controls. The following sections illustrate the Committee’s activities during the year. Corporate reporting Formal Committee meetings, covering the activities set out on pages 124 and 125, are supplemented during the year with informal learning sessions to review, with management, key messages for both the Annual Report and Accounts and Half-Year Results, and to explore in more depth any complicated issues emerging. This forum provides Committee members with an opportunity to gain further clarity and understanding. Some highlights of the Committee’s work during the year, including the significant issues it considered relating to the Financial Statements, are included in the table below. Key corporate reporting topics Theme What did the Audit Committee do? What was the conclusion and impact? Accounting  Management provided a summary of the transaction  Following discussion, and noting judgements to dispose of a portfolio of Partner loans to a third management’s engagement with the and actuarial party. It noted that it had exercised judgement in external auditors on this subject, the arriving at the conclusions that (i) the Group did Committee concurred with the assumptions not control the entity that acquired the loans; accounting treatment of the transaction. and (ii) the loans sold to the third party should  The Committee noted that high be deconsolidated for Group reporting purposes. persistency rates had been experienced The Committee challenged management to ensure for a number of years, and also that the that this judgement was recorded as a significant proposed rates still reflected the range accounting judgement in the Annual Report of possible outcomes beyond and Accounts. experience. As a result, they agreed  Management set out proposals for an update of the with management and approved the persistency assumptions for the unit trust and ISA changes for Group reporting purposes business. The Committee discussed the proposals, and for recommendation to the receiving confirmation from the external auditor board of St. James’s Place Unit that they had no concerns with the change Trust Group Limited. of methodology.  The Committee was satisfied with the | |  As part of the year-end exercise management | judgements made, noting in particular | | --- | --- | --- | | | provided a paper to the Committee setting out | that it was content with the impairment | | | the key accounting judgements and actuarial | exercise in relation to the significant | | | assumptions. | operational readiness prepayment. | | |  As part of their ongoing oversight of investments the |  The Committee was reassured that | | | Committee monitored the valuation process for level | despite the complexity and the | | | 3 assets, particularly private equity and private credit | uncertain economic environment | | | assets held in the Diversified Assets Fund. | the valuation process was robust. | | Accounting |  There were no new accounting standards or |  The Committee was satisfied that the | | regulation | significant new disclosure requirements for 2022. | impacts of IFRS 17 were not material to | | and audit | | the Group, and also with the proposed |  The Committee considered the proposed approach disclosures for 2022 year-end. to meeting the reporting requirements of IFRS 17 for the 2022 year-end. | Final results |  The Committee reviewed and provided input into the |  Following detailed deliberations, | | --- | --- | --- | | and Annual | periodic financial reporting, including the Half-Year | challenge and discussion on key | | Report | Report and Full-Year Accounts for 2022, including the | aspects of the reports, the Committee | | | final results announcement, and the Group Annual | was satisfied with the periodic financial | | | Report and Accounts for 2022, including the Viability | reports and recommended their | | | and Going Concern statements. | approval to the Board. | St. James’s Place plc Annual Report and Accounts 2022 127 | Theme | What did the Audit Committee do? | What was the conclusion and impact? | | --- | --- | --- | | **Regulatory reporting** | - In addition to statutory reporting, the Committee also reviewed the following regulatory reporting requirements: - **Solvency II** – Group Solvency and Financial Condition Report (SFCR) and Group Regular Supervisory Reporting (RSR) - **CASS** – reasonable assurance reports on St. James's Place Investment Administration Limited, St. James's Place Unit Trust Group Limited and Rowan Dartington & Co. Limited, and a limited assurance report on St. James's Place Wealth Management plc - **TCFD Report** – which encompassed St. James's Place UK plc & St. James's Place Unit Trust Group Limited | - Management confirmed the specifics of the rules for Solvency II reporting and the Committee was able to approve the publication of the 2022 year-end SFCR and the submission of the 2022 RSR to the regulator. - The Committee reviewed and was satisfied with the CASS external audit reports. - Following a request by the Committee that management carry out a validation exercise on the content of the report, the Committee was satisfied with the TCFD Report and recommended its approval to the respective boards. | #### 'Fair, balanced and understandable' opinion The Board is required to provide its opinion on whether the Company's Annual Report and Accounts taken as a whole are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy. To support the Board in providing its opinion, the Committee carried out a formal review, taking account of investor feedback, commentary from the Financial Reporting Council's (FRC) annual review of corporate reporting, and management's own assessment. The Committee assessed the quality of financial reporting through discussion with the external auditor, receiving presentations, and discussing key matters with senior financial management. This process included considering each of the elements (fair, balanced, and understandable) on an individual basis to ensure our reporting was comprehensive in a clear and consistent way, and in compliance with accounting standards and regulatory and legal requirements. The external auditor also considered and confirmed agreement with the 'fair, balanced and understandable' statement as part of the audit process. Following its review, the Committee advised the Board that the Company's Annual Report and Accounts for the year ended 31 December 2022 were fair, balanced and understandable. #### External audit ##### Auditor activity and effectiveness PwC were first appointed in 2009 and were reappointed as the Group's external auditor following a tender process in 2016. The Group will be required to change its audit firm no later than the 2027 audit. As noted in last year's Committee report, the Committee has continued with discussions regarding the next tender process, taking into account the need to expand market diversity whilst maintaining audit independence standards. Planning for this has begun with a view to completing a competitive tender process by 2026, well ahead of the FY27 audit cycle beginning to ensure a smooth transition between audit firms in order to mitigate risk for stakeholders. Andrew Moore held the position of the Group's Senior Statutory Auditor from July 2019, stepping down in May 2022 at the end of the financial year-end 2021 reporting cycle due to a change of his role at PwC. Gary Shaw was appointed as his successor following a selection process which the Committee fully participated in. New senior members of the PwC audit team were also introduced during the year-end process following a number of key audit team members reaching their seven-year tenure limits at the end of the audit. The process provided the Committee with reassurance of knowledge transfer and continuity, and that the audit team servicing SJP remained of high quality. As in previous years, PwC attended all Committee meetings and met privately with the Committee after each meeting. The Chair of the Committee also regularly met with Gary Shaw, the Group's Senior Statutory Auditor, to receive updates on progress and discuss any private matters, including audit fees and the profitability of the audit, progress of the audit and the performance of the SJP finance function. To launch PwC's programme of work, the Committee received and agreed their plan for the audit of the 2022 year-end. PwC then provided regular updates on their work, culminating in their overall final report and findings from the year-end audit and the review of the half-year results. The reports were discussed with PwC, and the Committee concurred with management's response to the recommendations identified. The Committee asked PwC to pay particular attention to the recognition of an additional operational readiness asset in relation to the new contract between St. James's Place International plc and SS&C, the IFRS 17 disclosures, the derecognition of the portfolio of Partner loans sold to a third party, and Diversified Assets Fund (DAF) hedging and exposure to the Group and was satisfied with the results of PwC's work and findings. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 128 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Audit Committee continued Matters considered during Committee asked them to focus, In their audit report to the Committee, for example the recognition of an PwC confirmed that they remain the year continued additional operational readiness independent of the Group and, having During the year, an internal evaluation asset, IFRS 17 outcome, derecognition carried out its own assessment, the was carried out to assess the of the portfolio of Partner loans, and Committee concluded that PwC independence, objectivity and DAF hedging. remained independent and objective. effectiveness of PwC and the effectiveness of the 31 December 2021 The Committee agreed with Internal audit audit process, following the publication management’s view that PwC were of the FRC’s Guidance on Audit The 2022 Internal Audit Plan (the Plan) effective in their role as external Committees. PwC’s effectiveness was was approved by the Committee in auditor. Following this evaluation, the assessed in various ways, including: October 2021. The planning process Committee recommended that the feedback from management involved is based on two approaches to Board seek the reappointment of PwC in the audit; feedback from the analysing risk. The first is a bottom-up as external auditor at the next Annual Committee; assessing audit quality risk assessment of the Group’s audit General Meeting (AGM). and delivery against the audit plan; universe, which methodically assesses and interrogating client administration the risks faced by each component The Committee also reviewed the systems to ensure senior PwC audit of the business. The second is a evaluation of Grant Thornton’s team members did not hold any top-down assessment of the key performance, in relation to their role St. James’s Place products. risks to the Group. The resulting Plan as auditors of St. James’s Place reflects both of these assessments, International plc and contributing to providing a blend of bottom-up core the Group audit by PwC, and were Audit quality assurance activity with specific satisfied with their performance. risk-targeted audits. The Committee noted the developing conversation in the Finally, the Committee was authorised This Plan, together with a risk-ranked industry about the use of Audit by shareholders at the last AGM to watchlist, was reviewed and monitored Quality Indicators (AQIs) to help determine the remuneration of the throughout the year and all updates track the performance of an external auditor. As such, the and changes to the Plan were audit and inform the annual Committee considered and approved specifically considered and assessment of auditor the 2022 audit fees. More information approved by the Committee. effectiveness. We will consider on the audit fees can be found in how we might use AQIs during Note 5 to the Financial Statements. Internal Audit Planning Process the next cycle of reporting. Auditor independence and Top-down Assessment of non-audit services Key Risks to the Group The Committee also noted the results During the year the Committee of the FRC’s review of PwC for the considered proposals for all non-audit 2021/22 inspection cycle, and were services as they arose and received pleased to observe that, when Specific Risk-Targeted Audits updates at each meeting on fees compared to the previous year, there incurred with PwC for all services. The was an uplift in the percentage of Committee discussed and approved audits graded as ‘good or limited Risk-based Internal Audit Plan the non-audit work carried out by improvements required’ from 80% to PwC, which was limited to audit 83%. Many instances of good practice services relating to the corporate were noted by the FRC and the reporting, such as the review of the Core Assurance Activity Committee therefore considered that half-year results and validating PwC currently provides a robust audit. capital contribution payments to St. James’s Place Wealth Management Bottom-up Risk Assessment The Committee found that PwC plc. Full details of PwC’s remuneration of Audit Universe demonstrated robust challenge and for 2022 are set out in Note 5 to the professional scepticism during the Financial Statements. 2022 year-end process and that Gary Shaw had been highly visible and The Committee carried out its effective as the engagement partner annual review of the Policy on for the Group. PwC continued to provide Auditor Independence with the review high-quality output to the Committee, resulting in minor changes. During setting out clearly their approach, 2023 the Committee will monitor for findings and recommendations. any potential developments in relation The Committee discussed with PwC to the Ethical Standard arising from the results of their work and challenge the BEIS consultation. of management, especially in relation to those matters on which the St. James’s Place plc Annual Report and Accounts 2022 ### 129 The Plan addressed three key themes, shown below with examples of audits undertaken: Theme Description Example audits undertaken Strategic Report Financial Statements Other Information Clients and the The Group’s processes for ensuring  ESG and Responsible Investing Partnership appropriate client outcomes,  Fund Liquidity Management overseeing the continued growth and expansion of the Partnership  Value Assessment Statements Costs and Charges compliance with the Group’s  Investment Committee Decision-Making advice standards, and the effectiveness of the field  Value for Money of Advice Framework management team in maintaining  FCA Consumer Duty the required controls.  Partner Growth and Development Function  Unit Pricing Controls Governance Operational The robustness and effectiveness  HR Processes excellence of the Group’s core operational  Oversight of SS&C processes, the impact of continued growth and increased complexity,  Strategic Data Storage and the major change initiatives.  IT General Controls in respect of various key systems  Onshore Bond and Pension Servicing Processes  Robotic Process Automation  Investment Data Hub  Systems Architecture Regulation The regulatory landscape,  Hong Kong and Singapore Risk Management Frameworks and reputation including significant recent and  Outsourcing and Third-Party Risk Management expected future changes, the importance of compliance across  Inclusion and Diversity the Group’s increasingly complex  Gender Pay Gap Reporting operations, and the key function of second-line monitoring.  Identity and Verification Matching  Provision and Implementation of Regulatory Guidance  CASS Oversight  Fraud Risk Management  ICARA Process | The delivery of the Plan is the | Internal audit reports regularly to | Following a competitive tender | | --- | --- | --- | | responsibility of the Internal Audit | the Committee on internal controls | process completed in late 2021, | | Director, who is accountable to the | and has confirmed that the Group’s | Deloitte LLP continue to provide | | Committee and who has regular | internal controls are generally | co-sourcing services for specialist | | one-to-one meetings with the Chair | effective at keeping the Group within | expertise and market insight. | | of the Committee and the Chair of | the Board’s stated risk appetite. | Examples of services provided under | | the Board. In addition, the Committee | Noting that certain controls require | this contract include subject matter | | Chair and chair designate attended | improvement, management has plans | experts such as IT and regulatory | | the internal audit strategy day held | in place for further enhancements to | specialists, and additional resources | | during the year. | the control framework in specific | to maintain and enhance the level of | | | areas, with progress being monitored | assurance provided to the Committee. | | Each internal audit report is sent | by internal audit and the Committee. | | | promptly to Committee members | For example, work is underway to | | | and progress reports are discussed | ensure first-line management is | | | at each meeting to update the | consistent in its evaluation of risks and | | | Committee on progress against | controls and to continue to enhance | | | the Plan and any remedial actions | the controls around the Group’s | | | allocated to management. During | technology estate, given the ongoing | | | the year, the Committee followed up | programme of change. In October | | | to ensure that management actions | 2022, the Committee considered and | | | from internal audit reports were | approved the proposed 2023 Internal | | | being completed, and that alternative | Audit Plan. | | controls were in place until those actions were completed. www.sjp.co.uk ### 130 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Audit Committee continued Matters considered during that each of the matters had been Specifically, in relation to the financial properly investigated and appropriate reporting processes, the main the year continued actions taken, that no resulting features of the internal control The effectiveness of the internal audit changes were required to the Group’s systems include: function was externally assessed in procedures or systems of control, late 2019 by EY against the global  operation and assessment of and that none of the matters were standards set by the International controls in key risk areas; material to the financial position or Institute of Internal Auditors, the 2017 results of the Group. None of the items  monthly review and approval Code for Effective Internal Audit in indicated a systemic problem or of all financial accounting data Financial Services, and current best control weakness. Following review including data generated by practice in our industry. The report and challenge by the Committee, the our outsource providers; concluded that the internal audit Annual Whistleblowing Report and the function remains effective and  formal review of financial Whistleblowing Policy were considered ‘generally conformed’ to the global information by senior by the Board in May 2022. The Board standards across all aspects of management, for both individual concluded that the whistleblowing performance. It highlighted the companies and the consolidated arrangements were appropriate function’s significant progress Group; and and consistently in force across and suggested opportunities for the entire Group.  extensive documentation of enhancements, work on which is key processes, procedures and now substantially concluded. Work Internal controls applicable key controls associated continued to progress during 2022 with financial reporting. on the one recommendation that Systems of internal control remains open: to enhance the use The Board has overall responsibility for The Committee is provided with of data analytics within audits. ensuring that management maintains updates on the operation of financial Data analytics have been employed comprehensive systems of internal reporting controls throughout the year in a growing number of audits and control for managing risk and for and each control is subject to an through developments in continuous assessing their effectiveness. On annual cycle of review and reapproval monitoring. This remains a key behalf of the Board, the Committee which culminates at the year-end. priority for the team and is also takes responsibility for assessing the being supported through co- effectiveness of the Group’s risk In addition, the Committee receives, source engagement. management and internal control discusses and evaluates quarterly systems, covering all material controls updates on the results from the Group An internal quality assessment including financial, operational and risk function on the effectiveness of was carried out and presented compliance controls for the Group and the internal control model. These to the Committee in May 2022. the individual entities. It does this by: updates are underpinned by The Committee concluded that  overseeing the continuous review management’s RCSAs which internal audit is effective and of risk and control self-assessments are captured through the Group’s meets the needs of the Group. (RCSAs); and risk and internal controls platform. The Committee also reviewed and The Committee also receives and approved the Internal Audit Charter,  monitoring the effectiveness of the discusses the assessments of internal which can be found on our website at: internal control model throughout controls from internal audit to support www.sjp.co.uk/about-us/corporate- the year through the quarterly its review of the internal control governance. updates provided by management system. Actions identified through to the Committee. internal audits, compliance monitoring Whistleblowing reviews, and through the RCSA The Board ensures that appropriate Through our risk management process via internal control updates arrangements are in place to enable framework we identify and assess are monitored, to ensure suitable individuals to raise any concerns risks. Our internal controls are improvements are made. about illegal or improper behaviour designed to manage the inherent risks connected to St. James’s Place. down to a level where the residual risk The Chair of the Committee is a key is within our stated risk appetite, rather contact in the Whistleblowing Policy than aiming to eliminate the risk and is the Whistleblowers’ Champion altogether. This provides appropriate under the Senior Managers and but not absolute assurance against Certification Regime. On behalf of material misstatement or loss. the Board, the Committee reviewed St. James’s Place plc is committed whistleblowing arrangements during to operating within strong systems of the year and received regular updates internal control that enable business on activity. Each case was considered to be executed and risk taken without when first reported and tracked through over-exposing the business to at each meeting until satisfactorily reputational damage or potential concluded. The Committee established losses beyond risk appetite. St. James’s Place plc Annual Report and Accounts 2022 ### 131 During the period, the Committee Overall the Committee is satisfied that The Committee did not identify discussed the management activities the Group’s internal control and risk any significant control failings or being undertaken in preparation for management framework comprises weaknesses that remain unmitigated Strategic Report Financial Statements Other Information | future stages of the Department for | adequate arrangements, actions and | and it has ensured that corrective | | | --- | --- | --- | --- | | Business, Energy & Industrial Strategy’s | mitigating controls. The Committee | action is being taken on matters | | | consultation paper on Audit and | recognises that to support the | arising from the review. Internal audit | | | Corporate Governance. The | continuing growth and increasing | and RCSAs identified areas where | | | Committee took steps to review its | complexity of the Group, there is | controls improvements should be | | | audit and assurance policy and | a need to invest in improving and | made. For example, enhancements | | | expand assurance in certain areas, | strengthening the Group’s risk culture | are being made to the process for | | | particularly regulatory reporting and | and the risk management and | evidencing the realisation of benefits | | | ESG. The Committee also considered | internal control systems. | from projects. The Committee | | | the requirements for enhanced | | continues to track progress on | | | control environment attestations and | These sources of assurance assist the | these items throughout the year | | | the potential impact on the external | Committee in completing its annual | to ensure actions are completed. | | | audit tender process. | review and enable it to attest on | | | | | behalf of the Board that it has been | | Governance | | Over the course of 2022, management | able to properly review the | | | | continued embedding Salesforce | effectiveness of St. James’s Place’s | | | | as the primary CRM system for the | system of internal control in | | | | Partnership. This is part of a strategic | accordance with the 2014 FRC | | | | initiative to be ‘easy to do business | Guidance on risk management, | | | | with’ via the upgrade of existing | internal control and related financial | | | | technology supporting the Partnership | and business reporting. | | | in advising clients. It also is significant in improving the management of client documentation and the Group’s ability Bribery and fraud review to maintain centralised oversight. A further material development to the The Committee monitors and receives regular reports from the Money control environment over the year was Laundering Reporting Officer on the Group’s policies, systems and controls a programme of activities focused on to prevent bribery and fraud. During 2022, fraud update reports have been improving the robustness of third party presented at each Committee meeting and a comprehensive annual oversight, including fund unit pricing. report covering fraud and bribery was presented to the Committee in May. It was determined that, overall, St. James’s Place’s controls are effective, During the year there have been appropriate policies and procedures are in place, and operational control-related failings on fund unit effectiveness of controls is evidenced. pricing on several occasions resulting from operational incidents involving The majority of attempted frauds against St. James’s Place and its clients a third party service provider. Whilst arise as a result of client account takeover activities involving email none of these resulted in client hacking and email interception. Fraud prevention controls to prevent the detriment, a comprehensive root takeover of client accounts and fraudulent withdrawal of client funds are cause investigation of the incidents reliant on manual controls performed by Partners and Partner support was commissioned and jointly staff. Whilst most operate the required controls effectively, individual overseen by the Group Audit and Risk lapses do lead to losses, of which we have seen a small number in 2022. Committees. Following the The Group has seen some cases of fraudulent misrepresentation or investigation, the provider has scams, aimed at persuading clients to transfer their funds for investment. implemented further mitigative The following actions have been undertaken to counteract these threats: control activities to prevent future  An updated fraud prevention training module was issued to all Partners, incidents, and these are assessed Partner support staff and employees to improve awareness of these as part of the regular monitoring risks and how to counteract them; programme. Furthermore, internal audit were engaged to provide  Monitoring of St. James’s Place social media activity to detect assurance over the risks of further attempted takeovers or suspicious activity, and detection and removal errors and the Committee will receive of cloned St. James’s Place websites; and reports and monitor the  Communications to Partners, Partner support staff and clients via SJP implementation of planned actions documents and social media to increase awareness of how to protect arising from this work. themselves from a range of investment scams. www.sjp.co.uk ### 132 Governance ### 1 2 3 4 5 Audit, risk and internal control Dear Shareholder, I am pleased to present this report to ## Report of the Group you as Chair of the Committee and would like to welcome Dominic Burke to the Committee and thank all the ## Risk Committee members for their contribution during the year. After nearly two years of living with the COVID-19 pandemic, in early 2022 the UK government lifted the last of the restrictions and the risk of major business disruption in the UK from COVID-19 restrictions has abated. Rosemary Hilary However, new risks have materialised, most notably the rapidly increasing rate of inflation, the conflict in Ukraine and related impacts on financial markets and energy supply and these have contributed to a cost-of-living crisis which has more recently been exacerbated by rising rates of interest. In light of these issues we have been Group Risk Committee Key objective cognisant of the impacts that these membership of the Committee challenges are having on all of our Member and date joined Committee The Committee’s primary role is stakeholders, including our clients to provide guidance, advice and whom we endeavour to support Rosemary Hilary (Chair) constructive challenge to relevant through the provision of sound 17 October 2019 and became boards in relation to the Group’s risk financial advice, to assist them in their Chair on 19 August 2020 appetite and management of risk. financial confidence and resilience. The relevant boards are those of The heightened political and Dominic Burke St. James’s Place PLC and its wholly economic uncertainty has also 1 November 2022 owned subsidiaries (together the increased the likelihood of clients SJP Group), which include its finding themselves in vulnerable Emma Griffin regulated companies. circumstances and therefore the 16 September 2020 Committee has continued to focus Regular attendees on the Group’s approach to identifying John Hitchins at meetings and supporting our clients who are in 1 January 2022 vulnerable circumstances. This has Chair of the Board, Chief Executive, included formulating a new Simon Jeffreys Chief Financial Officer, Chief vulnerability policy, enhancing 1 January 2014 Operations and Technology Officer, our corporate website to support Chief Risk Officer, Chief Actuary and clients who require assistance, Lesley-Ann Nash Internal Audit Director are regular and launching new online training 16 September 2020 attendees. Subject matter experts modules for the Group and its wider and other members of senior community in order to educate and Roger Yates management are also invited to raise awareness of how to recognise 1 January 2014 attend and present on specific and support clients with topics throughout the year. characteristics of vulnerability. The Committee’s terms of reference set out the Committee’s role and authority and can be found on the corporate website at www.sjp.co.uk/ about-us/corporate-governance. St. James’s Place plc Annual Report and Accounts 2022 ### 133 The Group has also continued to To ensure compliance with the Duty During the year, the Committee has focus on the wellbeing of its advisers the Committee has closely monitored continued its focus on strategic and and employees, with cost-of-living and challenged the approach taken emerging risks. A series of ‘deep dives’ Strategic Report Financial Statements Other Information | payments made to our lower paid | by the Group and reviewed the | was held with senior executives | | | --- | --- | --- | --- | | employees in September 2022 and | governance arrangements that have | supported by analysis from the | | | enhancements to the support we | been established to manage the | business to develop enhanced | | | provide in relation to adviser and | programme and workstreams and | understanding of how risks to | | | employee wellbeing as part of our | oversee the alignment of all relevant | the Group’s strategy were evolving | | | responsible business strategy. | practices and procedures. The | and where increased focus of risk | | | | Committee reviewed the Group’s | management activities should be | | | Our commitment to being a leading | implementation plan in October | prioritised. Additionally, the Committee | | | responsible business remains core to | (which was subsequently | monitored and received in-depth | | | our strategy and the Committee has | recommended to the Board for | assessments on new and emerging | | | monitored and challenged the | approval) and has since then | risks including inflation, the conflict in | | | business in a number of areas, | monitored the progress in assessing | Ukraine, climate change, employee- | | | including the risks posed by climate | and delivering the requirements of | related risks and shareholder activism. | | | change. We followed developments | the Duty ahead of implementation. | | Governance | | through 2021 when the UK hosted | Committee members attended a | The Group’s risk and compliance | | | the COP26 summit and then in 2022 | number of development sessions | functions sit under the executive | | | COP27 and the resulting outcomes. | during the year, including in relation | leadership of Mark Sutton, the Group’s | | | The Group continues to advance | to the Duty, which further enhanced | Chief Risk Officer (CRO), and during | | | towards achieving its ambition of | their understanding of the key | the year I have worked closely with | | | being a leading responsible business | requirements and impacts on | Mark to set the agenda of the | | | and meeting its commitments | the Group. | Committee meetings and discuss | | | of being climate positive in our | | key issues. | | | operations by 2025, net zero in | The Committee has continued to | | | | our supply chain and across the | oversee and scrutinise the Group’s | In 2023 the Committee will continue to | | | Partnership by 2035 and net zero in | risk profile and operational resilience. | probe and test the Group’s risk profile | | | our investments by 2050. During the | During the year it reviewed the policy | to assess whether it remains within | | | year, progress was made through | and framework approach adopted | the Board’s risk appetite, and to | | | focusing on each of the strategic | by the Group to ensure its important | monitor emerging risks to ensure | | | priorities within our Responsible | business services remained | the Group is ready for the challenges | | | Business Framework: financial | operationally resilient and were | which lie ahead. | | | wellbeing, investing responsibly, | prepared for operational disruptions | | | | climate change and community | in order to minimise client harm. The | | | | impact. Initial goals have been set for | Committee also considered the stress | Rosemary Hilary | | | each and more details can be found | and scenario testing carried out as | On behalf of the Group | | | on pages 40 to 56. | part of the Own Risk and Solvency | Risk Committee | | Assessment (ORSA) in order to assess 27 February 2023 | In 2022 the regulatory agenda | the risks to the Group’s capital and | | --- | --- | | remained full and has required the | liquidity. This analysis continued | | business to assess the implications | to confirm that the Group remains | | of new regulatory policies including | resilient to macroeconomic shocks | | in relation to the appointed | arising from post-pandemic supply | | representatives regime and, most | chain pressures, the conflict in Ukraine, | | notably, the new Consumer Duty | rising inflation and interest rates | | regulation which comes into force | and volatile financial markets. | | in July 2023. | It also assisted in informing the | Group’s dividend decisions. Focused reports from senior executives have also contributed to the Committee’s evaluation of the Group’s principal risks. www.sjp.co.uk ### 134 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Risk Committee continued Operation and performance Oversight of the Risk Management Interactions with regulators Framework is key to the delivery of of the Committee As most of the activity within the the responsibilities of the Committee. The Committee comprises seven Group is regulated, the Committee During 2022, the Group’s principal risks independent Non-executive Directors. considers all material interactions and emerging risks evolved with the The Committee Chair regularly meets with the Group’s principal regulators: changing macroeconomic and the CRO, the Chief Executive, the Chief the Prudential Regulation Authority, geopolitical situation. However, the Financial Officer and individual the Financial Conduct Authority, the continued progress and investment, members of the Executive Board to Information Commissioner’s Office, including in organisational design discuss key risk topics. The Chair, in the Central Bank of Ireland, the changes in the risk and compliance conjunction with the other Committee Monetary Authority of Singapore, function during the previous two members and the CRO, establishes a the Hong Kong Securities and Futures years, have meant that both the rolling forward agenda, ensuring that Commission and the Hong Kong business and the Risk Management the key responsibilities of the Insurance Authority. It monitors Framework were able to adapt to Committee are fulfilled, and that progress against any actions. these challenges and continued to significant and emerging risks are demonstrate resilience. The increased considered at appropriate times. Activities during the year use of technology and data analytics tools in areas such as risk reporting On an ongoing basis the Committee The Committee’s performance and anti-money laundering has also receives regular reports on a number was reviewed as part of a Board led to more effective operations. of areas, including: effectiveness review (see pages 119 to 121) and the Board remains satisfied  updates on material risks that have Assessing the implementation of risk with the Committee’s effectiveness been prominent in the period since mitigation in the business is another and that, taken together, the the previous meeting; area which the Committee reviews Committee has the experience and and challenges. Where risks  reporting on key risk indicators; qualifications necessary to perform its crystallise, the Committee reviews role. The Committee’s annual review  interactions with regulators and the circumstances and root causes, of its terms of reference concluded any actions required; and then assesses the response of that it continued to discharge its management. More details on the  an assessment of the impact and responsibilities appropriately. principal risks, how risk is monitored implementation of new regulations; and managed across the business,  business assurance reviews; | Oversight of risk | the Risk Management Framework | | | --- | --- | --- | | The Committee spends a significant | and the risk appetite can be found |  the Group’s Own Risk and Solvency | | proportion of its time receiving | on pages 90 to 99. The Committee | Assessment, as well as similar | | updates from the CRO and other key | reviewed and commented on the | assessments for certain of | | executives, who have direct access to | Group’s Risk Appetite Statement and, | St. James’s Place’s regulated | | the Chair should the need arise. The | in its final form, recommended | subsidiaries; | | Committee also regularly considers | its approval to the Group Board. | |  the latest view of emerging risks progress on and approves the and any significant changes in the Compliance Monitoring Plan. The risk environment; Committee continuously monitors the operation, performance and  reporting on conduct risk, resourcing levels of the risk and operational resilience and compliance functions. outsourcing and supplier management;  reporting on cyber security risks;  updates on progress with implementing the new Consumer Duty; and  examples of client complaints and reports on clients in vulnerable circumstances. St. James’s Place plc Annual Report and Accounts 2022 ### 135 Key matters considered during the year The table below highlights some examples of where the Committee has provided review and challenge, alongside relevant conclusions. Examples are shown across the Group’s nine risk areas. Strategic Report Financial Statements Other Information Risk area What did we do? What were the conclusions? Client Investment risk landscape – The Committee received The Committee challenged and discussed the an update on the development of a centralised risk development of the investment risk management proposition management team which is focused on the control team’s objectives to ensure they focused on client environment for investment risk management outcomes and ensure the plan was sufficiently associated with funds and outsourced providers. Their resourced to manage the risks associated with key objective is to ensure consistency in the monitoring the different strategies employed by the funds. of investment risk-taking across SJP’s appointed fund The Committee welcomed the decision to appoint John managers’ which in turn contributes to continued Hitchins as ‘Consumer Duty Champion’ and recognised positive client outcomes. that the governance structure of the programme would Consumer Duty – The Committee received regular evolve as it became embedded into the business. updates on the approach being taken by the Group to The Committee reviewed and was provided assurance Governance ensure the principles set out in the Duty are embedded as to the approach being taken to ensure appropriate in the business. The governance and structure of the evidence about the value of ongoing advice; and the programme were reviewed and areas of particular actions being taken to ensure the Consumer Duty focus were highlighted including culture, value principles pervaded the Group’s culture. assessment, testing of consumer understanding, and distribution arrangements for third-party products. Conduct Clients in vulnerable circumstances – The Committee The Committee discussed the actions being taken reviewed a detailed presentation on the key measures in the business to continuously develop its approach and oversight in place across the business to support to identifying and supporting clients in vulnerable clients in vulnerable circumstances, noting the progress circumstances and it was encouraged by the initiatives made in increasing awareness of and identification being undertaken and the increasing awareness of of vulnerable clients. Progress included the launching this complex area. It was agreed that progress would of six new online learning courses to the whole SJP continue to be monitored carefully in the future. community. The Committee explored new initiatives The Committee received assurance that sufficient which included adviser notifications when vulnerable resource was available to manage complaints volumes clients made a withdrawal and the use of voice adequately. Working practices had been reviewed and analytics and management information to assess why changes implemented which had improved the team’s such clients contacted the Company. effectiveness and complaint handling methods. Complaints handling – The Committee received The Committee was satisfied with the progress reports on the Group’s complaints handling operations made by advisers in better delivering and better and data, which outlined the impact of circumstances demonstrating ongoing servicing and advice to arising throughout the year on complaint volumes their clients, as well as the increased awareness and and complaint handling processes. Circumstances preventative actions being taken in relation to cyber included reactions to volatile market conditions, security risks throughout the Partnership. The depth the conflict in Ukraine and the cost-of-living crisis. and frequency of monitoring by the field risk team Supervision of Partner businesses – Elements of the provided assurance that risks posed to client outcomes Group Risk Management Framework were piloted with and SJP’s reputation continued to be well managed. certain areas of the Partnership and involved risk and The Committee was encouraged by the data-led control self-assessment workshops. These resulted in approach to the Risk Management Framework being a forward-looking, data-led approach to risk taken and the positive feedback received from management being taken in our large and medium- advisers, which has resulted in a focus on strategic sized Partner businesses. The Group’s field risk teams and operational risks for advisers. The Committee improved conduct risk management for advisers noted that the approach to conduct risk management through an organisational restructure which was could be scaled up effectively as the size of the intended to improve the quality of supervision, Partnership increased. especially for advisers in their early years with the organisation. The Committee acknowledged that as a result of the emerging risk analysis there would need to be a focus The Committee also received reports on the on the challenges involved with improving technology oversight and management of Partners’ outside and data to meet the Partnership’s needs. Additionally, business interests and a field risk team update an equal focus was required on improving Partner on client servicing. productivity and reviewing different approaches available to grow the Partnership, attract new talent and ensure the Partnership continued to engage with and value the benefits of the SJP proposition. www.sjp.co.uk ### 136 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Risk Committee continued Key matters considered during the year continued Risk area What did we do? What were the conclusions? Financial ORSA – The Committee reviewed and challenged the The Committee actively challenged the Group’s Own Risk and Solvency Assessment (ORSA) comprehensiveness and depth of stress and scenario process throughout the year. This included stress testing including those relating to current topical and scenario testing activity which supports the stresses; and was comfortable that: risks within the assessment of financial resilience, liquidity and Group remained at an acceptable level; the Group solvency ratios for the Group and the UK and Irish was adequately capitalised to deliver its strategy; and insurance entities, as well as analysis and challenge the Group would remain solvent in stressed situations of reverse stress testing. The Committee supported the Group’s Contingency Contingency Funding Plan and liquidity – The Funding Plan and the liquidity risk management Committee reviewed the Group’s Contingency for SJPUK. Funding Plan and liquidity risk management for St. James’s Place UK plc (SJPUK). The Committee noted that SJPUK remains highly liquid and any liquidity risks were closely monitored. Partner Technology support – The Committee received regular The Committee supported the strategy of reports on the implementation of Salesforce and cyber implementing Salesforce to further support Partner proposition security solutions as they continued to be rolled out to businesses and to facilitate enhanced centralised Partner businesses. evidence of client servicing, and was encouraged by the increasing number of Partner practices adopting Partner finance – The Committee reviewed the Group’s the Group’s cyber security solutions. proposition for providing finance in a rapidly changing environment where the size and structure of the The Committee was reassured by the actions being Partnership has been evolving and requires different taken to adapt to the different financial needs of the funding strategies to meet Partners’ needs and ensure Partnership through provision of a broad and evolving the Group’s gearing and risk exposure remain within range of financing capabilities, and was satisfied that appetite. the approach taken was sustainable in uncertain economic conditions. People The Committee received updates on our key employee- The Committee was satisfied with the results of the related risks, which focused on managing remuneration actions taken to embed measures to ensure the policies and practices in line with regulatory continued compliance of our remuneration policies requirements, maintaining appropriate levels of and practices with regulatory requirements. employee engagement and monitoring emerging The Committee was encouraged by the actions taken risks in relation to talent acquisition and retention. to enhance employee engagement and inclusion, To enhance monitoring of employee sentiment and which included: providing employees with the tools engagement, the Group used an annual employee and support they require to fulfil their roles; recognising survey and additional pulse surveys, which provided high performance; continuing to embed a diverse and valuable insight and highlighted that employee inclusive culture. engagement scores were improving. The surveys In terms of acquisition and retention of talent, also indicated areas which were having an impact the Committee derived assurance from the various on employees’ such as how the changing nature of the actions that were being taken. These included salary workplace was affecting employees’ ‘sense of belonging’ benchmarking; a cost-of-living payment to employees and the importance of promoting inclusive behaviours. earning below a certain level; and working policies The Committee discussed the challenges being and practices that allow flexibility for employees. experienced in the acquisition and retention of talent, The CRO attended meetings of the Group which included competition created by increasing Remuneration Committee to provide a view of risk numbers of opportunities for hybrid and remote working behaviours and of the conduct and management and the increasing demand for people with specialist of operational incidents in order to ensure reward skills in areas such as data science. and performance were reflected appropriately. As part of the overall review of people risk, the Committee The Committee’s own activities supported the Group considered remuneration risks. The review of such risks Remuneration Committee in reaching its conclusion supports the Group Remuneration Committee’s that remuneration policies continue to mitigate consideration of the alignment of the Group’s potential conflicts of interest and do not encourage remuneration policies for Directors and employees with inappropriate risk-taking. its strategy. It also provides assurance on compliance with existing and forthcoming regulatory requirements. St. James’s Place plc Annual Report and Accounts 2022 ### 137 Risk area What did we do? What were the conclusions? Regulatory Regulatory change – The Committee reviewed The Committee probed and received updates on Strategic Report Financial Statements Other Information and discussed the impact of upcoming regulatory each area and was satisfied with the progress made change and management’s response, for example, against the areas of regulatory change outlined to the FCA’s new Consumer Duty and policy on by management. Appointed Representatives. The Committee was comfortable with the rigorous Client money and client assets – The Committee approach taken in relation to CASS controls and reviewed and approved the CASS Annual Report for oversight, and the processes used to enhance future 2021, which provided assurance that core operational outcomes where items were identified for controls remained robust. improvement. Regulator engagement – The Committee received The Committee discussed and agreed the actions reports on the more material topics of discussion being taken to address both firm-specific and with the Group’s regulators, as well as progress reports industry-wide themes identified by regulators. on the actions taken to address matters raised by the Following the invasion of Ukraine by Russia the regulators as part of ongoing supervision and wider Committee reviewed the potential impact of new industry communications. sanctions, and the actions taken by the Group to ensure Governance they are complied with and the situation is monitored Business assurance – The Committee received an for any changing requirements. update on the effectiveness of the controls in place to provide assurance that advice provided by advisers The Committee noted that the business assurance is of a high standard. Technology was being utilised to function remained effective in ensuring that the advice reduce the risk of errors and support advisers to ensure provided to clients by advisers was of a high standard quality of advice and client outcomes. and had been validated for compliance with regulatory requirements during the year. The approach taken for higher risk products and more complex transactions such as defined benefit pension transfers was managed robustly and within the Group’s risk appetite. The Committee asked to receive reporting on the aged analyses of the resolution of case feedback from business assurance. Security and Operational resilience – The Committee oversaw the The Committee was satisfied with and approved the project to develop the Group’s approach to operational operational resilience self-assessment, policy and resilience resilience and compliance with the new FCA and PRA framework and continued to receive updates on the requirements. As part of this, the Committee reviewed operation of the policy framework and compliance the operational resilience self-assessment, policy and with the regulations. The Committee receives a regular framework which set out the processes used to ensure report which provides assurance on the resilience of the Group remains operationally resilient. our important business services and important support services and confirms that appropriate preventative Cyber risks – The Committee was provided with action is being taken to address any vulnerabilities updates on cyber risks, including the approaches to: identified. reduce cyber risk in the Partnership; increase cyber resilience throughout the extended business including The Committee was encouraged that significant suppliers; and respond to cyber threats. progress had been made with Partners either becoming self-accredited to Cyber Essentials Plus The Committee reviewed the Group’s objective to or accredited through the use of our Device as a implement a base level of cyber security through either Service offer. self-accreditation to the Cyber Essentials Plus (CE+) scheme or accreditation through subscribing to the The Committee discussed the main cyber risks Group’s own Device as a Service (DaaS) proposition. and was reassured by the controls in place and the enhancements which were continually being made to improve them in light of evolving threats, especially following the conflict in Ukraine. www.sjp.co.uk ### 138 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Risk Committee continued Key matters considered during the year continued Risk area What did we do? What were the conclusions? Strategy, Strategy impact – As part of an overall assessment of The Committee was reassured by the actions and the Group’s progress towards achieving its strategy, the developments evidenced to mitigate the identified competition Committee was presented with reports highlighting the risks to delivering the strategy, which included and brand different risks faced by the business in meeting its enhancements in the areas of Partner proposition, stated goals. More details can be found on pages 26 to finance and recruitment. 27. The reports emphasised the strong progress made The Committee was comfortable that appropriate in delivering new business, retention and cost control. emerging risks had been identified and that due focus The risks, both emerging and current, which threaten was being placed on managing them where possible. the delivery of the strategy were considered alongside The enhanced reporting and more granular the options available to address them. assessment of these risks provided the basis for deeper The Committee also received reports on the risks faced debate on the potential implications for the Group. by St. James’s Place International plc (SJPI) and the The Committee maintained the discipline of continuing Asia business. to set aside appropriate time to consider emerging Emerging risks – The Committee considered regular risks. Deep dives enabled the Committee to challenge updates on management’s views of emerging risks, each of these in a more detailed manner and assess supported by a detailed horizon scanning exercise the impact on the Group. carried out with each member of the Executive Board. The Committee was satisfied with the approach being The Committee also provided its views of emerging taken to managing our stakeholders’ expectations in risks that should remain within its short- to medium- relation to the transition to and delivery of the term focus. Responsible Business Framework. Responsible business – The Committee received an update on the Group’s progress toward being a leading responsible business and reviewed the framework that underpins the plan to achieve this strategic priority. The Committee challenged the flexibility of the approach in dealing with short-term variations in the macroeconomic environment. Third parties Administration performance – The Committee The Committee was satisfied that service level received updates on the risks to the provision of agreements (SLAs) continued to be met in all material administration services to Partners and clients. It was respects by our third-party administrators and centres reported that the overall risk environment remained in the UK, Ireland and Mumbai. The time to process stable and ongoing work would ensure that the risk certain transactions under the SLAs had improved remained at an acceptable level. This stability had considerably during the year. helped improve service delivery, quality of The Committee endorsed the additional support administration and error rates. measures which had been put in place for clients Outsourcing – The Committee reviewed supplier and cases which were more complex, including use performance generally, and specifically the progress of additional relationship managers and mechanisms being made to ensure compliance with new for monitoring and mitigating third-party supplier risks. regulations regarding oversight of outsourcing, The Committee was encouraged by the progress made including the provision of support and training to and approved a new policy to support a proportionate relevant employees. and risk-based approach to the management and The Committee also reviewed the Group’s oversight of third-party suppliers and outsourcers. arrangements for managing cyber security risk across The Committee monitors adherence to the policy its material outsourcers and the third and fourth parties on a regular basis. whom they sub-contract. The Committee challenged The Committee recognises the importance of maintaining the key mechanisms used to monitor changes to appropriate controls over outsourced activities and material outsourcer relationships and the response was encouraged by the improvements made in protocols for any cyber-related incidents. managing cyber risk throughout the supply chain. Outlook The Committee will continue its focus on ensuring the Group’s key risks are appropriately managed so that St. James’s Place remains resilient, with strong foundations for long-term success. Particular emphasis will be placed on considering how the Consumer Duty principles are embedded into culture throughout the SJP community to ensure continued positive client outcomes. Further areas of focus will include reviewing the adequacy of our response to emerging risks, the actions taken to ensure ongoing operational resilience, and assessing how the new appointed representatives regime is implemented and governed. The liquidity and solvency of the regulated entities within the Group will of course also remain important topics of focus along with the principles supporting our approach to product oversight and governance, which ensure our products continue to meet the needs of clients and the Partnership. St. James’s Place plc Annual Report and Accounts 2022 ### 139 ## Report of the Group Nomination Strategic Report Financial Statements Other Information ## and Governance Committee Dear Shareholder, Paul Manduca A Board’s success relies on membership that has a diverse balance of tenures, skills, experience Governance and perspectives, and maintaining robust succession plans is key to achieving this. As has been previously reported, big strides were made in 2020 and 2021 in making appointments (my own included) as part of our longer-term succession plans, Group Nomination and Key objective of recognising that a number of Non- Governance Committee the Committee executive Directors were nearing nine membership The Committee has overall years’ tenure. With quite a few new Member and date joined Committee responsibility for planning Board Directors and after limited opportunity and senior executive succession, for face-to-face interaction during the Paul Manduca (Chair) leading the process for new pandemic, 2022 was an important 1 January 2021 appointments and ensuring year for Directors to enhance that these appointments bring relationships and the Board Rosemary Hilary the required skills, experience and its Committees to bed in. 22 July 2020 and diversity to the Board. The Committee is also responsible for With Simon Jeffreys and Roger Yates Simon Jeffreys overseeing the Group’s governance both reaching nine years’ tenure in 1 January 2022 arrangements, taking into 2023 the Committee took the consideration the structure, size opportunity in 2022 to consider not Roger Yates and composition of all its boards only the strength of the overall Board, 8 October 2018 and committees to ensure they are but also potential successors to fill the made up of the right people with roles of Senior Independent Director The Committee’s terms of reference the necessary skills and experience and chairs of the Group Remuneration set out the Committee’s role and to direct the Group in the and Audit Committees. Recognising authority and can be found on the successful execution of its strategy. that we would lose experience when corporate website at www.sjp.co.uk/ both Simon and Roger stepped down, about-us/corporate-governance. we agreed to carry out a thorough Regular attendees search for candidates to further at meetings strengthen the Board, which resulted The Chief Executive, Company in the recommendation of the Secretary and representatives appointment of Dominic Burke. of external consultants. When the Board announced Dominic’s appointment in October, it was also able to confirm that, subject to regulatory approval, Emma Griffin and Dominic Burke would succeed Roger as chair of the Group Remuneration Committee and Senior Independent Director respectively, and John Hitchins would succeed Simon Jeffreys as chair of the Group Audit Committee. www.sjp.co.uk ### 140 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Nomination and Governance Committee ### continued | We continue to keep a close eye on | Board Diversity Policy. We continued to | regulation and legislation has given | | --- | --- | --- | | executive succession planning and | monitor progress against our inclusion | rise to a myriad of new requirements, | | the Chief Executive discussed with the | and diversity strategy and stated | making consistency, effective | | Committee details of the short-term/ | public commitments and have also | communication and engagement | | emergency succession plans in place | spent considerable time discussing | across the Group ever more important. | | for the Executive Board and other key | the implications of changes to | | | management roles, together with an | diversity targets relating to gender | We were not required to carry out an | | indication of potential longer-term | and ethnicity, and changes to the | externally facilitated Board evaluation | | succession options for each role. These | Listing Rules which will come into | in 2022, having last had one in 2021, | | plans were enacted in the second half | force from 2023. In line with many | but opted to carry out an internal | | of the year when Tom Beal was | organisations, we have found the | evaluation with the support of | | appointed as Director of Investments | pace of change that is required | Independent Audit. The effectiveness | | following Robert Gardner’s decision | challenging, but although we | review was carried out in the second | | to step down from the role to set up | acknowledge that we still have some | half of the year and further details | | a new venture in the environmental | way to go, we can see clear evidence | can be found in the corporate | | sector. We wish Robert the very best of | of inclusion and diversity being | governance report on pages 119 to 121. | | luck in his new business ventures, but | embedded in our culture. | | | are confident that Tom, who has been | | I look forward to reporting on further | | with SJP for in excess of 14 years – most | The Committee continues to monitor | progress as we continue our work | | recently in the role of Chief Investment | the Group’s governance framework, | in 2023. | | Officer – is a worthy successor and the | which aims to ensure the Group | | | best candidate for the role. | operates in the most effective | | | | manner, with its various boards able | Paul Manduca | | Our focus on inclusion and diversity | to work in a joined-up manner to | On behalf of the Group Nomination | | remains undimmed and during the | support the Group’s aims. For our | and Governance Committee | | year we updated the Group’s Inclusion | subsidiary boards and their directors, | | 27 February 2023 and Diversity Policy and our own an increase in entity-specific Activities during the year Topic Summary of activity Find out more Board Taking account of the tenure of existing Board members, noting that two Board See overleaf composition members would reach nine years’ tenure and were anticipated to step down in 2023, the Committee remained focused on the longer-term succession planning for Non-executive Directors. The Committee considered the skills, experience and diversity required to ensure ongoing effectiveness, and following a thorough search recommended to the Board that Dominic Burke be appointed a Non- executive Director. Committee The composition of the Board’s principal committees is kept under regular See overleaf composition review and changes were made during the year to ensure appropriate balance of membership. Management The Committee was kept well informed about the short- and medium-term See overleaf succession succession plans for members of the Executive Board and key personnel and also considered longer-term succession plans. Towards the end of 2022, Robert Gardner stepped down from his position on the Executive Board and as Director of Investments and the Committee considered the appointment of his successor, Tom Beal. Inclusion and The Committee continued to assess the progress made against the inclusion See page 142 diversity and diversity strategy and SJP’s commitments. The Committee also considered changes to specific targets and the FCA’s Listing Rules requiring the disclosure of diversity data. The Board Diversity Policy and the Inclusion and Diversity Policy have also been reviewed and updated. Group The Committee continued to monitor developments that impacted the Group’s See overleaf governance governance framework and the overall operation of Group governance. Board The Committee kept under review the progress made against the actions See pages 142 effectiveness identified in the 2021 Board effectiveness review. and 119 to 121 St. James’s Place plc Annual Report and Accounts 2022 ### 141 Operation and performance most appropriate successors for wider constituencies. With this in mind those roles and recommended to the Committee is not only focused on of the Committee | | the Board that, subject to regulatory | ensuring successors are identified | | | --- | --- | --- | --- | | During 2022 the Committee | | | Strategic Report Financial Statements Other Information | | | approval, Emma Griffin and Dominic | and nurtured, but also that the | | comprised the Chair of the Board Burke should succeed Roger as chair impact of enacting succession and three independent Non-executive of the Group Remuneration Committee plans is anticipated and addressed. Directors, who between them are also and Senior Independent Director The importance of having robust the chairs of the Group Nomination respectively, and John Hitchins should succession plans was demonstrated and Governance, Audit, Risk and succeed Simon Jeffreys as chair of this year when Robert Gardner Remuneration Committees and the Group Audit Committee. When resigned from his role as Director of the Senior Independent Director. making these recommendations the Investments to set up a new venture Membership of the Committee, Committee noted the responsibilities in the environmental sector. Tom alongside the Board’s other attaching to each role, ensuring that Beal had been identified as Robert’s Committees, was reviewed and no those being put forward had the successor which enabled the Chief changes to its composition were necessary experience. Executive and the Board to act quickly made in 2022. The Committee’s and ensure an unbroken delivery of our effectiveness was considered as part The composition of our committees investment management approach. Governance of the Board’s overall assessment of is another area kept under constant its effectiveness (see pages 119 to 121) review, and in August 2022 the and it remains satisfied that, as Group governance Committee recommended Rosemary a whole, the Committee has the The regulatory landscape in the Hilary be appointed as a member of experience and qualifications financial services sector has evolved the Group Remuneration Committee. necessary to perform its role. significantly in recent years. As we are Upon his appointment to the Board, a holistic wealth management firm, the Committee also recommended this means that a number of Board succession and that Dominic Burke be appointed as subsidiaries within the Group are Committee composition a member of the Group Audit and impacted by the extensive legal Risk Committees. The Committee has reported over and regulatory frameworks operating the last few years on the considerable in the UK and overseas. The Succession planning is an ongoing work undertaken to manage the requirements set by our regulators exercise and remains at the forefront succession of a number of Non- are often aligned but in some cases of the Committee’s consciousness executive Directors who were reaching there are differences, which adds and activities as it seeks to ensure the nine years’ tenure on the Board. Simon complexity to how we operate. In Board remains effective. We remain Jeffreys and Roger Yates will reach order to avoid potential duplication or comfortable that the size, structure nine years’ tenure in 2023 and will step inefficiency that could result from this and composition of the Board is down from their Board positions at the complexity the Group’s aim has been appropriate but will continue to conclusion of the AGM in 2023. to have a clear and demonstrable monitor the make-up and workload governance framework to support our of the Board. Where we deem it Recognising that the loss of Simon key people and governance bodies in necessary, we will look to bring and Roger’s experience would impact fulfilling their individual and collective in additional Directors to address the Board, the Committee agreed to responsibilities. The Committee plays potential gaps or the loss of one engage Russell Reynolds to support an important role in overseeing the of our existing Board members. in the search for a potential new evolution of our governance Non-executive Director. Russell framework and the implications of Reynolds is a sponsor of the 30% Club Executive succession new requirements. In 2022 one such and is accredited in the FTSE 350 Our people are one of our most evolution has been the appointment category of the Enhanced Voluntary important assets and ensuring we of an independent chair and the Code of Conduct for Executive Search appoint and retain the right people is establishment of a separate audit Firms. In May they provided a diverse critical to our success. In order for SJP, committee for our UK life company long-list of high-calibre candidates or any organisation, to be sustainable St. James’s Place UK plc. who could further strengthen the and successful over the long term Board. Having taken account of the it needs to be able to identify talent In recent years, the UK Corporate availability of candidates, a formal and manage succession. Succession Governance Code and financial interview process was undertaken planning at the executive and senior services regulations and guidance before other members of the Board management levels is a key focus of have introduced requirements for were invited to meet the the Committee and during the year it individual Directors to take on specific recommended candidate. On has kept under review the short-term roles on the Board. One such role is 28 October 2022 the Board succession plans in place for the the Consumer Duty Non-executive announced the appointment of Executive Board and key personnel Director Champion, which was Dominic Burke. in the event that emergency cover prescribed in the FCA’s rules and is required, as well as the medium- guidance relating to the Duty As well as losing their experience to long-term view. published in 2022. The Duty will come when Simon and Roger step down into force in July 2023 and aims to from the Board, we will also lose our However, succession planning isn’t ensure that firms act to deliver incumbent Senior Independent just important for senior management good outcomes for retail customers. Director and the chairs of the Group roles and when successors are Remuneration and Audit Committees. appointed from within the organisation The Committee has considered the there will inevitably be implications for www.sjp.co.uk ### 142 Governance ### 1 2 3 4 5 Audit, risk and internal control ## Report of the Group Nomination and Governance Committee ### continued | The Non-executive Director Champion, | Also during 2022, 14% of external hires | Whilst this means we would not | | --- | --- | --- | | together with the Chair and Chief | identified as minority ethnic, which | comply with the incoming Listing Rule | | Executive, is responsible for ensuring | has resulted in the total proportion of | requirement if it was currently in force, | | that the Consumer Duty is being | minority ethnic employees increasing | the Board sees each of these as | | discussed regularly and raised in all | to 6.3% against our target of 10% | prominent roles, in particular that of | | relevant discussions at meetings of | minority ethnic representation by | the chair of the Risk Committee, which | | the Board of the Company and its | 2023. Our latest Gender Pay Gap | holds much greater importance for | | committees. The Board, on behalf of | Report is available on our website | financial services companies than for | | the Group, appointed John Hitchins | at www.sjp.co.uk, and for the first time | other sectors, as demonstrated by the | | as the Group’s Non-executive Director | in 2023 we are voluntarily publishing | level of scrutiny and focus it receives | | Champion. The Committee took the | our Ethnicity Pay Gap Report which | from the financial services regulators. | | opportunity in 2022 to clearly define | will also be available on our website. | | | the responsibilities associated with | Further information on how the | | Board effectiveness this role and that of the Nominated Inclusion and Diversity Policy has been The Committee has reviewed detailed Non-executive Director for Workforce implemented can be found in the our analysis of the significant other Engagement, formalising them for responsible business section of our commitments of existing and newly inclusion in the respective Directors’ Strategic Report on pages 59 to 61. joined Non-executive Directors and job descriptions. how much time was spent on the The Board Diversity Policy, which Company’s business and affairs. was updated in 2022, sets out our Inclusion and diversity The Committee and the Board are own commitment and provides Inclusion and diversity is an important satisfied that the Non-executive an important part of the Board’s aspect of our succession planning Directors are able to, and do, commit succession plans, and the process and we recognise that if we are to sufficient time and attention to the for recruiting new Directors. The Board meet our long-term inclusion and Company’s business. In addition, the continues to meet the Parker Review diversity aims, it must form a part Committee reviewed and approved target and whilst the appointment of of our formal plans. During 2022 the an assessment of the independence Dominic Burke in November 2022 has Committee approved updates to the of each of the Non-executive resulted in the percentage of women Group’s Inclusion and Diversity Policy Directors, concluding that each on the Board falling to 30% temporarily, and has continued to monitor its of the Non-executive Directors the Board made the appointment fully implementation, our performance demonstrated that they remained aware that the proportion of women against our inclusion and diversity independent in character and would be 37.5% when both Simon strategy and the targets which have judgement. Further information Jeffreys and Roger Yates step been factored into executive team on these conclusions can be found down after the AGM in May 2023. bonus performance criteria and in the Notice of Meeting for the Board KPIs. Addressing diversity has Company’s 2023 AGM. During 2022 the FTSE Women Leaders been a challenge throughout the targets were updated, with increased financial services sector and is In 2021, following consideration diversity figures to be met by 2025, taking longer than anyone would of a number of potential board and the FCA introduced updated like. However, we are seeing progress evaluation providers, the Committee Listing requirements relating to the against our stated targets and, recommended to the Board that disclosure of diversity data, which perhaps more importantly, we see Independent Audit Limited be will be mandatory from 2023. The size clear evidence that a commitment to appointed to provide support with of our Board means that individual diversity is embedded in our culture, internal reviews in 2022 and 2023. membership changes can have a as demonstrated by its prominence in The Committee has monitored material impact on the gender ratio, the language we use and the actions progress against the actions but the Board remains committed to we take. We know that we need to that arose from the 2021 Board ensuring social, ethnic and cognitive keep our foot firmly on the accelerator effectiveness review during 2022 diversity is achieved through the if we are to achieve the progress and is satisfied that they have identification of and active support for we desire which is why inclusion and been addressed. Further details our talent pipeline. Whilst there are no diversity features in the objectives for of the progress made and the 2022 short-term plans to replace the Chair, executives’ annual bonuses. During review are set out on pages 119 to 121. Chief Executive, CFO or SID, all of which 2022, the number of senior female For details on the training and roles are currently occupied by men, hires increased by 100% and the total development provided to Directors the chair of the Group Risk Committee, proportion of women in senior roles (including induction programmes) chair-elect of the Group Remuneration increased to 28.1%, meaning we are please see pages 117 and 118. Committee and Nominated Non- on track to meet our commitment for executive Director for Workforce 30% senior females by September 2023. Engagement are all women. St. James’s Place plc Annual Report and Accounts 2022 143 Remuneration # Report of the Group Remuneration Committee ![img-13.jpeg](img-13.jpeg) Group Remuneration Committee membership Member and date joined Committee Roger Yates (Chair) 1 January 2014 Emma Griffin 22 July 2020 Simon Jeffreys 1 January 2014 Lesley-Ann Nash 1 January 2022 Rosemary Hilary 1 August 2022 The Committee's terms of reference set out the Committee's role and authority. They can be found on the corporate website at www.sjp.co.uk/about-us/corporate-governance. Roger Yates Key objective of the Committee The Committee's primary purpose is to ensure that the Directors' Remuneration Policy and related arrangements support the business's strategy and culture as well as the recruitment, motivation and retention of Executive Directors and senior executives, whilst also having regard to workforce remuneration and complying with regulatory requirements. Regular attendees at meetings Chair of the Board, Chief Executive, Chief Financial Officer, Chief Risk Officer and People Director. Contents Section 1 Committee Chair's annual statement (unaudited) Section 2 Remuneration at a glance and annual report on remuneration Section 3 2023 Directors' Remuneration Policy Dear Shareholder, On behalf of the Committee, I am pleased to present the Directors' Remuneration Report for 2022 (the Remuneration Report). The Remuneration Report is in three sections: - this introductory statement; - the Annual Report on Remuneration for 2022, including an 'at a glance' summary; and, - the proposed Directors' Remuneration Policy (the Policy) for the 2023-25 period, which also explains any differences from the Policy that applied during 2020-22. The sections are set out in accordance with the UK Directors' Remuneration Report Regulations 2013, as amended in 2018 and 2019. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information ### 144 Governance ### 1 2 3 4 5 Remuneration ## Section 1 ## Chair’s annual statement (unaudited) Shareholder support The Long-term Incentive Plan (LTIP) The performance criteria and award maximum of 250% of base outcomes are fully explained in the The Policy that applied for the 2020-22 salary was approved by shareholders Remuneration Report. The Committee period was approved by shareholders at the Policy vote in 2020. However, the has continued to enhance the level at the AGM in May 2020 with 94.71% of Committee decided to defer of detail and clarity of information votes cast in favour. The Committee’s implementation of this maximum in the Remuneration Report about implementation of that Policy also grant level until 2022 – awards in 2020 the strategic and operational received strong support at the AGMs and 2021 were held at the previous performance criteria, and the in 2021 and 2022, with 99.62% and maximum level of 200% of base salary. Committee’s assessment of this 97.72% votes in favour, respectively. non-financial part of the scorecard. Base salaries and total variable pay We have monitored developments maximums for our Executive Directors In accordance with the Policy, 50% of in shareholder and voting agency have been below market benchmarks the bonus is deferred into shares for guidance on remuneration and for financial sector companies of our three years. undertaken two significant size for many years. Nevertheless, the shareholder consultations Committee has kept base salary over the last two years. Long-term performance, and increases no higher than the level Performance Share Plan (PSP) applicable to the wider SJP workforce In 2021, we consulted with major outcomes for 2020-22 – including a zero award in 2021. shareholders on changes to the The three years ending 2022 have performance metrics for the annual been a period of strong absolute bonus for 2022 and subsequent years. Annual performance and and relative performance, and the These changes, which did not require bonus outcomes for 2022 PSP outcomes reflect this. The relative a change to the Policy, were designed The outcome for the annual bonus Total Shareholder Return (TSR) was to provide a rounded view of financial reflects the strong financial results for above median in the range set by the performance, with three key financial the year and the good progress made Committee, and Earnings Per Share criteria. These metrics are familiar by the Executive Directors in meeting (EPS) growth being towards the upper to shareholders and help to drive or exceeding the strategic goals end of the range set by the Committee. current year profits and future growth. set by the Committee at the start The proposals were welcomed by of the year which are fully explained Based on this, the total metric-driven shareholders who responded to the in the Report. outcome for the 2020-22 PSP cycle consultation and were implemented was 86.4% of maximum. by the Committee for the 2022 Before approving the performance performance year. outcome, the Committee considered The resulting vested shares are whether there were any wider subject to a two-year post-vesting During 2022, we conducted a performance or risk management holding period, in accordance with thorough review of the Policy, and factors that might require a downward the Policy. consulted with major shareholders discretionary adjustment. It concluded on some proposed amendments, that the outcome reflected the Before approving the PSP outcomes, in preparation for the normal triennial overall performance achieved by the Committee considered whether vote at the AGM in 2023. Shareholders the Company over the one-year there were any wider performance or who responded were generally period whilst maintaining effective risk management factors that might supportive of the proposed changes risk controls. Therefore, the require a downward discretionary and made a number of helpful and Committee decided that adjustment. It concluded that in line constructive suggestions for the no downward discretionary with the outcome for the annual Committee to consider. This feedback adjustment was appropriate. bonus that the PSP outcomes were was taken into account as the a good reflection of the overall proposed Policy was finalised for Based on this assessment of performance achieved by the inclusion in this Remuneration Report. | | performance, the Committee | Company and the value delivered | | --- | --- | --- | | | determined that 77.1% of the maximum | for shareholders, over the three-year | | Restraint in executive director | annual bonus should be awarded to | period, and that the results have been | | remuneration | Executive Directors for 2022. | achieved whilst maintaining effective | risk controls. Therefore, the Committee During the 2020-2022 Policy period, the decided that no downward Committee has applied a restrained discretionary adjustment was approach to remuneration for Executive appropriate. The Committee also Directors. Zero annual bonuses were considered whether any adjustment awarded for 2020 and zero base salary should be made for ‘windfall gains’ increases were awarded in 2021, despite (see opposite). robust Company performance, and strong personal performances from the Executive Directors. St. James’s Place plc Annual Report and Accounts 2022 ### 145 ‘Windfall gains’  SJP did not draw upon government Proposed Policy for 2023-25 support during the COVID The Committee carefully considered The Committee has undertaken pandemic, nor make any COVID- whether a downward adjustment a thorough review of the Policy in Strategic Report Financial Statements Other Information related redundancies, and we should be made to the PSP vesting preparation for the triennial AGM reinstated the proportion of the outcome in 2023 to take account of vote, including consulting with major withheld 2019 final dividend in the COVID pandemic-related stock shareholders as set out above, and March 2021. | market ‘shock’ around the time of | | taking account of remuneration for | | --- | --- | --- | | grant in March 2020 – specifically |  If there had, instead, been a share | other SJP employees. The Committee | | the impact of this on the number of | price ‘spike’ at the time of the | concluded that the overall | | shares that were awarded. Due to | award, the Committee would not | remuneration structure continues to | | the general stock market fall, the SJP | have increased the size of award | be suitable for SJP and is aligned to our | | share price at the time of grant was | in order to align it with the size of | strategic goals. Where amendments | | £7.13, compared to £10.26 at the time | the previous year’s award. The | have been proposed to the Policy | | of the prior year’s grant in 2019. This | Committee has not compensated | and practice, these are intended | | resulted in Executive Directors being | Executive Directors for any share | to: support the continued growth of | | granted 44% more shares at the 2020 | price ‘spike’ at the time of award in | the business over the next three years; | Governance | grant than they had received at the | previous year’s. For example, the | assist retention and, when necessary, | | --- | --- | --- | | prior year’s grant (excluding the | award price of the PSP in March | recruitment of talent; and, ensure that | | impact of year-on-year salary | 2014 spiked at a level 65% higher | the Policy includes features of best | | changes on the grant value). | than the previous years’ award, | practice in UK executive remuneration. | resulting in 40% fewer shares being The Committee considered a number awarded; however, no upward The key proposed changes to the of balancing factors in assessing adjustment was made to the Policy and practice are: whether an adjustment should be award size to mitigate this negative  to increase the weighting on made at vesting for this ‘windfall gain’: impact on Executive Directors. financial metrics in the annual  The fall in the share price around the bonus to 60% (from 50% currently), Having considered all the relevant time of grant was not a consequence with a corresponding reduction factors, the Committee concluded of SJP’s performance or that of the in the strategic and operational that no adjustment will be made to management team. It was a global metrics weighting to 40% (from the PSP vesting outcome in respect of phenomenon resulting from the 50% currently); the 2020 PSP awards due to vest in COVID pandemic ‘shock’. | | March 2023 for the Executive Directors. |  to align the maximum annual | | --- | --- | --- | |  Our Executive Directors were not | | bonus more closely with market | | insulated from the negative effects | | norms for companies of SJP’s size. | Changes to the Board on vesting values of the COVID- The current maximum of 150% of Ian Gascoigne retired as Managing related market ‘shock’. These base salary (with half deferred into Director from the Board and the negative effects included the shares) compares with medians of Company on 31 March 2022. His impact on the value of 2017 PSP 230-275% of base salary for CEOs remuneration in this Report is for awards vesting in 2020, and the and CFOs in listed financial sector the portion of the year that he served value of deferred bonuses earned companies of our size. We propose until the date he left the Board. He for the 2016 performance year that to increase the bonus maximum remained eligible for annual bonus vested in the spring of 2020. in two stages, to 175% in 2023, and for the part of 2022 that he served to 200% for 2024 and beyond –  Our Executive Directors were also as a Executive Director. Full details still below the median levels in not insulated from the economic of the treatment of Mr Gascoigne’s other financial sector companies. effects of the pandemic on remuneration on retirement were Maximum award levels for the performance outcomes for 2018 set out in last year’s Report. PSP are unchanged at 250% of PSP awards vesting in the spring of base salary; 2021 (which vested at only 9% of On 1 November 2022 we welcomed maximum, compared with 63% for  to reduce the weight of the Dominic Burke as a Non-executive the 2017 PSP awards vesting for Embedded Value (EV)-based Director onto the Board. Details of the performance to the end of 2019 Earnings Per Share (EPS) remuneration for all of the Directors before the pandemic). performance metric in the PSP to serving throughout the year one third (from two thirds currently) can be found later in the Report.  Unlike many FTSE 350 companies, and introduce a Cash Result-based As announced during October 2022, we awarded zero bonus for 2020, EPS performance metric with a I will be retiring from the SJP Board despite robust performance weighting of one third. Relative at the conclusion of the 2023 AGM relative to the non-financial criteria Total Shareholder Return (TSR) having served as a Director for nine that made up 50% of the annual will continue to be used as a years. In accordance with succession bonus. Executive Directors also performance metric for the plans, it is the SJP Board’s intention, received zero base salary increases remaining third. These subject to regulatory approval, in spring 2021 and voluntarily performance metrics provide to appoint Emma Griffin as my waived 20% of base salary for three a good balance, reflecting successor. I would like to take this months during 2020. The Chief performance over the long-term opportunity to thank the Committee Executive’s and the Chief Financial in growing the business and in members, management and Officer’s total remuneration for delivering value and cash flows shareholders for their support during 2020 was, respectively, 43% and for shareholders; my time as Chair of the Committee. 33% lower than for the prior year, in the context of the COVID pandemic. www.sjp.co.uk ### 146 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued |  to measure EPS growth for future |  to increase the post-cessation | However, the Executive Directors and | | --- | --- | --- | | PSP awards against absolute | shareholding requirement for | the Committee each concluded that, | | targets rather than relative to | Executive Directors to match | given the prevailing economic and | | inflation. We are one of the very | the Investment Association | cost-of-living context, base salary | | few remaining companies using | guideline; and | increases in 2023 for our Executive | | inflation-linked targets in its PSP. | | Directors should not exceed the |  to reduce the existing Executive With the increasingly volatile and average percentage increases Directors’ pension allowance from unpredictable inflation levels in the applying to the wider SJP workforce. 1 January 2023 to 15% of base salary economy, continuing the inflation- (from 20% currently). The allowance linked approach risks undermining The actual increase for the Executive for new Executive Director the incentive effect of the PSP; Directors determined by the appointments is already aligned Committee for 2023 is 5%, which is  we therefore also propose to with the level for other employees, below the average of 8% for the wider measure growth on a Compound which is 10% of base salary on SJP workforce. Annual Growth Rate (CAGR) basis, joining, rising to 15% with service. which is more exacting than the The Committee will keep the salary Average Annual Growth Rate During the consultation with levels under review for future years. (AAGR) basis used previously. The shareholders, a number of There may be a need to re-position EPS targets for the 2023 award are respondents highlighted the base salaries at some point during detailed in this Report on page 164; importance of ESG-related metrics in the 2023-25 Policy period. variable pay. This feedback has been considered by the Committee. For the last two years the strategic objectives Board Chair fee and Non- relating to the annual bonuses for the executive Director fees for 2023 Executive Directors have included a The Committee reviewed the Board category related to our culture and Chair fee and concluded that it being a responsible business. This would remain unchanged in 2023. The objectives of the category includes a range of ESG The Committee intends to consider remuneration policy are: targets, with progress tracked each the Board Chair’s fee again for 2024, year. It reflects our aim to become a  to support the retention of when the current Chair will have leading responsible business, and we individuals with the experience served three years. will continue to set relevant and and skills to drive the stretching targets for the Executive performance of the Company; The Board (excluding Non-executive Directors. Our commitment to Directors) reviewed the Non-executive  to ensure remuneration is addressing climate change is also Director fee rates and concluded that, transparent and reflects the reflected in our responsible overall, Non-executive Director fees performance of the Group in investment targets and our were not materially out of step with the relevant year and the membership of the Net-Zero Asset the market, and having taken account longer-term. Annual bonus Owner Alliance. Although we have not of the wider economic environment, and long-term incentive introduced an ESG-related metric to agreed that incremental increases opportunities are therefore the PSP for 2023, the Committee will would only be made where gaps linked to the achievement of consider this for future PSP awards. existed. With effect from 1 January demanding performance 2023, fees for the chairs of the targets; and Salary increases for 2023 Group Audit, Group Risk and Group  to align pay with the strategic Remuneration Committees will Base salaries in 2022 for the Chief objectives of the Company increase by £1,000 per annum Executive (£590,947) and Chief and the interests of our (to £26,000 per annum) and fees Financial Officer (£427,300) were shareholders whilst giving for members of these committees substantially below the relevant due regard to principles of will increase by £500 per annum market benchmarks for a company best practice and relevant (to £10,500 per annum). of SJP’s size, at 82% and 84% of the regulations. financial services market medians. There is a strong case for re-positioning The Policy can be found on these salaries, to better align them pages 166 to 174. with the market level that the Company would need to pay to recruit and retain individuals of the necessary calibre if the roles became vacant. St. James’s Place plc Annual Report and Accounts 2022 ### 147 Consultation with colleagues One of our Committee members, Lesley-Ann Nash, is also the Non-executive Director with responsibility for workforce engagement. Lesley-Ann conducts regular meetings with our Workforce Engagement Panel, which includes a cross-section of Strategic Report Financial Statements Other Information SJP colleagues. This included a remuneration session during 2022 which I also attended as Chair of the Committee along with the Committee’s independent adviser, to discuss the Policy and practice for Executive Directors and how the underlying principles and structure align to the wider employee workforce. A further session was held in early 2023 to discuss the proposed changes to the Policy and take account of the views of the Workforce Engagement Panel before finalising the proposals. Corporate Governance Code and FCA regulations The Committee regularly monitors how remuneration policy and practice meet the requirements of the Corporate Governance Code, and the relevant FCA Remuneration Codes that apply to regulated subsidiaries within the Group. In reviewing the Policy, the Committee was mindful of Provision 40 of the Corporate Governance Code and considers that our remuneration Policy addresses the following factors: Factors Approach to remuneration Policy Governance Clarity Our Remuneration Policy and its operation and alignment with our strategic objectives are disclosed in the Directors’ Remuneration Report, which provides stakeholders with clarity on the link between the achievement of SJP’s strategy and how Executives Directors are rewarded. Clarity on remuneration is also provided to employees via our Workforce Engagement Panel, which provides the opportunity for panel members to engage on remuneration-related topics including the proposed changes to the Policy. Simplicity The structure of the package for Executive Directors is simple to understand and provides transparent performance criteria and payment scales for variable pay plus appropriate scope for the use of judgement and discretion by the Committee. In recent years we have adjusted the performance measures for variable elements so that they are more clearly aligned with stakeholder expectations and experience. This has involved selecting measures that are better understood by stakeholders as well as ensuring we explain the alignment better in the Policy and the Report. Risk The Executive Directors’ package is sensitive to risk and is aligned with our strategic objectives and the interests of our shareholders and other stakeholders. The Policy is assessed to ensure it aligns with the Group’s risk appetite and regulatory requirements, and that it does not encourage undue risk-taking. Assurance of this is sought from the Chief Risk Officer. Predictability Our Policy clearly discloses the maximum opportunity for each element of the Policy. The actual outcomes will depend on the performance achieved against the specific performance metrics. The assessment of the overall outcome for each of the strategic objectives attaching to the annual bonus has this year been enhanced to make clear the extent to which each objective had been completed. The weighting of the financial performance element of the annual bonus has also increased this year and the strategic objective element has been reduced. Proportionality The proposed metrics and maximum award levels in the annual bonus and PSP help to ensure that variable pay for Executive Directors is proportionate to the performance delivered for stakeholders and there is alignment between the outcomes and the achievement of SJP’s strategy. Stretching performance conditions and the discretion available to the Committee ensure that poor performance is not rewarded. Alignment to The Policy reflects SJP’s culture of rewarding performance, being a responsible business, and taking culture account of the needs of all stakeholders. This is particularly relevant for the strategic objectives relating to the annual bonus as it includes elements specifically aligning with cultural indicators. Total Shareholder Return The Company has sustained outstanding levels of return to shareholders. The sum of £100 invested in SJP a decade ago was worth £366 at the end of 2022, which is three times the rate of return for the FTSE All-Share Index. Conclusion Remuneration outcomes for 2022 reflect the strong performance during the year. The proposed Policy amendments build on what has proved to be a successful remuneration strategy over many years. The changes are also balanced and proportionate. I thank shareholders who assisted the Committee in the consultation process, and very much welcome their constructive feedback and support for the proposals. I encourage you to vote both for the Directors’ Remuneration Report for 2022, and for the Directors’ Remuneration Policy for the 2023-25 period. Roger Yates On behalf of the Group Remuneration Committee 27 February 2023 www.sjp.co.uk ### 148 Governance ### 1 2 3 4 5 Remuneration ## Section 2 ## Remuneration at a glance and annual report on remuneration ### Summary of Executive Directors’ remuneration for the year How were our Executive Directors rewarded? Single figure remuneration for the year The following tables provide a summary of single total figure of remuneration for 2022 and 2021 for the Executive Directors. 3 Andrew Croft, Chief Executive Craig Gentle, Chief Financial Officer Ian Gascoigne , Managing Director £’000 £’000 £’000 159 2022 754 2,361 549 1,707 2022 1,338 2021 731 2,410 2021 532 1,744 2021 604 1,741 | | | | | 2022 2021 | | | | | 2022 2021 | | | | | | 2022 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Base salary 587,161 568,218 | | | | | Base salary 424,561 410,865 | | | | | Base salary 104,086 410,865 | | | | | | | Benefits 49,705 49,145 | | | | | Benefits 39,397 38,987 | | | | | Benefits 33,657 110,743 | | | | | | | Pension 117,432 113,644 | | | | | Pension 84,912 82,173 | | | | | Pension 20,817 82,173 | | | | | | | Other 176 2,863 | | | | | Other – 2,875 | | | | | Other 2,244 177 | | | | | | | Annual bonus | | | | | Annual bonus | | | | | Annual bonus | | | | | | | | 2 | | | | | 2 | | | | | 2 | | | | | | (cash) | | | 339,379 411,958 | | (cash) | | | 245,396 297,877 | | (cash) | | | | 60,162 297,877 | | | Annual bonus | | | | | Annual bonus | | | | | Annual bonus | | | | | | | | | 2 | | | | | 2 | | | | | 2 | | | | | (deferred) | | | 339,379 411,958 | | (deferred) | | | 245,396 297,877 | | (deferred) | | | | 60,162 297,877 | | | Total 1,433,232 1,557,786 | | | | | Total 1,039,662 1,130,654 | | | | | Total 281,128 1,199,712 | | | | | | | | | 1 | | | | | 1 | | | | | 1 | | | | | PSP vested | | | 1,682,174 1,583,637 | | PSP vested | | | 1,216,326 1,145,076 | | PSP vested | | | 1,216,326 1,145,076 | | | 1 The value of the PSP vested corresponds to the long-term incentives in the Total remuneration table on page 149. 2 The annual bonus awards are in respect of performance during the years ending 2021 and 2022 respectively. 3 Ian Gascoigne retired as Managing Director and from the Board on 31 March 2022 and received salary, benefits and pension allowance to this date. Linking remuneration to achievement of key business goals Weighting | (maximum potential | | | Outturn | Percentage of | | | | --- | --- | --- | --- | --- | --- | --- | | percentage points | | (actual points | | base salary | | | | | per item) | | earned) | | earned | 1 | Underlying cash result 10% 2.4 3.6% Net Funds Under Management flows 20% 20.0 30.0% Annual bonus for 2022 Annual growth in controllable expenses 20% 20.0 30.0% (max 150% of base salary) Strategic and operational KPIs 50% 34.7 52.0% Total bonus opportunity 100% 77.1 115.6% Relative TSR 33.3% 30.0 60.0% | PSP (2020 award) | | Average annual adjusted EPS growth | | | | --- | --- | --- | --- | --- | | | 1 | | 2 | | | (max 200% of base salary | ) | in excess of RPI | | 66.6% 56.4 112.7% | Total PSP opportunity 100% 86.4 172.7% 1 Base salary for PSP is the base salary at the time of grant. The value of the PSP vesting is also dependent on the amount of share price movement between grant and vesting. 2 The EPS performance condition is calculated by reference to the post-tax EEV operating profit (on a fully diluted per share basis). This measure excludes the direct impact of the stock market fluctuations and changes in economic assumptions on the final year’s performance. 2022 2,255 1,497 3,115 2,345 2,276 3,141 St. James’s Place plc Annual Report and Accounts 2022 Fixed Variable Fixed Variable Fixed Variable 149 ## Annual report on remuneration This Directors' Remuneration Report, excluding the Directors' Remuneration Policy, will be put to an advisory shareholder vote at the 2023 AGM. This part of the Remuneration Report explains the work of the Remuneration Committee and sets out how we implemented our Policy during 2022. The information on pages 148 to 165 has been audited where indicated. This part also sets out how we intend to implement the proposed Directors' Remuneration Policy in 2023. The Policy itself will be put to a shareholder vote at the AGM on 18 May 2023 and is set out in full on pages 166 to 174. ## 2.1 How the Remuneration Policy was applied in 2022 ### 2.1.1 Remuneration payable in respect of performance in 2022 (audited) #### Summary of total remuneration The remuneration received by Executive Directors in respect of the years ended 31 December 2022 and 2021 is set out below. | Executive Director | | Base salary | Benefits | Annual bonus | Long-term incentives | Pension | Other | Total | Total fixed remuneration | Total variable remuneration | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £ | £ | £ | £ | £ | £ | £ | £ | £ | | Andrew Croft | 2022 | 587,161 | 49,705 | 678,758 | 1,682,174 | 117,432 | 176 | 3,115,406 | 754,298 | 2,361,108 | | | 2021 | 568,216 | 49,145 | 623,916 | 1,583,637 | 113,644 | 2,863 | 3,141,423 | 731,007 | 2,410,416 | | Craig Gentle | 2022 | 424,561 | 39,397 | 490,792 | 1,216,326 | 84,912 | – | 2,255,988 | 548,870 | 1,707,118 | | | 2021 | 410,865 | 38,987 | 595,754 | 1,145,076 | 82,173 | 2,875 | 2,275,730 | 532,025 | 1,743,705 | | Ian Gascoigne | 2022 | 104,086 | 33,657 | 120,324 | 1,216,326 | 20,817 | 2,244 | 1,497,454 | 158,560 | 1,338,894 | | | 2021 | 410,865 | 110,743 | 595,754 | 1,145,076 | 82,173 | 177 | 2,344,788 | 603,781 | 1,741,007 | The remuneration received by Non-executive Directors in respect of the years ended 31 December 2022 and 2021 is set out below: | Non-executive Director | | Fees | Benefits | Total | | --- | --- | --- | --- | --- | | | | £ | £ | £ | | Dominic Burke | 2022 | 21,208 | – | 21,208 | | | 2021 | – | – | – | | Emma Griffin | 2022 | 124,125 | 6,584 | 130,709 | | | 2021 | 104,650 | 1,942 | 106,592 | | Rosemary Hilary | 2022 | 154,021 | – | 154,021 | | | 2021 | 127,725 | 287 | 128,012 | | John Hitchins | 2022 | 122,042 | – | 122,042 | | | 2021 | 14,108 | – | 14,108 | | Simon Jeffreys | 2022 | 181,537 | 1,699 | 183,236 | | | 2021 | 114,392 | 1,217 | 115,609 | | Paul Manduca | 2022 | 375,000 | 4,784 | 379,784 | | | 2021 | 305,948 | 179 | 306,127 | | Lesley-Ann Nash | 2022 | 111,000 | 85 | 111,085 | | | 2021 | 84,650 | 1,571 | 86,221 | | Roger Yates | 2022 | 167,042 | 534 | 167,576 | | | 2021 | 113,937 | 311 | 114,248 | Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 150 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued 2.1.1 Remuneration payable in respect of performance in 2022 (audited) continued Summary of total remuneration continued | Benefits | Annual bonus | Other | | --- | --- | --- | | Benefits for the Executive Directors comprise a | As explained on page 169, half of the annual | These amounts relate to income received from | | company car or cash equivalent, fuel, private | bonus is paid in cash, and the other half in the | the Share Incentive Plan and the Save As You | | healthcare, life and critical illness cover, | form of a conditional award of the Company’s | Earn scheme. For the Share Incentive Plan the | | permanent health insurance, health screening | shares. Release of the shares is subject to the | value relates to the Matching shares (one | | and travel costs. For Ian Gascoigne, they also | participant’s continued employment | Matching share is awarded for every ten | | included a housing allowance to facilitate | throughout the restricted period. Deferred | Partnership shares purchased) received. For | | working across multiple locations (2022: | shares are subject to forfeiture for three years | Andrew Croft, 12 Matching shares were | | £18,000). The amounts shown are generally | under the terms of the Deferred Bonus | awarded on 25 March 2022 at £14.63. | | the taxable amounts. | Scheme. | Employees making contributions to the Save | As You Earn receive a 20% discount on shares Benefits for Non-executive Directors are for Long-term incentives under option. Ian Gascoigne started a savings the reimbursement of taxable travel expenses The value of the long-term incentives is the contract in March 2022 with a discount of grossed up for any tax payable thereon. Paul value of shares for the award where the £2.77 per share for 810 shares under option. Manduca received private healthcare benefit of £3,551 during 2022. Simon Jeffreys and Roger performance period ends in the year, together with the value of dividend equivalents that Subsidiary board fees Yates received health screening of £534 each | during 2022. Non-executive Directors are not | have been added in the form of shares, during | Rosemary Hilary received £36,458 for chairing | | --- | --- | --- | | paid a pension and do not participate in any | the three-year performance period. The gross | St. James’s Place UK plc until 6 June 2022 and | | of the Company’s variable incentive schemes. | value of those dividend equivalent shares is | Emma Griffin received £28,125 for chairing | | | based on the three-month average share | St. James’s Place Unit Trust Group Limited | | Pension allowance | price to 31 December 2022 of £10.93 (being | in 2022. Simon Jeffreys received €31,250 for | | | £176,660 for Andrew Croft, £127,729 for Craig | chairing St. James’s Place International plc | Pension contributions, being 20% of base Gentle and £127,729 for Ian Gascoigne). The in 2022. Dominic Burke, John Hitchins and salary, were capped by legislation and so a long-term incentive figures for 2022 have been Roger Yates were appointed as Non-executive non-pensionable allowance was paid to the calculated using the average of the Directors of St. James’s Place UK plc during Executive Directors in full for Andrew Croft and Company’s share price in the three-month 2022 and received the following fees for the Ian Gascoigne (until he retired as an Executive period to 31 December 2022, being £10.93, as part of the year that they served: £5,208 for Director on 31 March 2022), and for the balance the actual vesting date of the PSP award is on Dominic Burke; £26,042 for John Hitchins and for Craig Gentle, who had a £4,000 contribution 25 March 2023. The figures for 2021 have been £26,042 for Roger Yates. to the money purchase Group pension updated from the three-month average scheme. Consistent with the pension figures used in last year’s report (being Payments to past Directors contributions provided to the wider workforce, £1,702,967 for Andrew Croft, £1,231,359 for Craig As detailed in last years’ Report, Ian all Executive Directors appointed after the 2018 Gentle and £1,231,359 for Ian Gascoigne) to the Gascoigne, who retired from the Board on AGM receive a pension allowance of 10% of Company’s share price on the date of vesting 31 March 2022, retained his 2020 PSP Award salary on joining, increasing to 12.5% after five on 25 March 2022, being £14.47. in full as he continued as an employee after years and 15% after ten years of service. The | pension contributions for Executive Directors | The LTIP figure for 2022 in the table on the | leaving the Board. The award of 115,249 shares | | --- | --- | --- | | appointed prior to the 2018 AGM were reduced | previous page includes the following: £524,019 | will vest on 25 March 2023. | | to 15% of base salary on 1 January 2023. None | for Andrew Croft; £378,904 for Craig Gentle and | | | of the Executive Directors participate in | £378,904 for Ian Gascoigne, which are | | Payments for loss of office defined benefit pension schemes. attributable to the movement in the share No payments were made to past Directors price between the grant date and the end of for loss of office during the year ended the performance period. This amounts to 31.15% 31 December 2022. of the vesting amount shown in the table. The LTIP figure for 2021 in the table on the previous page includes the following: £456,664 for Andrew Croft, £330,199 for Craig Gentle and £330,199 for Ian Gascoigne, which are attributable to the movement in the share price between the grant date and the date of vesting the end of the performance period. This amounts to 28.84% of the vesting amount shown in the table for Andrew Croft, Ian Gascoigne and Craig Gentle. These awards are subject to a two-year post-vesting holding period. St. James’s Place plc Annual Report and Accounts 2022 ### 151 2.1.2 Summary of total annual bonus for 2022 performance (audited) Financial objectives The performance conditions and weightings which applied to the annual bonus and the resulting payout were as follows: Strategic Report Financial Statements Other Information Payout | | | Weighting | | | Weighting | | | Maximum | | Payout | (percentage of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | (percentage of | | | (percentage of | | Threshold (20% | | value (100% | (percentage of | | maximum total | | | Measure | | | salary) | | maximum) | | payable) | payable) Actual | | salary) | | bonus) | Underlying cash result 15% 10% £405m £505m £410.1m 3.6% 2.4% Net funds under management flows 30% 20% £7.42bn £9.24bn £9.8bn 30.0% 20.0% Annual growth in controllable expenses 30% 20% £349.9m £344.0m £343.0 30.0% 20.0% Strategic 75% 50% Assessment by the Committee of the 52.0% 34.7% performance of the Executive Directors Governance Total payout 115.6% 77.1% Annual bonus strategic targets performance assessment As described in other parts of the Annual Report and Accounts, the Company delivered strong performance in 2022 for each of our key stakeholders: clients, advisers, employees, shareholders and society. The Committee considered these groups when setting the strategic targets for 2022, together with other objectives set out in the 2022 business plan. In serving our clients well, developing our employees and advisers for the future and striving to improve the effectiveness of our organisation, the Company will be well placed to meet our long-term business objectives, and create additional value for our shareholders. The Company also focuses on the importance of safe and sustainable growth through prudent management of risk and the highest standards of regulatory compliance, maintaining constructive relationships with regulators. The Committee set the Executive Directors a range of business priorities which align to the six business priorities underpinning our annual business plan. Each category is equally weighted and is made up of a number of objectives. Underlying performance against each of the priorities was monitored against quantitative and qualitative measures to help support the Committee’s determination of the overall success against objectives and we have included details of the measures and outcomes for the objectives below. When assessing the overall outcome for each priority, the Committee has this year included a score to show to what extent each priority had been completed. In order to determine an overall outcome the Committee has aggregated the scores for each of the six priorities and has also taken into account any other relevant achievements attained during the year. The Committee recognised that a high proportion of the business priorities had been achieved and that good progress had been made in meeting or exceeding the major business plan objectives. The category entitled ‘Our culture and being a leading responsible business’ is made up entirely of ESG targets. In addition, other factors throughout the objectives also recognise our aim to be a leading responsible business. Business priority (scorecard weighting – total 75%) Measure/target Outcome Score Building community (12.5%) Slightly behind | Net manpower growth | Growth of adviser base in line with plan 3% growth achieved | | | --- | --- | --- | | Employee learning | Achieve strong rates of employees | New online learning and development tool | | and development | adopting online tools for their learning | implemented with the Academy. Marginal | | | and development | delay with the implementation to the | Partnership and employees Partner sentiment Achieve strong overall scores based Enhanced engagement and tracking on a basket of criteria in Partner of sentiment achieved. Partner engagement surveys development events were well received. Further strengthening of Partner relationship ongoing Employee engagement Achieve strong employee engagement Engagement score of 83% achieved, scores based on employee survey results close to stretch goal www.sjp.co.uk ### 152 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued Business priority (scorecard weighting – total 75%) Measure/target Outcome Score | Being easier to do business with (12.5%) | | | On track | | --- | --- | --- | --- | | Administration | % of KPIs used to track the performance of our | Target exceeded. Achieved 90% over the | | | performance | administrators showing a positive outcome | whole year | | | Salesforce adoption | Embed use of Salesforce into Group functions Embedded into Group functions. Work | | | on realising full benefits to be completed | Digital client proposition | Launch a new digital client application Achieved | | | --- | --- | --- | | Client adoption of | Increase the use of digital communications | Exceeded target | | digital literature | by clients | | | Operational efficiency | Delivery of efficiency gains through | Outperformed target as at December 2022. | automation in line with plan Delivering value to advisers and clients through our investment proposition (12.5%) Slightly behind Value Assessment Ratings Aggregate relative performance of funds Some progress achieved in Value Assessment Statement Delivery of fund changes Successful delivery of planned fund changes Achieved in line with plan Operational excellence Delivery of programme in line with plan Programme delivered broadly in line with plan Responsible Investment Reduce carbon footprint of investment Exceeded target proposition in line with plan Building and protecting our brand and reputation (12.5%) On track Client sentiment Maintain client sentiment toward SJP Positive client sentiment. Overall satisfaction level of 87% Brand Implement new brand in line with plan New brand was launched in 2022 and positively received. Strong media sentiment score: 97% average Digital marketing Launch of Salesforce digital marketing solution Launch achieved Value of advice Develop clear value of advice Achieved in line with plan communications and engagement tools Cyber security Increase % of Partner practice which use Strong progress achieved DaaS or who are CE+ accredited Client complaints Achieve low levels of complaints, relative to Low ratio of complaints relative volume of clients to volume of clients Internal audit, Based on broadening/deepening regulatory There were no significant control failings risk and regulation relationships, no regulatory sanctions and or weaknesses identified in the year that internal audit/compliance reports remain unmitigated, and no regulatory sanctions. See Report of the Group Audit Committee on pages 130-131 for more information. | Our culture and being a leading responsible business (ESG) (12.5%) | | | Ahead | | --- | --- | --- | --- | | Responsible | Embed our culture vision effectively across | Achieved in line with plan | | | business strategy | larger bases of Partners and employees | | | | Net zero commitments | Executive approval of Responsible | Achieved in line with plan and endorsed by | | | | Business KPIs | the Board | | | Community impact | Support St. James’s Place Charitable | Goal exceeded. £10.48m raised during 2022 | | Foundation to raise £9 million | Inclusion and diversity | Increase representation of female (goal 28%) | Achieved 28% for females in senior roles. | | | --- | --- | --- | --- | | | and minority ethnic employees (goal 8%) in | Further work ongoing on representation | | | | senior roles | of minority ethnic employees | | | Continued financial strength (12.5%) | | | On track | | Partner lending | Optimise external lending facilities for Partner | Achieved. New loan securitisation | | | | business loans | completed | | | Capital usage | Group capital managed within risk appetite Achieved | | | | Regulator relationship | Maintain constructive relationship with PRA | Constructive relationship maintained. | | | | and FCA | Work on the implementation of | | Consumer Duty is ongoing St. James’s Place plc Annual Report and Accounts 2022 ### 153 2.1.3 Long-term incentive awards (audited) Vesting of Performance Share Plan (PSP) awards On 31 December 2022, the awards made on 25 March 2020 under the PSP reached the end of their three-year performance Strategic Report Financial Statements Other Information period. These will vest on 25 March 2023, being the third anniversary of the date of grant. The vested shares for Executive Directors are subject to a two-year post-vesting holding period (other than to sell shares to settle tax on vesting or exercise). The performance conditions which applied to the 2020 PSP awards, and the actual performance achieved against these conditions, are set out in the tables below: Average annual adjusted EPS | | TSR relative to the FTSE 51 to 150 | | 1 | growth in excess of RPI | | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Percentage of | | | | Percentage of | | | | | one third of | | Performance | | two thirds of | | | Performance hurdle | Performance required | award vesting | | | required | award vesting | | Below threshold Below median 0% Below 5% 0% Threshold Median 25% At least 5% 25% Stretch or above Upper quartile or above 100% 16% or above 100% Governance Actual achieved 24 out of 83 companies 90.1% 13.7% 84.5% 1 FTSE 51-150 index excluding investment trusts and companies in the FTSE oil, gas and mining sectors. 2 The EPS performance condition is calculated by reference to the post-tax EEV operating profit (on a fully diluted per-share basis). This measure excludes the direct impact of stock market fluctuations and changes in economic assumptions on the final year’s performance. 3 Straight-line vesting occurs between threshold and maximum vesting. 4 Awards are subject to a three-year performance period. Vested shares cannot normally be sold for a further two years other than to the extent necessary to settle tax on vesting or exercise. 5 Malus and clawback provisions apply. 6 No discretion was exercised by the Committee to override the outcome referred to above. Therefore, the total percentage of the 2020 PSP awards vesting was 86.37%, which resulted in the following awards to the Executive Directors: Number of shares vesting including | | Total number | | | dividend | | Value of | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | of shares | Percentage of | equivalent | shares vesting | | | | | Director | | granted | awards vesting | shares | 1 | | (£) | 2 | Andrew Croft 159,387 86.37% 153,810 1,682,174 Craig Gentle 115,249 86.37% 111,215 1,216,326 Ian Gascoigne 115,249 86.37% 111,215 1,216,326 1 Andrew Croft accrued 16,153 dividend equivalent shares and Craig Gentle and Ian Gascoigne accrued 11,679 dividend equivalent shares. 2 As these awards will not actually vest until 25 March 2023, a deemed share price is used to calculate the value of shares vesting for the purposes of this Report. This is taken as the three-month average to 31 December 2022, being £10.93. Granting of PSP awards in 2022 Details of PSP awards (nil-cost options) granted to the Executive Directors in 2022 are set out in the table below: Percentage of | | | | Number of SJP | | | | | face value that | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Average share | | | shares over | | Face value | | would vest at | | | | price at date of | | | which award | | | of award | | threshold | | Director Type of award Basis of award granted | | grant | | was granted | 1 | | (£’000) | performance | | Andrew Croft Nil-cost option 250% of salary of £590,947 £14.64 100,947 1,478 25% Craig Gentle Nil-cost option 250% of salary of £427,300 £14.64 72,992 1,069 25% 1 The number of shares awarded was calculated based on the average share price over a period of three days prior to the date of grant on 25 March 2022, being £14.64 per share. The face value of the award figure is calculated by multiplying the number of shares awarded by the average share price figure of £14.64. 2 PSP awards are structured as nil-cost options and therefore no exercise price is payable on exercise. Dividend equivalents accrue to the Executive Directors between the date of grant and exercise of the award (up to a maximum of six years from date of grant) but are released only to the extent that awards vest. Awards in 2022 were based on the achievement of two metrics: (a) TSR performance relative to a composite benchmark of the FTSE 51 to 150, excluding investment trusts and companies in the oil, gas and mining sectors for one third of the award. For the TSR performance metric element, 25% vests at median, with straight-line relationship to 100% vesting for upper quartile performance; and (b) average annual adjusted earnings (EPS) per share growth target, based on EEV, in excess of CPI, with the scale starting at CPI+5% and extending to CPI+12% calculated by reference to the post-tax EEV operating profit (on a fully diluted per share basis) for two thirds of the award. For the EPS performance metric element a threshold and stretch level of performance is set. At threshold, 25% of the relevant element vests, rising on a straight-line basis to 100% for attainment of levels of performance between threshold and maximum targets. These awards also have a post-vesting holding period of two years from the vesting date. www.sjp.co.uk ### 154 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued 2.1.4 Share awards (audited) The tables below set out details of share awards that have been granted to individuals who were Executive Directors during 2022 and which had yet to vest or be exercised at some point during the year. The performance periods for all share awards run for a period of three years, ending on 31 December of the year immediately preceding the vesting date. Performance Share Plan awards outstanding Remaining | | | | Shares | | unexercised at | | | --- | --- | --- | --- | --- | --- | --- | | | Market price at | | originally | | 31 December | | | Director Date of grant | | grant | awarded Face value (£) | 1 Shares vested Vesting date | | 2022 | Andrew Croft 25 March 2019 £9.92 107,537 1,066,767 100,454 25 March 2022 100,454 25 March 2020 £7.13 159,387 1,136,429 – 25 March 2023 159,387 25 March 2021 £12.67 89,695 1,136,436 – 25 March 2024 89,695 25 March 2022 £14.64 100,947 1,477,359 – 25 March 2025 100,947 Craig Gentle 25 March 2019 £9.92 77,757 771,349 72,635 25 March 2022 72,635 25 March 2020 £7.13 115,249 821,725 – 25 March 2023 115,249 25 March 2021 £12.67 64,856 821,726 – 25 March 2024 64,856 25 March 2022 £14.64 72,992 1,068,238 – 25 March 2025 72,992 Ian Gascoigne 27 March 2017 £10.57 71,405 754,751 44,912 27 March 2020 44,912 25 March 2019 £9.92 77,757 771,349 72,635 25 March 2022 72,635 25 March 2020 £7.13 115,249 821,725 – 25 March 2023 115,249 25 March 2021 £12.67 64,856 821,726 – 25 March 2024 64,856 1 The face value of the award is calculated by multiplying the number of shares awarded by the market price at grant (the average share price figure over a period of three days prior to the date of grant). Deferred Bonus Scheme – shares held during 2022 The table below sets out details of the awards held by the Executive Directors under the deferred element of the annual bonus scheme during 2022: | | Balance at | | | | | | | | Balance at | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 January | | Released in | | | Awarded in | | | 31 December | | | | | Director | | 2022 | | year | 1 | | year | 2 | | 2022 | 3 | Vesting date | Andrew Croft 24,806 24,806 – – 25 March 2022 15,346 – – 15,346 25 March 2023 – – 31,934 31,934 25 March 2025 Craig Gentle 17,936 17,936 – – 25 March 2022 11,096 – – 11,096 25 March 2023 – – 23,091 23,091 25 March 2025 Ian Gascoigne 17,936 17,936 – – 25 March 2022 11,096 – – 11,096 25 March 2023 – – 23,091 23,091 25 March 2025 1 These deferred share awards were awarded on 25 March 2019 and were equal in value to 50% of the Directors’ 2018 total annual bonus. 2 Bonuses were not paid to any employees for 2020 and therefore no deferred share awards were awarded. 3 Outstanding awards at the year-end relate to deferred shares awarded in 2020 and 2022 which were earned in 2019 and 2021 respectively. The share price used to calculate the 2020 award was £10.11 and for the 2022 award was £12.90. Further details of the deferred element of the annual bonus scheme are set out on page 169. Dividends accrue to the Executive Directors during the three-year period while the shares are subject to forfeiture, and details of these dividends are set out on page 169. St. James’s Place plc Annual Report and Accounts 2022 ### 155 Save As You Earn (SAYE) share option scheme – shares held during 2022 Details of the options held by the Directors in 2022 under the SAYE scheme and any movements during the year are as follows: Strategic Report Financial Statements Other Information | | Options held at | | | | | | | Options held at | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 January | | Granted | Lapsed | Exercised | | 31 December | | Exercise | | | Director | | | 2022 | in year | in year | | in year | | 2022 | | price Dates from which exercisable | Andrew Croft 1,148 – – – 1,148 £9.40 01 May 2024 to 31 October 2024 Craig Gentle 843 – – – 843 £12.81 01 November 2024 to 30 April 2025 Ian Gascoigne 1,167 – – 1,167 – £7.71 01 May 2022 to 31 October 2022 221 – – – 221 £8.13 01 May 2023 to 31 October 2023 – 810 – – 810 £11.11 01 May 2025 to 31 October 2025 Governance At 31 December 2022 the mid-market price for the Company’s shares was £10.95. The range of prices between 1 January 2022 and 31 December 2022 was between £9.20 and £17.32. Share Incentive Plan – shares held during 2022 The table below sets out details of the awards held by the Directors under the Share Incentive Plan during 2022: | | | | Partnership | | | Matching | | | | Dividend | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Balance at | | | shares | | | shares | | | shares | | | Balance at | | | | 1 January | | allocated in | | | allocated in | | | allocated in | | | | 31 December | | | Director | | 2022 | | year | 1 | | year | 2 | | | year | 3 | | 2022 Holding period (matching shares) | Andrew Croft 188 – – – 188 24 March 2017 to 24 March 2020 181 – – – 181 29 March 2018 to 29 March 2021 192 – – – 192 25 March 2019 to 25 March 2022 277 – – – 277 25 March 2020 to 25 March 2023 156 – – – 156 25 March 2021 to 25 March 2024 – 122 12 – 134 25 March 2022 to 25 March 2025 Craig Gentle 188 – – – 188 24 March 2017 to 24 March 2020 192 – – – 192 25 March 2019 to 25 March 2022 156 – – – 156 25 March 2021 to 25 March 2024 Ian Gascoigne 502 – – – 502 28 March 2011 to 28 March 2014 210 – – – 210 26 March 2014 to 26 March 2017 167 – – – 167 26 March 2015 to 26 March 2018 174 – – – 174 24 March 2016 to 24 March 2019 188 – – – 188 24 March 2017 to 24 March 2020 181 – – – 181 29 March 2018 to 29 March 2021 192 – – – 192 25 March 2019 to 25 March 2022 277 – – – 277 25 March 2020 to 25 March 2023 156 – – – 156 25 March 2021 to 25 March 2024 1 Partnership shares are shares awarded in return for an investment of between £10 and £1,800. Partnership shares were purchased on behalf of Andrew Croft on 25 March 2022 at a price of £14.63 per share, in return for £1,800 being deducted from pre-tax salary. 2 For every ten Partnership shares acquired, the Company awards one matching share. Matching shares were also awarded on 25 March 2022 in relation to the Partnership shares mentioned above. 3 The Partnership, dividend and matching shares will be held by an employee benefit trust on behalf of the Director. The matching and dividend shares must be held for a minimum period of three years from the date of the award. Between 1 January 2023 and 27 February 2023 there were no exercises or other dealings in the Company’s share awards by the Directors. www.sjp.co.uk ### 156 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued 2.1.5 Shareholding requirements and Directors’ share interests (audited) Shareholding requirements As from 2018, the Executive Directors were required to build up a shareholding equivalent to 200% of salary in Company shares. As from 2020, the Chief Executive was required to build up a shareholding equivalent to 300% of salary in the Company shares. All of the Executive Directors have already exceeded the shareholding requirements (as shown in the table below). Whilst our Policy aims to broadly align with market expectations, in practice the longest-serving Executive Directors continue to maintain shareholdings that exceed the stated policy. This demonstrates their commitment to the long-term success of the Company and to upholding the values that underpin our culture (see page 8 for further details on our values). Percentage of base salary held in SJP | | Shares held at | | | Shares held at | | shares as at | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 January | | 31 December | | 31 December | | | | Director | | | 2022 | | 2022 | | 2022 | 1 | Andrew Croft 725,133 732,395 1316% Craig Gentle 81,998 96,631 206% Dominic Burke – – Emma Griffin 2,070 2,164 Rosemary Hilary – – John Hitchins – – Simon Jeffreys 18,364 18,364 Paul Manduca 10,000 17,000 Lesley-Ann Nash – – Roger Yates 50,000 50,000 1 Calculated using the mid-market price at 31 December 2022 of £10.95 and the base salary as at 31 December 2022. The overall percentage of base salary excludes the shares that would need to be sold to meet the notional tax and employee National Insurance contributions on bonus share awards that remained in their periods of deferral. 2 The interests of the Executive Directors set out above include Deferred Bonus Scheme (DBS) awards held in trust for the Directors which are subject to a three-year continuous service requirement, details of which are set out on page 169. The interests of the Executive Directors also include awards under the Share Incentive Plan, details of which are set out on page 168. 3 The Company’s register of Directors’ interests contains full details of Directors’ shareholdings and any share awards under the Company’s various share schemes. 4 Disclosure of the Directors’ interests in share awards is given on pages 154 and 155 and also in Note 25 – Related Party Transactions. 5 Ian Gascoigne retired (see page 115) from the Board on 31 March 2022 and held 490,856 shares as at that date (31 December 2021: 452,360). He is subject to a post-cessation shareholding requirement which requires him to hold all of these shares up to the first anniversary of his departure date and then 50% of them up until the second anniversary of his departure date. Between 1 January 2023 and 27 February 2023 there were no transactions in the Company’s shares by the Directors. St. James’s Place plc Annual Report and Accounts 2022 ### 157 Executive Directors’ shareholdings and outstanding share awards Beneficially Outstanding PSP Outstanding DBS owned at awards SAYE options awards SIP shares Strategic Report Financial Statements Other Information 31 December (performance (no performance (no performance (no performance Executive Director 2022 1 conditions) 2 conditions) 3 conditions) 4 conditions) 5 Andrew Croft 732,395 450,483 1,148 47,280 1,128 Craig Gentle 96,631 325,732 843 34,187 536 6 Ian Gascoigne 452,360 297,652 1,031 34,187 2,047 1 Beneficially owned shares include those DBS awards and SIP shares set out in columns 5 and 6 above. 2 Details of the PSP awards (including options that are unvested and those that are vested but have not been exercised) are set out on page 154. 3 Details of the SAYE options (including options that are vested but have not been exercised) are set out on page 155. 4 Details of DBS awards are set out on page 154. 5 Details of the SIP shares are set out on page 155. 6 Ian Gascoigne’s shareholdings and outstanding share awards are as at the date he retired as a Director (31 March 2022). Governance 2.1.6 Dilution (unaudited) Dilution limits agreed by shareholders at the time of shareholder approval of the various long-term incentive schemes allow for up to 10% of share capital in ten years to be used for grants to employees and members of the St. James’s Place Partnership under all share schemes (i.e. both the employee and Partner share schemes), and up to 5% of share capital in ten years to be used for grants to employees under discretionary schemes. These limits comply with the Investment Association dilution guidelines on the issue of new shares. The table below sets out, as at 31 December 2022, the number of new ordinary shares in the Company which have been issued, or are capable of being issued (subject to the satisfaction of any applicable performance conditions), as a result of options or awards granted under the various long-term incentive schemes operated by the Company in the ten years prior to 31 December 2022. Percentage of total issued | | Number of new | | share capital | | | --- | --- | --- | --- | --- | | | | ordinary | | as at | | | | shares of | 31 December | | | Share scheme | 15 pence each | | | 2022 | SAYE schemes 3,582,204 0.66% Executive share schemes 13,622,645 2.5% Partners’ share schemes 11,511,762 2.12% Total 28,716,611 5.28% In addition, as at 31 December 2022, the Group’s Employee Share Trust held 1,740,251 shares in the Company which were acquired to meet awards made under the PSP, Deferred Bonus Scheme and Restricted Share Plan. The number of shares in the Company held in the Share Incentive Plan Trust as at 31 December 2022 was 470,005. www.sjp.co.uk 158 Governance ◆ ◆ ◆ ◆ ◆ Remuneration ## Report of the Group Remuneration Committee continued ### 2.1.7 Total shareholder return performance and CEO pay over the same period (unaudited) The graph below shows a comparison of the Company's TSR performance against the FTSE All-Share Index over the last ten financial years. The Company considers this to be the most appropriate comparative index, given the broad nature of the index and the companies within it. This graph shows the value, by 31 December 2022, of £100 invested in St. James's Place on 31 December 2012, compared with the value of £100 invested in the FTSE All-Share Index on the same date. The other points plotted are the values at intervening financial year-ends. ![img-14.jpeg](img-14.jpeg) The table below shows the total remuneration figure for the Chief Executive over the last ten financial years. The total remuneration figure includes the annual bonus and long-term incentive awards which vested based on performance in those years (and ending in that year for PSP scheme awards). | | Year ending 31 December | | | | | | Year ending 31 December | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | David Bellamy | | | | | | Andrew Croft | | | | | | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | **Total remuneration (£)** | 3,362,651 | 3,646,514 | 3,115,230 | 2,631,667 | 2,458,020 | 1,886,774 | 1,421,729 | 812,678 | 3,141,423 | 3,115,406 | | **Annual bonus (% of maximum)** | 98% | 95% | 93.3% | 96.67% | 96.67% | 62% | 37.5% | 0% | 96.7% | 77.1% | | **LTIP vesting (% of maximum)** | 95% | 96% | 100% | 100% | 87.94% | 85.3% | 62.9% | 9% | 93.4% | 86.4% | The deemed value of the PSP award in the table above for 2022 is £1,682,174. This value reflects an increase of £3.80 or 53.4% in the St. James's Place share price over the vesting period (the share price of the PSP award on the date of grant was £7.13 and the deemed share price on the date of vesting was £10.93, calculated as set out in the following note). As the actual vesting date for the PSP (performance period ending 31 December 2022) is not until 25 March 2023, a deemed value has been used. This is the average of the Company's share price in the three-month period to 31 December 2022, being £10.93. The 2021 figure for total remuneration has been updated by substituting the three-month average figure used to calculate the value of long-term incentive awards in last year's Report by a revised figure based on the Company's share price on the date of vesting on 25 March 2022, being £14.47. St. James's Place plc Annual Report and Accounts 2022 159 ### 2.1.8 Percentage change in remuneration of all Directors and employees (unaudited) As the Company has no employees, the table below shows the percentage change in the salary/fee, benefits and annual bonus for each Director against all UK employees of the Group over the last three years. | Remuneration element | Average employee (% change) | Executive Directors (% change) | | | --- | --- | --- | --- | | | | A Craft | C Gentle | | Salary/fee^{1} | 2022 | 7.4 | 3.3 | | | 2021 | – | 5.8 | | | 2020 | 5.0 | (2.2) | | Benefits^{2} | 2022 | 3.3 | 1.1 | | | 2021 | 5.6 | 1.7 | | | 2020 | 3.1 | – | | Bonus | 2022 | 9.5 | (17.6) | | | 2021 | – | – | | | 2020 | (10.0) | (10.0) | | Remuneration element | Average employee (% change) | Non-executive Directors (% change)^{1} | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | D Burke^{1} | E Griffin^{1} | R Hilary^{1} | J Hitchins^{1} | S Jeffreys^{1} | P Manduca | L A Nash^{1} | R Yates^{1} | | Salary/fee^{1, 2} | 2022 | 7.4 | – | 18.6 | 20.6 | 765.1 | 58.7 | 22.6 | 31.1 | | | 2021 | – | – | 18.1 | 34.3 | – | 11.8 | – | 71.4 | | | 2020 | 5.0 | – | –^{3} | 686.2 | – | 14.5 | – | – | | Benefits^{2} | 2022 | 3.3 | – | 239.0 | (100) | – | 39.6 | 2,572.6 | (94.6) | | | 2021 | 5.6 | – | 62.9 | (58.5) | – | (5.7) | – | – | | | 2020 | 3.1 | – | – | – | – | (34.2) | – | – | | Bonus | 2022 | 9.5 | – | – | – | – | – | – | – | | | 2021 | – | – | – | – | – | – | – | – | | | 2020 | (10.0) | – | – | – | – | – | – | – | 1 The change in the salary for average employees is higher than the average salary increase of the workforce referred to in the Chair's annual statements in prior years due to salary increases in respect of promotions and role changes being taken into account. 2 See the Benefits note on page 150 for further details on the benefits for Directors. 3 The fees for Non-executive Directors for 2022 were split into a base fee and a separate committee membership fee. The total for these two elements resulted in an increase of 16% for 2022. 4 The Directors in office at the time each agreed to a 20% reduction of base salaries/fees for May, June and July 2020. The reduction is reflected in the changes for both 2020 and 2021. 5 Emma Griffin and Lesley Ann Nash were appointed during 2020. Paul Manduca and John Hitchins were appointed in 2021 and Dominic Burke was appointed in 2022. Additionally, John Hitchins, Simon Jeffreys and Roger Yates were appointed to the board of St. James's Place UK plc during 2022. 6 The significant increase in Rosemary Hilary's fee in 2020 was due to her having not served a full year in 2019. Rosemary Hilary was also appointed as chair of the Group Risk Committee on 19 August 2020. 7 The significant increase in John Hitchins' fee in 2022 was due to him having not served a full year in 2021. ### 2.1.9 Relative importance of spend on pay (unaudited) The following table sets out the percentage change in profit, dividends and overall spend on pay in the year ending 31 December 2022, compared to the year ending 31 December 2021. | | 2022 £ Million | 2021 £ Million | Percentage change | | --- | --- | --- | --- | | Executive Directors' remuneration^{1} | 5.4 | 5.4 | –1% | | IFRS profit after tax^{2} | 405.4 | 287.6 | +41% | | EEV operating profit before tax^{2} | 1,589.7 | 1,545.4 | +3% | | Dividends | 287.1 | 281.3 | +2% | | Employee remuneration costs | 254.2 | 262.9 | –3% | 1 Calculated on the same basis as the Single total figure of remuneration on page 148 for Executive Directors in office as at 31 December 2022. 2 IFRS profit after tax has been presented to enable comparison between different companies, as it is a measure defined by International Financial Reporting Standards. EEV operating profit before tax is an alternative performance measure (for further details see the glossary of alternative performance measures on page 273), which has been presented as it is the financial performance measure upon which bonuses are based. Further information about these measures is set out in the financial review on pages 70 to 89. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information 160 Governance ◆ ◆ ◆ ◆ ◆ Remuneration ## Report of the Group Remuneration Committee continued ### 2.1.10 CEO pay ratio (unaudited) | Year | Method | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio | | --- | --- | --- | --- | --- | | **2022** | **Option C** | **75:1** | **54:1** | **30:1** | | 2021 | Option C | 93:1 | 60:1 | 33:1 | | 2021 | Option A | 87:1 | 56:1 | 31:1 | | 2020 | Option A | 25:1 | 16:1 | 10:1 | | 2019 | Option A | 45:1 | 28:1 | 17:1 | | 2018 | Option C | 62:1 | 42:1 | 21:1 | | | CEO pay | 25th percentile pay | 50th percentile pay | 75th percentile pay | | --- | --- | --- | --- | --- | | | £ | £ | £ | £ | | Salary | 587,161 | 29,414 | 40,445 | 61,426 | | Total pay | 3,117,452 | 41,622 | 57,324 | 102,845 | For 2022, we have calculated the CEO pay ratio using Option C, as it allows us to use our existing gender pay gap information supplemented with other pay data from our Group companies. We have changed from using Option A, as Option C is less complex and better aligned with the way we hold our employee data for our Group companies. Through testing we have found that Option C provides reliable results, similar to those that Option A would produce. We have also recalculated the 2021 figures on the Option C basis to provide a like-for-like comparison with 2022. To calculate the ratio in accordance with the regulations we ranked all our UK employees by their annualised full-time equivalent salary as at 30 April 2022. From this we identified three employees at the 25th, 50th and 75th percentiles. We then calculated the total remuneration figure for each of the three employees throughout 2022, in line with the same reporting regulations that apply to our Executive Directors, which is then used to calculate the ratio to the Chief Executive's remuneration. We believe the three identified employees are representative of the 25th, 50th and 75th percentiles. For 2022, the financial objective element of the annual bonus changed from an objective based on EEV operating profit, to a scorecard of three financial metrics: Underlying Cash Result, Net Funds Under Management flows and Annual growth in controllable expenses. The Net Funds Under Management flows and Annual growth in controllable expenses metrics were met in full and the Underlying Cash Result was met in part. This is reflected in the lower CEO pay ratio than the previous year when the financial objective element of the annual bonus was met in full. The median ratio is consistent with our pay, reward and progression policies for employees which relate pay levels to performance and market benchmarks. In 2022, 75.8% of the Chief Executive's total remuneration was delivered through variable pay schemes. These are directly linked to the Company's performance as well as share price movements over the longer-term. Whilst none of the three employees identified at the 25th, 50th and 75th percentiles are eligible to receive PSP Awards, all three received an annual bonus within the year and are invited to participate in the SIP and SAYE scheme on the same terms as the Chief Executive. St. James's Place plc Annual Report and Accounts 2022 ### 161 ### 2.2. Remuneration Committee (unaudited) 2.2.1 Role, activities and performance of the Committee Strategic Report Financial Statements Other Information The Committee’s primary purpose is to ensure that there is a clear link between reward and performance and that the Policy structure and levels of remuneration for both Executive Directors and Material Risk Takers (identified in accordance with relevant PRA and FCA requirements) are appropriate. In particular, the Committee reviews the list of those employees who are considered to be Material Risk Takers and monitors compliance with the Group’s remuneration policies, as they apply to that population. When determining the appropriateness of remuneration the Committee pays particular attention to the remuneration paid to the wider workforce (in particular Director pay ratios and relative importance of spend) and the overall competitiveness of packages when compared to peers. The key responsibilities of the Committee are set out in its terms of reference, which can be found on the Company’s website www.sjp.co.uk. The Committee’s key areas of activity during the year included: Topic Summary of activity Find out more Annual bonus The Committee considered and set the strategic objectives for 2022 and agreed See pages Governance objectives and the bonus awards made for 2021. 151 to 152 new awards PSP awards The Committee determined the grants and performance conditions for PSP See page 153 and vestings awards to be made to Directors, senior management and Material Risk Takers. The Committee also considered whether there were any circumstances which warranted the application of malus or clawback provisions, or the exercise of discretion permitted under scheme rules. Assessing risk The Committee assessed the alignment of the Group’s remuneration policies with risk appetite and regulatory requirements, and sought assurance from the Chief Risk Officer, and relevant management from across the business, that the remuneration outcomes were in line with the policies, were appropriate, and did not warrant discretionary changes. Financial The Group’s remuneration policies and practices are required to meet services regulatory requirements that apply to certain Group subsidiaries. In addition, regulation industry best practice drives the expectations of a range of stakeholders, including our regulators. During the year, the Committee considered adherence to existing requirements and the implications of the new Investment Firms Prudential Regulations (IFPRs). The Committee has also considered the approach to remuneration for individuals in control functions and is responsible for setting the methodology for determining Material Risk Takers and for agreeing the list of Material Risk Takers. Remuneration The Committee carried out an annual review of the Committee’s advisers, See opposite advisers Alvarez and Marsal (A&M), and confirmed that the Committee continued to be satisfied with the support and advice provided and that there were no circumstances existing which would compromise A&M’s independence. Regulatory Regular updates were received from the Company Secretary and the developments Committee’s remuneration advisers on regulatory developments, investor and feedback guidelines and feedback from investor meetings. These were taken into account by the Committee when determining remuneration outcomes from investors and the application of the Policy for 2023. Remuneration The Committee sets the remuneration for the Company’s Chair, Executive policy Directors, Executive Board members and Material Risk Takers and has reviewed the Directors’ Remuneration Policy and consulted with stakeholders, including investors and employees. The Committee also reviewed the Employee Remuneration Policy. Governance The Committee reviewed the gender pay gap reporting, its own terms and other of reference and the Chair’s fee, and carried out an annual review of matters the remuneration adviser as detailed above. The Committee’s effectiveness was reviewed by the Board as part of its overall assessment of its effectiveness (see pages 119 to 121) and the Board remains satisfied that, as a whole, the Committee has the experience and qualifications necessary to successfully perform its role. www.sjp.co.uk ### 162 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued 2.2.2 Committee membership and attendance in 2022 This is set out on page 115. No Director was present when their own remuneration was considered or agreed. 2.2.3 Advisers to the Committee As reported last year, the Committee carried out a formal tender process in 2021 and appointed A&M as advisers to the Committee. A&M are signatories to the Remuneration Consultants’ Code of Conduct, which requires their advice to be impartial, and they have confirmed their compliance with the Code to the Committee. A&M provided advice in relation to general remuneration matters and on proposed changes to the Policy. A&M did not provide any other services to the Company. Following an annual review, the Committee is satisfied that A&M have no connection with the Company or individual Directors which may compromise their independence or objectivity. The total fees paid to A&M for the advice provided to the Committee during the year was £141,006. Fees are charged on a ‘time spent’ basis. 2.2.4 Voting at Annual General Meetings The votes cast at the 2021 and 2022 Annual General Meetings in respect of the resolution on the Directors’ Remuneration Report and at the 2020 Annual General Meeting in respect of the resolution on the Directors’ Remuneration Policy are summarised below. | 2022 Directors’ | | | | 2021 Directors’ | | | 2020 Directors’ | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Remuneration | | Percentage of | | Remuneration | Percentage of | | Remuneration | | Percentage of | | | | Report vote | | votes cast | Report vote | | votes cast | | Policy vote | | votes cast | Votes for 443,328,337 97.72% 454,434,677 99.62% 421,389,944 94.71 Votes against 10,363,154 2.28% 1,744,941 0.38% 23,526,651 5.29 Total votes cast 453,691,491 456,179,618 444,916,595 Total votes withheld 597,929 36,400 63,572 ### 2.3. Implementation of the Remuneration Policy in 2023 (unaudited) 2.3.1 2023 salary The base salaries of the Executive Directors are being increased in 2023. The current salaries as at 1 March 2022 and from 1 March 2023 are as follows. These percentage increases are below the average increase levels for other employees of the Company: Salary from Salary from March 2022 March 2023 Percentage Executive Director increase £ £ Andrew Croft 590,947 620,494 5% Craig Gentle 427,300 448,665 5% 2.3.2 Annual bonus for 2023 The Executive Directors’ maximum bonus opportunity for 2023 will, subject to the approval of the new Policy at the 2023 AGM, increase to 175% of salary. 60% of the annual bonus will be determined by a scorecard of financial performance metrics, and 40% by key strategic targets. Malus and clawback provisions apply to both the cash and deferred elements of the bonus. St. James’s Place plc Annual Report and Accounts 2022 ### 163 Financial objectives The scorecard of financial performance metrics is intended to: Strategic Report Financial Statements Other Information  provide a rounded and balanced view of financial performance;  include targets that management can directly influence;  include a target relating to future growth; and  recognise current year profitability. Weighting (% of base salary | Metrics | – total 105%) Alignment with strategy | | | | --- | --- | --- | --- | | Underlying cash | 21% Recognises annual cash profitability, which is an important driver of dividends and future | | | | result | | investment in the business. | | | Net funds under | 42% Reflects both new business and client retention, and is a driver of sustained profit growth. | | | | management | | | Governance | flows Annual growth in 42% Keeping cost growth below the rate of growth in revenues is a key determinant of profit growth. controllable expenses Annual bonus performance targets for the metrics set out here for 2023 will be disclosed in the Directors’ Remuneration Report for 2023, as disclosing them in the Report for 2022 may have commercial disadvantages for the Company. Strategic objectives For 2023, the Committee has again set the Executive Directors a range of business priorities which align to the six business priorities underpinning our annual business plan. Each priority is equally weighted and is made up of a number of objectives with a mix of quantitative and qualitative measures, which will be scored against a set of defined KPI metrics to determine the outcome of each priority. Set out below are details of the measures for the objectives. As was the case in 2022, the priority titled ‘Our culture and being a leading responsible business’ is made up entirely of ESG targets. However, other factors throughout the objectives may also to some extent recognise our aim to be a leading responsible business. Business priority (scorecard weighting – % of base salary – total 70%) Building community Being easier to do business with  Net manpower growth  Administration performance  Attainment of competent adviser status  Administration error rate  Partner sentiment  Salesforce integration and satisfaction levels  Partner feedback from engagement events  Enhancement of digital client proposition  Employee engagement  Client adoption of digital tools  Data governance and quality Delivering value to advisers and clients through Building and protecting our brand and reputation our investment proposition  Client sentiment  Client sentiment  Maintain reputation  Value Assessment Ratings  Client servicing  Delivery of Fund and portfolio changes  Cyber security  Carbon footprint of investment proposition  Media sentiment  Client complaints  Regulator relationship  Internal Audit, risk and regulation Our culture and being a leading responsible business Continued financial strength  Embed culture vision  Partner Lending  Carbon-positive commitments  Risk appetite of capital  Financial resilience and education  Community impact  Inclusion and diversity www.sjp.co.uk ### 164 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued 2.3.3 Performance Share Plan awards for 2023 The Executive Directors will each receive a PSP award in 2023 of 250% of salary (2022: 250%). The existing and proposed new Policy both set the maximum award capacity at 250% of base salary. These awards will be subject to a relative TSR performance condition for one third of the award; EPS CAGR using Cash Result profits for one third and EPS CAGR using EEV adjusted profits for the final third as follows: | | | | | | | EPS CAGR % using Cash Result | | | | EPS CAGR % using EEV adjusted | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | TSR relative to FTSE 51 to 150 | | | | 1 | | | profits | 2 | | | profit | 3 | | | | | | Percentage of | | | | | Percentage of | | | | Percentage of | | | | Performance | | | one third of | Performance | | | one third of | Performance | | | one third of | | Performance level hurdle | | | required | award vesting | | | required | | award vesting | | required | | award vesting | Below threshold Below median 0% Below 5% 0% Below 5% 0% Threshold Median 25% At least 5% 25% At least 5% 25% Stretch or above Upper quartile or above 100% 12% or above 100% 12% or above 100% 1 FTSE 51 to 150, excluding investment trusts and companies in the FTSE oil, gas and mining sectors. 2 One-third of the award is based on EPS CAGR % using Cash Result profits. 3 One-third of the award is based on EPS CAGR % using EEV adjusted profit. This is by reference to the post-tax EEV operating profit (on a fully diluted per-share basis). This metric excludes the direct impact of stock market fluctuations and changes in economic assumptions on the final year’s performance. 4 Straight-line vesting occurs between threshold and maximum vesting. 5 Awards are subject to a three-year performance period. Vested shares cannot normally be sold for a further two years other than to the extent necessary to settle tax on vesting or exercise. 6 Malus and clawback provisions apply. 2.3.4 Shareholding requirement The Chief Executive is required to build and maintain a shareholding equivalent to 300% of salary in the Company’s shares. For other Executive Directors, the shareholding requirement is 200% of salary. 2.3.5 Pensions The Executive Directors’ pension level reduced to 15% of base salary on 1 January 2023. This brings it into line with the pension allowance for long-serving employees in the wider workforce. 2.3.6 Duration of contracts The Board of the Company is proposing that each of the Executive Directors be re-elected at the Company’s forthcoming AGM. Although the Executive Directors’ services contracts do not have fixed end dates they may be terminated with 12 months’ notice from either the Company or the Executive Director. St. James’s Place plc Annual Report and Accounts 2022 ### 165 2.3.7 Fees for the Board Chair and Non-executive Directors for 2023 The fees for the Board Chair and Non-executive Directors for 2022 and 2023 are as set out below. SJP aims to provide competitive recognition and reward for all employees that reflects the nature of individual roles and enables us to attract Strategic Report Financial Statements Other Information and retain the best talent. Similarly, providing adequate compensation to all Board members is essential if the Board is to be able to recruit and retain high-calibre Directors and maintain effective succession plans for all Board roles. As reported last year, the Board reviewed the fees paid to our Non-executive Directors in 2021 and set fees in line with individual responsibilities. The Board believes that setting fees in line with responsibilities will ensure that the fees paid to individual Directors better reflect their differing responsibilities and time commitments and will also recognise the impact on specific Committees and roles of increased complexity, workload, regulatory responsibilities and the size of the Group. The Board (excluding the Non-executive Directors) reviewed the base fees for the Non-executive Directors, Senior Independent Director and Designated Non-executive Director for Workforce Engagement during the year and concluded that no changes would be made in 2023. The Board did however note that the fees for committee membership were not reflective of the increased responsibility and commitments for those roles and were also out of step with commensurate roles elsewhere. Having taken account of the wider economic climate the Board agreed that modest incremental increases should be made, commencing on 1 January 2023. The fees for Committee Chairs will increase to £26,000 (2022: Governance £25,000) and for Committee members (other than Committee Chairs) will increase to £10,500 (2022: £10,000). These fees would not apply to the chair or members of the Nomination and Governance Committee which remain unchanged. Alongside the Board’s review of Non-executive Director fees, the Committee also reviewed the fee for the Chair of the Board and decided that it would not be increased in 2023. When setting the fees paid to our Non-executive Directors and the Chair for 2023, the Board and Remuneration Committee sought to ensure that they were commensurate with those for listed financial services companies of comparable size. | | Fees from | | | Fees from | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 1 January to | | | 1 January to | | | Percentage | | | 31 December | | | 31 December | | | increase from | | | | | 2022 | | | 2023 | | 2021 | £ £ Board Chair 375,000 375,000 0% Base fee 76,000 76,000 0% Committee Chair (excluding Nomination and Governance Committee) 25,000 26,000 4% Audit, Risk and Remuneration Committee member (per Committee membership) 10,000 10,500 5% Nomination and Governance Committee member 5,000 5,000 0% Senior Independent Director 15,000 15,000 0% Designated Non-executive Director for Workforce Engagement 15,000 15,000 0% This Remuneration Report was approved by the Board of Directors and signed on its behalf by: Roger Yates, Chair of the Group Remuneration Committee 27 February 2023 www.sjp.co.uk ### 166 Governance ### 1 2 3 4 5 Remuneration ## Section 3 ## 2023 Directors’ Remuneration Policy | During the year, the Committee | practice guidance and the 2018 |  the Committee has overall | | --- | --- | --- | | carried out a review of the Directors’ | UK Corporate Governance Code. | responsibility for the remuneration | | Remuneration Policy (Policy) in | Following the review, the Committee | policies and structures for | | preparation for the normal triennial | decided to propose a number of | employees of the Group as a | | vote at the AGM in 2023. The | amendments to the Policy to ensure | whole and it reviews remuneration | | Committee decided to propose some | the remuneration arrangements | policy on a firm-wide basis. | | amendments to the Policy to support | for Executive Directors continue to | When the Committee determines | | the continued success of the business | be in line with best practice and | and reviews the Policy, it considers | | over the next three years and to | shareholder expectations, and that | and compares it against the pay, | | incorporate latest developments | the Policy supports the business | policy and employment conditions | | in best practice. This section of the | strategy. The amended Policy will | of the Group to ensure that there | | Directors’ Remuneration Report sets | apply to awards in respect of the | is appropriate alignment between | | out the new Policy, which will be | 2023 performance year onwards for | the two; and | | submitted for a shareholder vote | all Executive Directors. A summary | |  the Committee considers the at the 2023 AGM. The Policy will apply of the proposed amendments to external market in which the Group to remuneration in respect of the the current Policy is also provided. operates and uses comparator three-year period from 2023 to 2025. remuneration data from time to The proposed new Policy is designed time to inform its decisions. to meet the following objectives: Overview of the Policy However, the Committee recognises  to support the retention of that such data should be used as How the Committee individuals with the experience and a guide only (recognising that data sets the Policy skills to drive the performance of can be volatile and may not be The Committee, on behalf of the Board, the Company; directly relevant) and that there is draws up and recommends the Policy often a need to phase in changes and determines the remuneration  to ensure remuneration is over a period of time. packages of the Executive Directors transparent and reflects the of the Company and the Chair of performance of the Group in The Committee’s overall policy, having the Board. In addition, the Committee the relevant year and the longer had due regard to the factors above, determines the remuneration of the term. Annual bonus and long- is that a substantial proportion of total senior management team (including term incentive opportunities are remuneration should be in the form of the Chief Risk Officer) and any other therefore linked to the achievement variable pay. This is achieved by setting employees classified as Material of demanding performance base pay and benefits no higher than Risk Takers or Identified Staff under targets; and mid-market levels, with annual bonus relevant financial services regulations.  to align pay with the strategic and long-term incentive opportunities The Committee also oversees objectives of the Company and linked to the achievement of remuneration policy and practice the interests of our shareholders, demanding performance targets. for the wider employee population, whilst giving due regard to The Policy ensures alignment of the including the operation of any principles of best practice total remuneration paid to the share schemes. and relevant regulations. Executive Directors with the interests of shareholders. Historically, the levels of Approach to, and objectives of, annual bonus awarded, and long-term Considerations when setting the Policy incentives awarded, to the Executives the Policy have varied considerably, reflecting Our previous Policy was approved by In setting the Policy for the Executive the performance of the Group in the shareholders in the required triennial Directors, the Committee also takes relevant year. vote at the 2020 AGM with 94.71% into consideration a number of factors: votes in favour, and operated from Executive Directors are not involved in 2020 to 2022. The overall approach  the Committee applies the the determination of their personal to remuneration adopted by principles set out in the UK remuneration. Committee members St. James’s Place has been in place Corporate Governance Code are not permitted to vote on the for many years, and the 2020 Policy and also takes into account best implementation of the Non-Executive was little changed from that approved practice guidance issued by the Director elements of the Policy that by shareholders in 2017. major UK institutional investor apply to them, in line with the bodies, the PRA and FCA (including procedures established by the Board The Committee carried out a detailed the provisions of any applicable for the management of conflicts of review of the current Policy during Remuneration Codes) and other interest (see page 116). 2022, taking into account the business relevant organisations; strategy for the next three years, pay and employment conditions of other employees in the Group, shareholder feedback received, latest best St. James’s Place plc Annual Report and Accounts 2022 ### 167 Engagement with shareholders  extend the post-cessation provide a good balance, reflecting shareholding requirement of 300% performance over the long term The Committee engages with, and | | of salary for the CEO and 200% of | in growing the business, and in | | | --- | --- | --- | --- | | seeks the views of, its major investors | | | Strategic Report Financial Statements Other Information | | | salary for the CFO, for all shares to | delivering value and cash flows | | and investor representative bodies on be retained for the entire two year for shareholders. any significant changes to the Policy. period post cessation (instead of The Committee also engages from the previous Policy of full The Committee will measure EPS time to time with shareholders when requirement for the first year, and growth for future grants in the PSP considering important questions half this for the second year); and against absolute targets rather than about the implementation of relative to inflation. SJP has been one the Policy. Views expressed by  reduce pension allowances for of the very few remaining companies shareholders are considered by incumbent Executive Directors to using inflation-linked targets in its LTIP. the Committee as part of any review 15% effective 1 January 2023, With the increasingly volatile and of the Policy, or sooner if appropriate. aligned with the level provided to unpredictable inflation levels in the The Committee has consulted long-serving employees in the economy, continuing the inflation- with major shareholders and wider workforce. The allowance linked approach risks undermining the | voting agencies on the proposed | level for new Executive Directors | | | | --- | --- | --- | --- | | | | incentive effect of the plan. Growth will | Governance | | amendments to the Policy for 2023-25. | appointees is already aligned with | | | be measured on a Compound Annual the level for the wider workforce, Growth Rate (CAGR) basis, which is Summary of proposed amendments which is 10% of base salary on more exacting than the Average to the current Policy: joining rising to 15% with service. Annual Growth Rate (AAGR) basis  increase the weight on financial used previously. The EPS targets for For information, the Committee is also performance in the annual bonus the 2023 grant are detailed in the reducing the weight on Embedded scorecard to 60% (from 50% 2022 Annual Report on Remuneration. Value (EV)-based EPS in the previously) and reduce the weight Performance Share Plan (PSP) to one on the strategic and operational third (from two thirds currently) and metrics to 40%; introducing a Cash Result-based EPS |  increase the maximum annual | metric with a weighting of one third. | | --- | --- | | bonus to 200% of base salary (from | Relative TSR will continue to be used | | 150% previously) in two stages – to | for the remaining third. These metrics | 175% for 2023 and 200% from 2024; Remuneration Policy for Executive Directors The following table summarises each element of the Policy, explaining how each element operates and links to corporate strategy. Purpose and link to | Element | strategy Operation including maximum opportunity Performance metrics | | | | --- | --- | --- | --- | | Base salary | To provide the core | Normally reviewed annually from 1 March, taking into account: | Whilst there are no | | | reward for the role. | role, experience and performance of the individual; Company | performance targets | | | | performance; external economic conditions; average changes | attached to the payment | | | Sufficient level to | in broader workforce salary; and periodic benchmarking for | of base salary, performance | | | recruit and retain | each role against similar UK-listed companies. | is considered as context | | | individuals of the | | in the annual salary review. | | | necessary calibre, | Percentage increases will normally be at, or below, the level | | | | taking into account | of percentage increases for the Company’s wider employee | | | | the required skills, | population. Increases may be higher in exceptional | | | | experience, | circumstances, such as a change in role, a significant change in | | | | demands and | responsibility or role size and/or where salary is substantially out | | | | complexity of | of line with market norms. | | the role. Where new appointees have been given a starting salary below mid-market level, percentage increases above those granted to the wider workforce may be awarded, subject to individual performance and development in the role. www.sjp.co.uk ### 168 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued Purpose and link to Element strategy Operation including maximum opportunity Performance metrics | Pension | Helps recruit and | Provides either defined contributions to a pension scheme or an | N/A | | --- | --- | --- | --- | | | retain Executive | equivalent cash amount via non-pensionable allowance if the | | | | Directors. | Executive Director is affected by HMRC limits. | | | | Provides a discrete | The maximum pension level for Executive Directors who joined | | | | element of the | the Board before the 2018 AGM will be 15% from 1 January 2023. | | | | package to | This brings it into line with the pension allowance for long-serving | | | | contribute to | employees in the wider workforce. | | retirement income. For any Executive Directors joining the Board after the 2018 AGM, the pension allowances are aligned to those of the wider workforce, which is currently an employer contribution of 10% of salary on joining, which increases with service up to a maximum of 15%. In response to changes in legislation or similar developments, the Company may amend the form of an Executive Director’s pension arrangements. Other Operate Including but not limited to: N/A competitive benefits  Company car (or salary supplement in lieu) benefits to help recruit, retain and  Private medical insurance support the  Life cover wellbeing of employees.  Critical illness  Death-in-service cover  Relocation assistance, such as accommodation allowance, where necessary  Use of a driver for business purposes. Executive Directors are eligible to participate in any all- employee share plan (e.g. SIP and SAYE) operated by the Company, on the same terms as other eligible employees. The maximum level of participation is subject to limits imposed by HMRC (or a lower cap set by the Company). Any reasonable business expenses (including tax thereon) may be reimbursed. St. James’s Place plc Annual Report and Accounts 2022 ### 169 Purpose and link to Element strategy Operation including maximum opportunity Performance metrics Strategic Report Financial Statements Other Information | Annual bonus | Rewards the | Maximum opportunity for the Executive Directors is 175% of base | Performance measures, | | --- | --- | --- | --- | | | achievement of | salary in 2023 and 200% from 2024 onwards. | targets and weightings are | | | annual financial | | reviewed annually and set | | | and strategic | Performance below threshold results in zero payment. Payments | in line with the annual | | | business plan | are on a scale from 20% to 100% of the maximum opportunity, | business plan. | | | targets and | for performance between threshold and maximum. | | | | delivery of key | | Performance is measured | | | non-financial | 50% of any bonus payable is paid in cash and the remaining | over one year. At least 60% | | | objectives. | 50% deferred into SJP shares, the vesting of which is normally | of the bonus is based on | | | | subject to a three-year continuous service requirement but | financial measures, | | | Deferred element | not further performance conditions. | reflecting the key priorities | | | aids retention, | | of the business for the | | | encourages | Dividends in the form of shares accrue on the deferred shares | relevant year. Up to 40% of | | | long-term | and are paid to the Executive Directors during the three-year | the annual bonus can be | | | shareholding, | deferral period. | based on the achievement | Governance discourages of key non-financial excessive risk All bonus payments are at the discretion of the Committee. objectives set at the start taking and aligns The Committee has the discretion to override formulaic bonus of the year. with shareholders’ outcomes, where necessary, under both financial and non- interests. financial performance metrics, to take account of overall Actual measures and performance. weightings may change Performance from year to year to reflect metrics reflect the The Company Malus and Clawback Policy applies. the business priorities at key performance The Committee may apply malus or clawback in such that time. drivers of the circumstances as: annual business Details of performance  misconduct; plan, achievement criteria and targets set for of which will  failure to meet appropriate standards of fitness and propriety; the year under review and indicate performance against them  financial misstatement; performance are provided in the Annual in line with the  error or miscalculation in determining a performance Report on Remuneration. Group’s strategy. outcome or award; and  material failure of risk management. Performance Supports long- Awards may be granted annually for up to 250% of salary as at Awards vest to the extent term retention. date of grant. of achievement of the Share Plan following performance Focuses the Vesting is usually on the third anniversary of the date of grant, metrics (equally weighted): Executive Director dependent on the achievement of stretching performance  EPS growth based on on longer-term conditions measured over a period of three financial years. EEV adjusted profit; corporate performance Executive Directors are required to retain vested PSP shares,  EPS growth based and objectives. net of tax, for a further period of two years. on Cash result; and  relative TSR Aligns interests Dividend equivalents may accrue, in the form of shares, performance. to those of on awards made between the date of grant and the end shareholders. of the two-year post-vesting holding period. These dividend The Committee may equivalents will be released only to the extent that awards vest. choose different measures, and weightings between The Committee has the discretion to override formulaic them, if it deems it vesting outcomes, where necessary, to take account of appropriate, taking into overall performance. account the strategic objectives of the Company. The Committee has the discretion, in exceptional circumstances, to grant and/or settle an award in cash. For each performance metric, a threshold The Company Malus and Clawback Policy applies. The and stretch level of Committee may apply malus or clawback in such performance is set. circumstances as: At threshold, 25% of the  misconduct; relevant element vests, rising on a straight-line  failure to meet appropriate standards of fitness and propriety; basis to 100% for  financial misstatement; performance between threshold and maximum.  error or miscalculation in determining a performance outcome or award; and  material failure of risk management. www.sjp.co.uk ### 170 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued Purpose and link to | Element | strategy Operation including maximum opportunity Performance metrics | | | | --- | --- | --- | --- | | Minimum | To ensure | Executives are required to build and maintain a minimum | N/A | | | alignment of the | shareholding equivalent to 300% of base salary for the Chief | | shareholding long-term interests Executive and 200% of base salary for other Executives, to be requirements of Executive achieved normally within five years of appointment. Directors and shareholders. Until the threshold is reached, at least 50% of vested shares from the PSP and other share awards (less tax liability) should normally be retained. Post- To ensure Executives are required to maintain a shareholding equivalent N/A continued to the in-employment shareholding requirement immediately cessation alignment of the prior to departure (or the actual share and award holding on shareholding long-term interests departure, if lower) for two years post cessation. requirements of Executive Directors and There are appropriate arrangements in place to ensure shareholders enforceability. post cessation. Non- To attract The Chair of the Board is paid an all-inclusive annual fee Neither the Chair nor the high-quality, which is reviewed periodically by the Committee. Non-executive Directors executive experienced are eligible for any Directors’ Non-executive All Non-executive Directors receive a basic annual fee for performance-related fees Directors. carrying out their duties, together with additional fees in remuneration. respect of Board Committee Chairship and, where appropriate, membership, and other responsibilities, with fee levels reviewed periodically by the Board. They may also be paid additional fees in the event of exceptional levels of additional time being required. PLC Board Directors who are also members of subsidiary boards of the Company may receive fees in respect of their duties on the subsidiary boards. Any reasonable business expenses (including tax thereon if applicable) may be reimbursed. There is no prescribed maximum individual fee level or annual increase. Reviews take into account market data for similar non-executive roles in other companies of a similar size, complexity and/or business to St. James’s Place as well as the time commitment of Non-executive Directors. The policy is to pay up to the mid-market level based on similar roles and time commitments of chairs and non-executives in comparable companies. Notes to the Policy table expectations and the Company’s continue to review the choice of budget and business plan for the year performance measures and the The performance measures and ahead. Currently a set of financial appropriateness of targets prior to targets that are set for the Executive metrics, such as cash profit result, net each PSP award being made and will Directors’ annual bonus and FUM flows and costs, are used to set robust and stretching measures Performance Share Plan (PSP) awards assess financial performance as for any alternative measures used. For are carefully selected to align with the these measures reflect a number of the EPS growth measure, stretching Company’s strategic and key key performance drivers including targets will be set annually taking into performance indicators. new business, retention of funds under account the economic environment, management and cost control. The market expectations and the For the annual bonus, financial and remaining bonus is determined based Company’s budget and business strategic measures are reviewed and on strategic measures set annually on plan at that time. For the comparative selected by the Committee annually. a balanced scorecard basis. TSR measure the Committee’s policy The measures selected and weighting is to set threshold vesting for median between them may vary annually The Company has used a relative TSR performance rising to full vesting for depending on the key priorities of the measure and EPS growth targets for upper quartile performance. The business for the year ahead. Robust the PSP for a number of years in line Committee may from time to time and demanding targets will be set with the Group’s strategy of delivering review the appropriateness of the annually taking into account the profitable growth and superior returns TSR comparator group. economic environment, market to its shareholders. The Committee will St. James’s Place plc Annual Report and Accounts 2022 ### 171 No performance targets are set for the Any use of exceptional discretion to arrangements to replace foregone SAYE and SIP awards as these form override formulaic outcomes would, remuneration – see below). part of all employee arrangements where relevant, be explained in the Participation in the annual bonus plan Strategic Report Financial Statements Other Information designed to encourage employees Annual Report on Remuneration, will normally be pro-rated for the year across the Group to purchase shares as appropriate. of joining and different performance in the Company. measures may be set from those applying to the other Directors, if it Awards made prior to the is appropriate to do so to reflect the Committee discretion effective date individual’s responsibilities and the The Committee will operate the For the avoidance of doubt, in point in the year at which they joined annual bonus plan, deferred bonus approving the Policy, authority the Board. A PSP award can be made plan, PSP and all-employee share was given to the Company to honour shortly following an appointment plans according to the rules of each any commitments entered into with (assuming the Company is not in respective plan and consistent with current or former Directors that have a close period). Where it is essential normal market practice and the Listing been disclosed to shareholders in for the purposes of recruitment, such Rules, where relevant. The Committee previous remuneration reports. as where a new external recruit has will retain flexibility in a number of This includes all historic awards that not had any bonus deferral in their Governance areas regarding the operation and were granted under any current or previous role, bonus deferral may be administration of these plans, including previous share schemes operated by phased in over a short period. The (but not limited to) the following: the Company but remain outstanding standard approach will be for deferral (detailed in the Annual Report on  who participates in the plans; to apply as stated in the Policy table. Remuneration) and which will remain  when to make awards and eligible to vest based on their original The Committee may make additional payments; award terms. Awards made under the cash and/or share-based awards Performance Share Plan in 2020, 2021  how to determine the size of an as it deems appropriate and, if the and 2022 will continue to be based award, a payment, or when and circumstances so demand, to take on the achievement of the metrics how much of an award should vest; account of foregone remuneration previously set for those awards. by an executive on leaving a previous  how to deal with a change of employer. Awards would, where control or restructuring of the Group; For each performance metric, possible, reflect the nature of a threshold and stretch level of  in the case of stated good leaver awards forfeited in terms of delivery performance is set. At threshold, 25% reasons or otherwise, whether mechanism (cash or shares), time of the relevant element vests, rising a Director is a good/bad leaver horizons, attributed expected value on a straight-line basis to 100% for for incentive plan purposes and and performance conditions. Other performance between threshold whether and what proportion of payments may be made in relation and maximum targets. Details of awards vest at the time of leaving to relocation expenses and other payments to former Directors will be or at the original vesting date(s) incidental expenses as appropriate. set out in the Annual Remuneration as relevant; Report, where required by the relevant In the case of an internal appointment,  how and whether an award may be regulations, as they arise. any variable pay element awarded adjusted in certain circumstances in respect of the prior role would (e.g. for a rights issue, a corporate Approach to remuneration for be allowed to pay out according restructuring or for special to its terms and any other ongoing recruitment and promotions dividends); and remuneration obligations existing The Committee aims to set a new  whether any adjustment to the PSP prior to appointment would continue. Executive Director’s remuneration vesting outcome is required, taking package in line with the Policy in account of any windfall gain due For an overseas appointment, the place at the time of appointment. to share price variation at the time Committee will have the discretion to The Committee will take into account, of grant. offer benefits and pension provisions in arriving at a total package and which reflect local market practice in considering the quantum for each The Committee also has the discretion and relevant legislation. element of the package, the skills within the Policy to adjust targets and/ and experience of the candidate, or set different measures and alter If appropriate and in exceptional the market rate for a candidate of weightings for the annual bonus plan circumstances the Committee may that experience, and the importance and the PSP if events happen that agree, on the recruitment of a new of securing the best candidate. cause it to determine that the original Executive Director, a notice period of For new appointments, base salary targets or conditions are no longer in excess of 12 months but reducing and total remuneration may be set appropriate and the amendment to 12 months over a specified period. initially below normal market rates is required so that the targets or on the basis that it may be increased conditions achieve their original For the appointment of a new Chair once satisfactory development purpose. The Committee has the or Non-executive Director, the fee and performance in role has discretion to adjust the application arrangement would be set in been demonstrated. of the minimum shareholding accordance with the approved requirements, in role or post- Policy at that time. Annual bonus and long-term incentive cessation, to take account of maximum award sizes will comply exceptional circumstances. with the maximum opportunity set out in the Policy table (not including any www.sjp.co.uk ### 172 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued Risk management  requiring the Executive Directors to Remuneration policy retain shares acquired on vesting Risk is managed within the Policy across the Group of PSP awards granted from through the Committee: The Policy is designed after having 1 January 2015 onward for a regard to the remuneration policy  taking into consideration the post-vesting holding period of two for employees across the Group as recommendations contained in years on the shares vesting. During a whole and the Committee aims, any applicable Remuneration this period the vested shares where appropriate, for there to be Codes and associated guidance cannot normally be sold other than a consistent approach applied. which apply to the Group; to the extent necessary to settle tax For instance, the suite of benefits in on vesting or exercise;  structuring the annual bonus plan kind is generally consistent (other to contain a mix of financial and  ensuring that the majority of the than in relation to quantum) and all strategic performance metrics, incentive pay comes in the form of employees participate in annual where performance conditions a long-term incentive plan subject bonus plans. All employees, including are tailored to the business outlook to stretching performance targets the Executive Directors, are offered and strategy, including the measured over multi-year the opportunity to participate in management of risk within the performance periods, with the the Group’s SAYE Share Option Plan business. The Committee also performance period for and Share Incentive Plan. Senior retains the discretion to reduce subsequent awards overlapping managers participate in the long- the bonus and PSP outturns the previous award, together with term incentive plan. where appropriate; an additional two-year holding period. This ensures that there is no The Policy is more weighted towards  assessing the performance metrics incentive to maximise performance variable pay than for other employees from a risk perspective, with input over a particular period; to make a greater part of their pay from the Risk Committee and Chief conditional on the successful delivery Risk Officer;  incorporating withholding (malus) of business strategy, and in line with and recovery (clawback) provisions  requiring deferral of 50% of annual shareholder interests. In addition, into the Company’s bonus and bonus payments into the Company’s a higher proportion of senior level long-term incentive plans; and shares, which are then deferred for remuneration is deferred than is the three years;  requiring the Executive Directors to case for the workforce as a whole. build and maintain a substantial shareholding in the Company, The Workforce Engagement Panel is and to retain a shareholding for periodically consulted on a range of two years post cessation. topics, which include, amongst other matters, the Directors’ Remuneration Policy and the Company’s approach to remuneration. St. James’s Place plc Annual Report and Accounts 2022 ### 173 Remuneration scenarios Maximum + 50% share price growth = Service contracts maximum pay + the impact of an for Executive Directors and loss of office assumed 50% share price growth The chart below shows how the The Company’s policy is that Strategic Report Financial Statements Other Information on the PSP award. proportion of each Executive Director’s service contracts may be terminated remuneration package varies at with 12 months’ notice from either Salaries used are those applying different levels of performance in the Company or from the Executive on 1 March 2023 and taxable benefits accordance with the Policy to be Director (except in certain exceptional are those reported for the year ending implemented in 2023 and using the recruitment situations where a longer 31 December 2022. assumptions set out below. A significant notice period from the Company proportion of remuneration is linked may be set provided it reduces Pension is based on 2023 Policy to performance, especially at stretch to a maximum of 12 months with a applied to 1 March 2023 salaries. performance levels. specified time limit). Service contracts do not contain a fixed end date. Amounts have been rounded to Assumptions the nearest £1,000. The assumptions Under their service contracts the Threshold = fixed pay only (salary, noted for ‘on-target’ PSP performance Executive Directors are entitled to benefits and pension). in the graph above are provided for Governance salary, pension contributions and illustration purposes only. Participation benefits for their notice period (except Target = fixed pay plus payout of the in all employee plans, dividends on termination for events such as annual bonus at midway between payable on PSP awards over the gross misconduct where payment threshold and max and 50% vesting vesting period or on deferred share will be for sums earned up to the date of PSP awards. bonus awards are not included in of termination with no notice period the above scenarios and the table only). The Company would seek to Maximum = fixed pay plus 100% assumes no increase to the ensure that any payment is mitigated vesting of the annual bonus and share price. by use of phased payments and PSP awards. offset against earnings elsewhere in the event that an Executive Director CEO finds alternative employment during their notice period. There are no 100% £763,000 contractual provisions in force other than those set out above that impact 35% 30% 35% £2,190,000 any termination payment. 22% 32% 46% £3,400,000 18% 26% 56% £4,176,000 CFO | 100% | £555,000 | | | | | | --- | --- | --- | --- | --- | --- | | 35% | 30% 35% | | £1,587,000 | | | | 23% | | 32% 46% | | £2,462,000 | | | 18% | | 26% 56% | | | £3,023,000 | Fixed pay Annual bonus LTIP | Minimum Minimum | | | --- | --- | | Target Target | | | Maximum Maximum | | | Maximum + 50% Maximum + 50% | www.sjp.co.uk | | share price growth share price growth | | ### 174 Governance ### 1 2 3 4 5 Remuneration ## Report of the Group Remuneration Committee continued In summary the position on cessation of employment is as follows: Provision Detailed Terms Notice Period 12 months by either party Termination payment Base salary plus benefits (including pension). An express obligation on the Executive to mitigate their loss. Payments can be made on a monthly basis, and reduced or ceased if an Executive is able to secure alternative employment. In addition any statutory amounts would be paid as necessary. Remuneration A pro-rata bonus may also become payable for the period of active service along with entitlements the vesting of outstanding share awards (in certain circumstances as described below). on cessation of appointment Change of control As on termination and with remuneration entitlements as described above. Executive Directors are also subject Any unvested awards held under the The terms and conditions of Executive to the Company’s post-cessation Deferred Bonus Scheme will lapse at Directors’ service contracts and the shareholding policy. cessation of employment unless the letters of appointment of the Non- Committee exercises discretion to executive Directors are available When considering the size of any allow them to be retained. In these for inspection at the Company’s proposed termination payment, the circumstances the Committee may registered office during normal Committee would take into account determine whether unvested awards business hours and at the AGM, a number of factors including the will vest at the normal vesting date the details of which can be found in health, length of service and or at cessation of employment. the Directors’ report in the Company’s performance of the relevant Executive, Annual Report and Accounts. including the duty to mitigate their The Committee may agree to the own loss, with a broad aim to avoid payment of disbursements such External appointments rewarding poor performance while as legal costs and outplacement Executive Directors are permitted to dealing fairly with cases where the services if appropriate and be appointed to an external board or departure is due to other reasons, depending on the circumstances committee so long as this is unlikely for example illness or redundancy. of the leaving Executive. to interfere with the business of the Group. Any fees received in respect Any unvested awards held under the The Committee may pay any legal of external appointments are retained PSP schemes will lapse at cessation of entitlements or settle or compromise by the relevant Executive Director. employment, unless the individual is claims in connection with a termination leaving for certain reasons (defined of employment, where considered in under the plan such as death, injury, the best interests of the Company. ill-health, disability, redundancy, retirement, their office or employment Non-executive Directors’ being either a company which ceases letters of appointment to be a Group member or relating to The Non-executive Directors a business or part of a business which (including the Chair) do not have is transferred to a person who is not service contracts or any benefits a Group member, or any other reason in kind arrangements and do not the Committee so decides). In these participate in any of the Group’s circumstances, unvested awards will pension or incentive arrangements. normally vest at the normal vesting The appointment of each Non- date (unless the Committee decides executive Director can be terminated they should vest at cessation of by giving three months’ notice appointment) subject to performance (subject to annual re-appointment at conditions being met and normally the AGM). Any period of service longer subject to scaling back in respect of than six years is subject to particularly actual service as a proportion of the rigorous review by the Nomination total performance period (unless the Committee of the Board. The Non- Committee decides that scaling back executive Directors’ letters of is inappropriate). The same approach appointment do not provide for applies on a change of control. any payment on termination except for accrued fees and expenses to the date of termination. St. James’s Place plc Annual Report and Accounts 2022 ### 175 ## Directors’ report Strategic Report Financial Statements Other Information The Directors present their report together with the audited Consolidated Financial Statements of the Group for the year ended 31 December 2022. This report has been prepared in accordance with requirements outlined within The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and, together with the Strategic Report, forms the management report as required under the UK Financial Conduct Authority’s (FCA) Disclosure and Transparency Governance Rule DTR4.1. Certain information that fulfils the requirements of the Directors’ report can be found elsewhere in this document and is referred to below. This information is incorporated into this Directors’ report by reference. Information disclosed in accordance with the requirements of the sections of the FCA’s Listing Rule LR9.8 (Annual Financial Report) and Disclosure and Transparency Rule DTR7 (Corporate Governance) that is applicable can be located as follows: Disclosure Location Board diversity targets Corporate governance report Details of long-term incentive schemes Directors’ Remuneration Report Contracts of significance This Directors’ report Shareholder waivers of dividends This Directors’ report Shareholder waivers of future dividends This Directors’ report Directors’ interests in the Company’s shares Directors’ Remuneration Report Major shareholders’ interests This Directors’ report Authority to purchase own shares Corporate governance report Internal controls Report of the Group Audit Committee Climate-related financial disclosures consistent with TCFD 2022 TCFD Report located on our corporate website at: www.sjp.co.uk/about-us/responsible-business As permitted by legislation, some of Status of Company Share capital the matters required to be included The Company is registered as a public Structure of the in the Directors’ report have instead limited company under the Companies Company’s capital been included elsewhere in this Act 2006. For details of the Company’s As at 31 December 2022, the Annual Report and Accounts: subsidiaries and overseas branches, Company’s issued and fully paid-  future business developments please see Note 23 to the Financial up share capital was 544,235,757 throughout the Strategic Report; Statements. ordinary shares of 15 pence each. All ordinary shares are quoted on the  risk management on pages 90 Going concern London Stock Exchange and can be to 99 of the Strategic Report; held in uncertificated form via CREST. In conjunction with its assessment  details of branches operated by All shares have equal rights to of longer-term viability as set out the Company on page 248; and dividends and to participate in a on pages 97 to 99, the Board distribution on winding up. Details  the Group’s impact on the concluded that it remained of the movement in the issued share environment, including those appropriate to adopt the going capital during the year are provided disclosures required regarding concern basis of accounting in in Note 20 to the Consolidated greenhouse gas emissions, preparing the Consolidated Financial Financial Statements. on pages 46 to 51 of the Strategic Statements as it believes the Group Report. will continue to be in business, with Voting rights neither the intention nor the necessity | of liquidation, ceasing trading or | At any General Meeting, on a show of | | --- | --- | | seeking protection from creditors | hands, each member who is present | | pursuant to laws or regulations, for a | in person has one vote and every proxy | | period of at least 12 months from the | present who has been duly appointed | | date of approval of the Consolidated | by a member entitled to vote on a | | Financial Statements. | resolution has one vote. On a poll, every | member who is present in person or by proxy shall have one vote for every share of which they are the holder. www.sjp.co.uk ### 176 Governance ## Directors’ report continued | Shares held by the Company’s | If those default shares represent at | shares held in certificated form which | | --- | --- | --- | | Employee Share Trust and Share | least 0.25% of their class, any dividend | are not fully paid. Directors may also | | Incentive Plan Trust rank pari passu | payable in respect of the shares will | choose to decline requests for share | | with the shares in issue and have no | be withheld by the Company and | transfers from a US Person (as defined | | special rights. Voting rights and rights | (subject to certain limited exceptions) | under Regulation S of the United | | of acceptance of any offer relating to | no transfer, other than an excepted | States Securities Act 1933) that would | | the shares held in the Employee Share | transfer, of any shares held by the | cause the aggregate number of | | Trust rests with the trustees, who may | member in certificated form will | beneficial owners of issued shares | | take account of any recommendation | be registered. | who are US Persons to exceed 70. | from the Company. The trustees of the Share Incentive Plan Trust may vote in Articles of Association The registration of transfers may be respect of shares held in the Trust, but suspended at such times and for such The full rights and obligations only as instructed by participants in periods (not exceeding 30 days in any attaching to the ordinary shares of the the Share Incentive Plan in respect of year) as the Directors may from time Company are set out in the Articles. their Partnership, Dividend and/or to time determine in respect of any Holders of ordinary shares are entitled Matching Shares. The trustees will not class of shares. to: receive the Company’s Reports otherwise vote in respect of shares and Accounts; attend, speak and held in the Share Incentive Plan Trust. The Company is not aware of any exercise voting rights; and appoint agreements between shareholders proxies to attend General Meetings. Restrictions on voting rights that restrict the transfer of shares or voting rights attached to the shares. If any shareholder has been sent a Restrictions on share transfers notice by the Company under section There are restrictions on share The interests of the Directors, and any 793 of the Companies Act 2006 and transfers, all of which are set out in the persons closely associated with them, has failed to supply the relevant Articles. Restrictions include transfers in the issued share capital of the information within a period of 14 days, made in favour of more than four joint Company are shown on page 156. then the shareholder may not (for so holders and transfers held in long as the default continues) be certificated form. Directors may entitled to attend or vote either decline to recognise a transfer unless personally or by proxy at a it is in respect of only one class of shareholders’ meeting, or to exercise share and lodged and duly stamped any other right conferred by by the HMRC. The Directors may also membership in relation to refuse to register any transfer of shareholders’ meetings. Substantial shareholders Information provided to the Company by substantial shareholders pursuant to the FCA’s Disclosure Guidance and Transparency Rules (DTR) is published via a Regulatory Information Service and are available on the Company’s website. As at 31 December 2022 and the date of this report, the Company had been notified of the following interests disclosed to the Company under Chapter 5 of the DTR: % of voting rights 1 BlackRock, Inc. 6.36% BLS Capital 5.23% 1 Percentages are shown as a percentage of the Company’s total voting rights as at the date the Company was notified of the change in holding. Results and dividends The financial review on pages 70 to 89 sets out the consolidated results for the year. An interim dividend of 15.59 pence per share, which equates to £84.7 million, was paid on 23 September 2022 in respect of the year ended 31 December 2022 (2021: 11.55 pence per share/£62.4 million). The Directors recommend that shareholders approve a final dividend of 37.19 pence per share, which equates to £202.4 million (2021: 40.41 pence per share/ £218.9 million), in respect of the year ended 31 December 2022, to be paid on 31 May 2023 to shareholders on the register at close of business on 5 May 2023. Details of the Dividend Reinvestment Plan (DRIP) are set out on page 270. St. James’s Place plc Annual Report and Accounts 2022 177 # Our people Details of the Company's approach to maintaining an appropriately skilled and diverse workforce, including recruitment practices, development opportunities, employee engagement and equal opportunities can be found in the our responsible business section on pages 57 to 61. Details of how the Board engages with employees can be found on page 106 of the Corporate Governance section. This engagement, and the presence of a designated Non-executive Director on the Board, ensures that the Board is able to take account of the interests of employees in its discussions and when making decisions. Engagement during 2022 contributed to the Board's consideration of key strategic topics and the determination of policies affecting the workforce, and helped to inform future decision-making around flexible working and our strategy regarding employee rewards. # Fostering business relationships Engagement with the Board's key stakeholders, including suppliers and clients, is summarised in the corporate governance report on pages 105 to 107. In many cases the Group's primary point of engagement with these stakeholders is through the business, where regular dialogue is maintained. Focus on strategic topics and regular reporting from management enables the Board to establish a clear view of business relationships with these stakeholders and has provided important context in its deliberations and decision-making. Further details are set out in the section 172(1) statement on pages 104 to 111. # Significant contracts and change of control The Company has a number of contractual arrangements which it considers essential to the business of the Company. Specifically, these are committed loan facilities from a number of banks, arrangements with fund managers and third-party providers of administrative services. A change of control of the Company may cause some agreements to which the Company is a party to alter or terminate. These include bank facility agreements, securitisation arrangements and employee share plans. The Group had committed facilities totalling £509 million as at 27 February 2023 which contain clauses which require lender consent for any change of control. In addition, the Group guarantees the obligations of loans made to Partners in connection with facilities agreed with various lenders totalling £414 million in aggregate. Should consent not be given, a change of control would trigger mandatory repayment of the said facilities. The Group also had committed securitisation facilities totalling £175 million which contain clauses which require lender consent for any change of control. Should such consent not be given, a change of control would trigger early amortisation of the facilities. All the Company's employee share plans contain provisions relating to a change of control. Outstanding awards and options may vest and become exercisable on a change of control, subject where appropriate to the satisfaction of any performance conditions at that time and pro-rating of awards. # Financial instruments An indication of the Group's use of financial instruments can be found in Note 17 to the Financial Statements. # Directors and Directors' indemnities Details of the Directors of the Company at the date of this report and during the year ended 31 December 2022 can be found in the corporate governance report on pages 102 and 103. Details of the indemnity provisions in place for the Directors, including qualifying third-party indemnity provisions, can be found on page 116. # Political and charitable donations It is the Group's policy not to make any donations to political parties within the definitions set out in the Political Parties, Elections and Referendums Act 2000 and sections 362 to 379 of the Companies Act 2006. During the year we have donated £5.4 million to the St. James's Place Charitable Foundation, more details of which can be found on pages 55 and 56. # Annual General Meeting The Company plans to hold its Annual General Meeting on Thursday 18 May 2023. Full details of the meeting, including location, time and the resolutions to be put to shareholders at the meeting, are included in a separate Notice of Annual General Meeting, which will be available on our website www.sjp.co.uk. # Important events since the financial year-end Details of important events affecting the Group since 31 December 2022 can be found in the Chief Executive's report on pages 16 to 19. # Disclosure of information to auditors Each of the Directors, at the date of approval of this report, confirms that: so far as each Director is aware, there is no relevant audit information of which the auditors are unaware; and - each Director has taken all steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of such information. This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006. On behalf of the Board: Andrew Croft, Chief Executive Craig Gentle, Chief Financial Officer 27 February 2023 Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 178 Governance ## Statement of Directors’ ## responsibilities | The Directors are responsible for | The Directors are responsible for |  the Company financial statements, | | --- | --- | --- | | preparing the Annual Report and | safeguarding the assets of the Group | which have been prepared in | | Accounts 2022 and the financial | and Company and hence for taking | accordance with United Kingdom | | statements in accordance with | reasonable steps for the prevention | Accounting Standards, comprising | | applicable law and regulation. | and detection of fraud and other | FRS 101, give a true and fair view of | | | irregularities. | the assets, liabilities and financial | | Company law requires the Directors | | position of the Company; and | | to prepare financial statements for | The Directors are also responsible | |  the Strategic Report includes a each financial year. Under that law for keeping adequate accounting fair review of the development the Directors have prepared the Group records that are sufficient to show and performance of the business financial statements in accordance and explain the Group’s and and the position of the Group with UK-adopted international Company’s transactions and disclose and Company, together with a accounting standards and the with reasonable accuracy at any time description of the principal risks Company financial statements in the financial position of the Group and and uncertainties that it faces. accordance with United Kingdom Company and enable them to ensure Generally Accepted Accounting that the financial statements and the In the case of each Director in office Practice (United Kingdom Accounting Directors’ Remuneration Report at the date the Directors’ report Standards, comprising FRS 101 comply with the Companies Act 2006. is approved: Reduced Disclosure Framework, and applicable law). The Directors are responsible for the  so far as the Director is aware, there maintenance and integrity of the is no relevant audit information of Under company law, the Directors Company’s website. Legislation in which the Group’s and Company’s must not approve the financial the United Kingdom governing the auditors are unaware; and statements unless they are satisfied preparation and dissemination of  they have taken all the steps that that they give a true and fair view of financial statements may differ they ought to have taken as a the state of affairs of the Group and from legislation in other jurisdictions. Director in order to make themselves Company and of the profit or loss of aware of any relevant audit the Group for that period. In preparing Directors’ confirmations information and to establish that the financial statements, the Directors The Directors consider that the the Group’s and Company’s auditors are required to: | | Annual Report and Accounts 2022 | | are aware of that information. | | --- | --- | --- | --- | |  select suitable accounting policies | and the financial statements, taken as | | | | and then apply them consistently; | a whole, are fair, balanced and | By order of the Board: | | understandable and provide the  state whether applicable UK- information necessary for adopted international accounting shareholders to assess the Group’s Jonathan Dale, Company Secretary standards have been followed for and Company’s position and 27 February 2023 the Group financial statements, performance, business model and United Kingdom Accounting and strategy. Standards, comprising FRS 101, have been followed for the Each of the Directors, whose names Company financial statements, and functions are listed in the Board subject to any material departures of Directors section on pages 102 disclosed and explained in the and 103 confirms that, to the best financial statements; of their knowledge:  make judgements and accounting  the Group financial statements, estimates that are reasonable and which have been prepared in prudent; and accordance with UK-adopted  prepare the financial statements international accounting on the going concern basis unless standards, give a true and fair view it is inappropriate to presume that of the assets, liabilities, financial the Group and Company will position and profit of the Group; continue in business. St. James’s Place plc Annual Report and Accounts 2022 ### 179 ## Financial ## Statements Independent Auditors’ Report to the Financial Statements Members of St. James’s Place plc 180 Consolidated Statement of Comprehensive Income 188 Consolidated Statement of Changes in Equity 189 Consolidated Statement of Financial Position 190 Consolidated Statement of Cash Flows 191 Notes to the Consolidated Financial Statements under International Financial Reporting Standards 192 Other InformationGovernanceStrategic Report ### 180 Financial Statements ## Independent Auditors’ Report to the Members ## of St. James’s Place plc ### Report on the audit of the Independence ### Financial Statements We remained independent of the Group in accordance with the ethical requirements that are relevant to our Opinion audit of the Financial Statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public In our opinion: interest entities, and we have fulfilled our other ethical  St. James’s Place plc’s Consolidated Financial Statements responsibilities in accordance with these requirements. and Parent Company Financial Statements (the “Financial Statements”) give a true and fair view of the state of To the best of our knowledge and belief, we declare that the Group’s and of the Parent Company’s affairs as non-audit services prohibited by the FRC’s Ethical Standard at 31 December 2022 and of the Group’s profit and were not provided. the Group’s cash flows for the year then ended; Other than those disclosed in Note 5, we have provided no  the Consolidated Financial Statements have been non-audit services to the Parent Company in the period properly prepared in accordance with UK-adopted under audit. international accounting standards as applied in accordance with the provisions of the Companies Act 2006; Our audit approach  the Parent Company Financial Statements have been Overview properly prepared in accordance with United Kingdom Audit scope Generally Accepted Accounting Practice (United Kingdom  The Consolidated Financial Statements comprise the Accounting Standards, including FRS 101 “Reduced consolidation of approximately 70 individual components, Disclosure Framework”, and applicable law); and each of which represents an individual legal entity within  the Financial Statements have been prepared in the Group or consolidation adjustments. accordance with the requirements of the Companies  We assessed each component and considered Act 2006. the contribution it made to the Group’s performance in the year, whether it displayed any significant risk We have audited the Financial Statements, included characteristics and/or whether it contributed a significant within the Annual Report and Accounts (the “Annual Report”), amount to any individual Financial Statement line item. which comprise: Consolidated and Parent Company Statements of Financial Position as at 31 December 2022;  The above assessment resulted in us identifying the Consolidated Statement of Comprehensive Income, seven financially significant components that required Consolidated Statement of Cash Flows, the Consolidated audit procedures for the purpose of the audit of the and Parent Company Statements of Changes in Equity for Consolidated Financial Statements. the year then ended; and the notes to the Financial  Six financially significant components are based in Statements, which include a description of the significant the UK and were audited by the PwC UK audit team. accounting policies. The other significant component is based in the Republic of Ireland and was audited by Grant Thornton Ireland. Our opinion is consistent with our reporting to the Group Audit Committee.  By performing audit procedures on these seven components and by audit of specific balances in four components with large individual balances, Basis for opinion we achieved coverage greater than 85% of each We conducted our audit in accordance with International material Financial Statement line item within the Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Consolidated Financial Statements. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the Financial  We performed a full scope audit of all material line Statements section of our report. We believe that the audit items in the Parent Company’s Financial Statements evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters  Valuation of level 3 investments, being investment properties and equities and fixed income securities in the Diversified Assets Fund (Group)  Valuation of the Operational Readiness prepayment in respect of the development of an administration platform at an outsourced provider (Group) St. James’s Place plc Annual Report and Accounts 2022 ### 181 Strategic Report Governance Other Information Materiality  Performance materiality: £15,500,000 (2021: £11,250,000) (Group) and £10,350,000 (2021: £10,600,000) (Parent  Overall Group materiality: £20,700,000 (2021: £15,000,000) Company). based on 5% of average underlying cash generated in the year (2021: 5% of average underlying cash result  Specific performance materiality: £540,000,000 generated in the past three years). (2021: £568,000,000) applied to assets held to cover linked liabilities, investment contract liabilities  Specific group overall materiality: £720,000,000 (2021: and associated income statement line items. £758,000,000) based on 0.5% (2021: 0.5%) of Assets held to cover linked liabilities applied to assets held to cover linked liabilities, investment contract liabilities and The scope of our audit associated income statement line items. As part of designing our audit, we determined materiality  Overall Parent Company materiality: £13,800,000 and assessed the risks of material misstatement in the (2021: £14,200,000) based on 1% of total assets Financial Statements. (2021: 1% of total assets). Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Financial Statements The key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter | Valuation of investments with judgemental | Investment properties: | | --- | --- | | valuation, being investment properties and | We engaged our internal real estate valuation experts to review the | | level 3 investments in the Diversified Assets | methodology and key assumptions used by CBRE in valuing the | | Fund (Group) | property portfolio. | | As disclosed in the Group Audit Committee | Our valuation experts: | report (Page 122) and Note 17 (Page 226).  Obtained and reviewed the valuation reports produced by CBRE As at 31 December 2022, the Group held and confirmed that the methodology adopted was appropriate. £146.5 billion of investments (including cash and cash equivalents). The majority of  Benchmarked the key assumptions used by CBRE against industry these investments do not require significant norms using our experience and knowledge of the market for all judgement in calculating their valuation properties in the portfolio. in the Financial Statements. However,  Where they fell outside of the expected ranges, valuations showed £3.3 billion of these investments are in unexpected movements, or otherwise appeared unusual, further investment properties (£1.3 billion) and testing was performed and, when necessary, further discussions level 3 equities (£1.6 billion) and fixed were held with Valuers to understand and validate the assumptions. income securities (£0.4 billion) in the Diversified Assets Fund (“DAF”), which require  Agreed key data inputs to the valuations to supporting evidence on management to use significant estimates a sample basis and judgements in order to calculate the valuation at the year-end. Due to the Level 3 equities and fixed income securities in the Diversified Assets Fund: magnitude of these balances and the level We engaged our internal valuation experts to review the methodology of judgement involved in their valuation, and key assumptions used by KKR in valuing a sample of individual level 3 this was an area of focus for our audit. The investments within the DAF. Our valuations experts met with KKR and reviewed Group outsources the investment valuation the year end valuation report for each asset in the sample. They challenged activities for each, with assets in the DAF KKR on the appropriateness of the methodology and assumptions, given the valued by Kohlberg Kravis Roberts & Co. specifics of each of the assets in question. From the evidence obtained when Inc (“KKR”), whilst the investment property testing the valuation of investment properties and level 3 assets in the DAF, portfolio is managed by Orchard Street we found the assumptions and methodology used, and the resulting with regular valuations performed by CBRE. valuations, to be appropriate www.sjp.co.uk ### 182 Financial Statements ## Independent Auditors’ Report to the Members ## of St. James’s Place plc continued Key audit matter How our audit addressed the key audit matter Valuation of the Operational Readiness In testing whether the asset was valued appropriately and whether prepayment in respect of the development an impairment was necessary we: of an administration platform at an  agreed amounts capitalised in the year to the service agreement outsourced provider (Group) and cash payments to the provider; As disclosed in the Group Audit Committee  assessed the reasonableness of the assumptions underlying report (Page 122) and Note 12 (Page 217). management’s discounted cash flow analysis calculating the anticipated The Group is charged costs by an future cost savings that support the valuation of the asset; outsourced provider for the development  agreed that the cost savings had been calculated using appropriate of a policy administration platform used service tariffs; by the Group. These costs are recognised as a prepayment and are unwound over  performed a sensitivity analysis on the inflation and discount rate the duration of the related service assumptions as well as business flow levels to determine the potential agreement with the provider. The balance of impact of changes in these assumptions to check whether they would the prepayment asset at 31 December 2022 affect the carrying value of the asset; and was £278.3 million. The maximum value at  considered the headroom available under what we considered to which the prepayment can be recognised be reasonably possible downside scenarios and whether additional is equal to the net present value of future disclosure was necessary. cost savings from the agreement. Due to the nature and magnitude of the amount We determined that the accounting, recognition and disclosure of the arising from the contractual terms, the asset in the Financial Statements was supported by the evidence obtained. valuation of this asset was an area of focus for our audit. How we tailored the audit scope Six of the financially significant components were audited by PwC UK. St. James’s Place International plc is incorporated We tailored the scope of our audit to ensure that we and regulated in the Republic of Ireland and was audited performed enough work to be able to give an opinion on by Grant Thornton Ireland. At the planning stage of the audit the Financial Statements as a whole, taking into account we provided written instructions to Grant Thornton Ireland the structure of the Group and the Parent Company, the to confirm the work we required them to complete. The accounting processes and controls, and the industry in instructions set out respective responsibilities (including which they operate. on actuarial work), our involvement in their work, and the materiality level they should perform their work to. We held The Group is structured as a vertically integrated wealth regular phone calls and meetings with the Grant Thornton management business and operates predominantly within Ireland engagement leader, director, and senior members the United Kingdom. Seven components within the Group of the Grant Thornton Ireland team through the planning, were considered financial significant and therefore required execution and completion phases of the audit to inform an audit of their complete financial information. These were them of developments at a Group level and to understand St. James’s Place UK plc, St. James’s Place Unit Trust Group from them any local developments that were relevant for Limited, St. James’s Place Investment Administration Limited, our audit of the Group. During the execution phase, senior St. James’s Place Management Services Limited, members of the UK engagement team visited Grant St. James’s Place Wealth Management plc, St. James’s Place Thornton Ireland and performed a live review of Grant Wealth Management Group Limited and St. James’s Place Thornton Ireland’s audit working papers, reviewing selected International plc. elements of their work focused on the significant and elevated risks identified. In addition to the full scope audit of the seven components noted above, we also performed specific audit procedures on certain Financial Statement line items within three other components. These Financial Statement line items were selected for testing to ensure that we had sufficient coverage of each Financial Statement line item within the Consolidated Financial Statements. St. James’s Place plc Annual Report and Accounts 2022 ### 183 Strategic Report Governance Other Information The impact of climate risk on our audit  Considered management’s risk assessment and the TCFD report in light of our knowledge of the wider asset The Group has set out its approach and goals in respect management and wealth management industries. of its Funds under Management in the Investing responsibly section of the Strategic Report. This includes the goal We have incorporated a consideration of the climate of becoming “Net Zero” in investments by 2050 (with an change impact on the audit of the Group’s valuation interim target of a 25% reduction in the carbon emissions of investment properties and level 3 investments in the of its investment proposition by 2025). Diversified Assets Fund held at fair value, taking into In planning our audit, we considered the extent to which account the nature of the asset and the valuation approach. climate change is impacting the Group and how it impacted This has not had a significant impact on the related key our risk assessment for the audit of the Group’s Financial audit matters. Statements. In making these considerations we: Our conclusions were that the impact of climate change  Enquired of management in respect of their own does not give rise to a Key Audit Matter for the Group and climate change risk assessment, including associated it did not impact our risk assessment for any material governance processes and understood how these Financial Statement line item or disclosure. have been implemented.  Obtained the latest Task Force for Climate Related Financial Disclosures (“TCFD”) report from the Group and checked it for consistency with our knowledge of the Group based on our audit work and the disclosures made in the Strategic Report. Materiality Financial Statements 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 – Parent Company Overall materiality £20,700,000 (2021: £15,000,000). £13,800,000 (2021: £14,200,000). How we determined it 5% of underlying cash generated in the year (2021: 5% of 1% of total assets (2021: 1% of total assets) average underlying cash generated in the past three years) | Rationale for | The engagement team concluded that £20.7 million | The purpose of the Parent Company | | --- | --- | --- | | benchmark applied | is the most appropriate figure when setting an overall | is to hold investments in other Group | | | materiality on the engagement. The quantum of | companies. As such PwC considers | | | £20.7 million was determined by considering the various | it appropriate to use total assets as | | | benchmarks available to us as auditors, our experience | the benchmark for overall materiality. | of auditing the Group and our experience of the Group. £20.7 million represents 5% of the underlying cash generated in the last year. For each component in the scope of our Group audit, We use performance materiality to reduce to an we allocated a materiality that is less than our overall appropriately low level the probability that the aggregate Group materiality. The range of materiality allocated of uncorrected and undetected misstatements exceeds across components was £3,000,000 to £19,700,000. overall materiality. Specifically, we use performance Certain components were audited to a local statutory materiality in determining the scope of our audit and audit materiality that was also less than our overall the nature and extent of our testing of account balances, Group materiality. classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £15,500,000 (2021: £11,250,000) for the Consolidated Financial Statements and £10,350,000 (2021: £10,600,000) for the Parent Company Financial Statements. www.sjp.co.uk 184 Financial Statements ## Independent Auditors' Report to the Members of St. James's Place plc continued 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. For certain balances, our specific performance materiality was 75% of the specific overall materiality for assets held to cover linked liabilities, investment contract liabilities and associated income statement line items, amounting to £540,000,000 (2021: £568,000,000) for the consolidated financial statements. We agreed with the Group Audit Committee that we would report to them misstatements identified during our audit above £1,000,000 (Group audit) (2021: £750,000) and £690,000 (Parent Company audit) (2021: £700,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. For balances where we apply our specific performance materiality we agreed to report misstatements greater than £20,700,000 (2021: £15,000,000). ### Conclusions relating to going concern Our evaluation of the Directors' assessment of the Group's and the parent company's ability to continue to adopt the going concern basis of accounting included: - Obtained management's assessment of the going concern of the Group, and challenged the appropriateness of the assumptions used by utilising our knowledge of the Group gained throughout the audit and obtaining further corroborative audit evidence. - Considered the results of management's analysis of the relevant solvency requirements and liquidity position of the Group, including forward looking scenarios within the Group's Own Risk and Solvency Assessment. - Considered information obtained through review of regulatory correspondence, minutes of meetings of the Board, Group Audit and Group Risk Committees, as well as publicly available information to identify any information that would contradict management's assessment. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the Financial Statements are authorised for issue. In auditing the Financial Statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group's and the Parent Company's ability to continue as a going concern. In relation to the Directors' reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ### Reporting on other information The other information comprises all of the information in the Annual Report other than the Financial Statements and our auditors' report thereon. The Directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. ### Strategic Report and Directors' Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors' Report for the year ended 31 December 2022 is consistent with the Financial Statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report. St. James's Place plc Annual Report and Accounts 2022 ### 185 Strategic Report Governance Other Information Directors’ Remuneration In addition, based on the work undertaken as part of our audit, we have concluded that each of the following In our opinion, the part of the The Directors’ Remuneration elements of the corporate governance statement is Report to be audited has been properly prepared in materially consistent with the Financial Statements accordance with the Companies Act 2006. and our knowledge obtained during the audit: Corporate governance statement  The Directors’ statement that they consider the The Listing Rules require us to review the Directors’ statements Annual Report, taken as a whole, is fair, balanced and in relation to going concern, longer-term viability and that understandable, and provides the information necessary part of the corporate governance statement relating to the for the members to assess the Group’s and Parent Parent Company’s compliance with the provisions of the Company’s position, performance, business model UK Corporate Governance Code specified for our review. and strategy; Our additional responsibilities with respect to the corporate governance statement as other information are described  The section of the Annual Report that describes the in the Reporting on other information section of this report. review of effectiveness of risk management and internal control systems; and Based on the work undertaken as part of our audit, we  The section of the Annual Report describing the work of have concluded that each of the following elements of the the Group Audit Committee. corporate governance statement is materially consistent with the Financial Statements and our knowledge obtained We have nothing to report in respect of our responsibility to during the audit, and we have nothing material to add or report when the Directors’ statement relating to the Parent draw attention to in relation to: Company’s compliance with the Code does not properly  The Directors’ confirmation that they have carried out a disclose a departure from a relevant provision of the Code robust assessment of the emerging and principal risks; specified under the Listing Rules for review by the auditors. Financial Statements  The disclosures in the Annual Report that describe those Responsibilities for the Financial Statements principal risks, what procedures are in place to identify and the audit emerging risks and an explanation of how these are being managed or mitigated; Responsibilities of the directors for the Financial Statements  The Directors’ statement in the Financial Statements about whether they considered it appropriate to adopt As explained more fully in the Statement of Directors’ the going concern basis of accounting in preparing them, Responsibilities, the Directors are responsible for the and their identification of any material uncertainties to preparation of the Financial Statements in accordance with the Group’s and Parent Company’s ability to continue the applicable framework and for being satisfied that they to do so over a period of at least twelve months from give a true and fair view. The Directors are also responsible the date of approval of the Financial Statements; for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free  The Directors’ explanation as to their assessment of the from material misstatement, whether due to fraud or error. Group’s and parent company’s prospects, the period this assessment covers and why the period is appropriate; In preparing the Financial Statements, the Directors are and responsible for assessing the Group’s and the Parent  The Directors’ statement as to whether they have a Company’s ability to continue as a going concern, reasonable expectation that the Parent Company will disclosing, as applicable, matters related to going concern be able to continue in operation and meet its liabilities and using the going concern basis of accounting unless the as they fall due over the period of its assessment, directors either intend to liquidate the Group or the Parent including any related disclosures drawing attention Company or to cease operations, or have no realistic to any necessary qualifications or assumptions. alternative but to do so. Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the Financial Statements and our knowledge and understanding of the Group and Parent Company and their environment obtained in the course of the audit. www.sjp.co.uk ### 186 Financial Statements ## Independent Auditors’ Report to the Members ## of St. James’s Place plc continued Auditors’ responsibilities for the audit of the  Reading key correspondence with the Prudential Financial Statements Regulation Authority, the Financial Conduct Authority and the Central Bank of Ireland in relation to compliance Our objectives are to obtain reasonable assurance about with laws and regulations; whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and  Reviewing relevant meeting minutes including those to issue an auditors’ report that includes our opinion. of the Board, Group Risk and Group Audit Committees; Reasonable assurance is a high level of assurance, but is  Reviewing data regarding customer complaints and not a guarantee that an audit conducted in accordance the company’s register of litigation and claims, in so with ISAs (UK) will always detect a material misstatement far as they related to non-compliance with laws and when it exists. Misstatements can arise from fraud or regulations and fraud; error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence  Identifying and testing journal entries, in particular the economic decisions of users taken on the basis of these any journal entries posted with unusual account Financial Statements. combinations increasing reported revenues;  Designing audit procedures to incorporate unpredictability Irregularities, including fraud, are instances of non- around nature, timing or extent of our testing. compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, There are inherent limitations in the audit procedures to detect material misstatements in respect of irregularities, described above. We are less likely to become aware of including fraud. The extent to which our procedures are instances of non-compliance with laws and regulations that capable of detecting irregularities, including fraud, is are not closely related to events and transactions reflected detailed below. in the Financial Statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of Based on our understanding of the Group and industry, not detecting one resulting from error, as fraud may involve we identified that the principal risks of non-compliance deliberate concealment by, for example, forgery or with laws and regulations related to corporate taxation, and intentional misrepresentations, or through collusion. to UK and Irish regulatory principles, such as those governed by the Prudential Regulation Authority, the Financial Conduct Our audit testing might include testing complete Authority and the Central Bank of Ireland, and we considered populations of certain transactions and balances, possibly the extent to which non-compliance might have a material using data auditing techniques. However, it typically involves effect on the Financial Statements. We also considered selecting a limited number of items for testing, rather than those laws and regulations that have a direct impact on testing complete populations. We will often seek to target the Financial Statements such as the Companies Act 2006. particular items for testing based on their size or risk We evaluated management’s incentives and opportunities characteristics. In other cases, we will use audit sampling to for fraudulent manipulation of the Financial Statements enable us to draw a conclusion about the population from (including the risk of override of controls), and determined which the sample is selected. that the principal risks were related to risk of management override of controls and risk of fraud in revenue recognition. A further description of our responsibilities for the audit of The Group engagement team shared this risk assessment the Financial Statements is located on the FRC’s website at: with the component auditors so that they could include www.frc.org.uk/auditorsresponsibilities. This description appropriate audit procedures in response to such risks in forms part of our auditors’ report. their work. Audit procedures performed by the Group engagement team and/or component auditors included: Use of this report  Discussions with the Risk and Compliance function, This report, including the opinions, has been prepared for Internal Audit and the company’s legal counsel, including and only for the Parent Company’s members as a body in consideration of known or suspected instances of accordance with Chapter 3 of Part 16 of the Companies Act non-compliance with laws and regulation and fraud; 2006 and for no other purpose. We do not, in giving these  Reading the Group Audit Committee papers in which opinions, accept or assume responsibility for any other whistle blowing matters are reported and considered the purpose or to any other person to whom this report is shown impact of these matters on the Group’s compliance with or into whose hands it may come save where expressly laws and regulations; agreed by our prior consent in writing. St. James’s Place plc Annual Report and Accounts 2022 ### 187 Strategic Report Governance Other Information ### Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion:  we have not obtained all the information and explanations we require for our audit; or  adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or  certain disclosures of Directors’ remuneration specified by law are not made; or  the Parent Company Financial Statements and the part of the The Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Financial Statements Following the recommendation of the Group Audit Committee, we were appointed by the Directors on 7 December 2009 to audit the Financial Statements for the year ended 31 December 2009 and subsequent financial periods. The period of total uninterrupted engagement is 14 years, covering the years ended 31 December 2009 to 31 December 2022. Other matter As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these Financial Statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Gary Shaw (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Bristol 27 February 2023 www.sjp.co.uk ### 188 Financial Statements ## Consolidated Statement of Comprehensive Income | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Insurance premium income 33 .7 36 .5 Less premiums ceded to reinsurers (23.3) (23 . 2) Net insurance premium income 10.4 1 3.3 Fee and commission income 4 1 ,954 .2 2 , 7 37. 2 Investment return 6 (13, 771.9) 15,275.4 Net income (1 1 , 8 07. 3) 18,025.9 Policy claims and benefits – Gross amount (4 8 . 0) (62 . 8) – Reinsurers’ share 14 .6 16. 9 Net policyholder claims and benefits incurred (33 . 4) (4 5 . 9) Change in insurance contract liabilities 14 – Gross amount 88.8 (9 . 7) – Reinsurers’ share (16.0) (9 . 9) Net change in insurance contract liabilities 72.8 (1 9 . 6) Movement in investment contract benefits 6 1 3 ,73 4 . 8 (1 5 , 1 8 6 . 7) Expenses 5 (1 , 9 6 6 . 2) (1 , 9 3 1 . 3) Profit before tax 3 0.7 8 42 . 4 Tax attributable to policyholders’ returns 7 501 .1 (4 8 8 . 6) Profit before tax attributable to shareholders’ returns 501 .8 353 . 8 Total tax credit/(charge) 7 4 04 .7 (55 4 . 8) Less: tax attributable to policyholders’ returns 7 (5 0 1 . 1) 48 8 .6 Tax attributable to shareholders’ returns 7 (9 6 . 4) (6 6 . 2) Profit and total comprehensive income for the year 405.4 2 8 7. 6 Profit attributable to non-controlling interests 0.4 0.9 Profit attributable to equity shareholders 405.0 28 6 .7 Profit and total comprehensive income for the year 405.4 2 8 7. 6 Pence Pence Basic earnings per share 20 74 . 6 53.3 Diluted earnings per share 20 7 3.9 52. 5 The results relate to continuing operations. The Notes and information on pages 192 to 254 form part of these Consolidated Financial Statements. As permitted by section 408 of the Companies Act 2006, no Statement of Comprehensive Income is presented for the Company. St. James’s Place plc Annual Report and Accounts 2022 189 ## Consolidated Statement of Changes in Equity | | Note | Equity attributable to owners of the Parent Company | | | | | | Non-controlling interests | Total equity | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share capital | Share premium | Shares in trust reserve | Misc. reserves | Retained earnings | Total | | | | | | £ Million | £ Million | £ Million | £ Million | £ Million | £ Million | £ Million | £ Million | | At 1 January 2021 | | 80.6 | 185.3 | (14.8) | 2.5 | 859.4 | 1,113.0 | (0.9) | 1,112.1 | | Profit and total comprehensive income for the year | | – | – | – | – | 286.7 | 286.7 | 0.9 | 287.6 | | Dividends | 20 | – | – | – | – | (329.9) | (329.9) | – | (329.9) | | Issue of share capital | 20 | 0.1 | 10.2 | – | – | – | 10.3 | – | 10.3 | | Exercise of options | 20 | 0.4 | 18.3 | – | – | – | 18.7 | – | 18.7 | | Shares sold during the year | | – | – | 6.3 | – | (6.3) | – | – | – | | Retained earnings credit in respect of share option charges | | – | – | – | – | 20.4 | 20.4 | – | 20.4 | | **At 31 December 2021** | | **81.1** | **213.8** | **(8.5)** | **2.5** | **830.3** | **1,119.2** | **–** | **1,119.2** | | Profit and total comprehensive income for the year | | – | – | – | – | 405.0 | 405.0 | 0.4 | 405.4 | | Dividends | 20 | – | – | – | – | (303.6) | (303.6) | (0.3) | (303.9) | | Issue of share capital | 20 | 0.1 | 5.6 | – | – | – | 5.7 | – | 5.7 | | Exercise of options | 20 | 0.4 | 8.4 | – | – | – | 8.8 | – | 8.8 | | Consideration paid for own shares | | – | – | (0.3) | – | – | (0.3) | – | (0.3) | | Shares sold during the year | | – | – | 4.7 | – | (4.7) | – | – | – | | Retained earnings credit in respect of share option charges | | – | – | – | – | 20.5 | 20.5 | – | 20.5 | | Non-controlling interests arising on the part-disposal of subsidiaries | | – | – | – | – | 4.9 | 4.9 | 0.1 | 5.0 | | **At 31 December 2022** | | **81.6** | **227.8** | **(4.1)** | **2.5** | **952.4** | **1,260.2** | **0.2** | **1,260.4** | The number of shares held in the Shares in trust reserve is given in Note 20 Share capital, earnings per share and dividends. Miscellaneous reserves represent other non-distributable reserves. The Notes and information on pages 192 to 254 form part of these Consolidated Financial Statements. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 190 Financial Statements ## Consolidated Statement of Financial Position | | | | As at | | As at | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Assets Goodwill 8 33.6 29 .6 Deferred acquisition costs 8 33 7. 3 379.6 Intangible assets – Purchased value of in-force business 8 11. 2 14 . 4 – Computer software 8 33.3 2 7. 0 Property and equipment 9 14 5.7 154 . 5 Deferred tax assets 7 13.9 20 .6 Investment in associates 1.4 1.4 Reinsurance assets 14 66. 4 82. 4 Other receivables 12 2,9 82. 8 2,92 3.0 Income tax assets 35.0 – Investments – Investment property 11 1, 29 4 .5 1 , 568 . 5 – Equities 11 103, 536 .0 10 6 ,782 . 3 – Fixed income securities 11 2 7, 5 5 2 . 7 29,305.9 – Investment in Collective Investment Schemes 11 5, 73 5.4 5,513.2 – Derivative financial instruments 11 3,493.0 1, 09 4 .6 Cash and cash equivalents 11 6, 4 32 . 8 7, 8 3 2 . 9 Total assets 151,70 5 .0 155,729. 9 Liabilities Borrowings 16 163. 8 4 3 3. 0 Deferred tax liabilities 7 162 . 9 649 . 8 Insurance contract liabilities 14 483 .5 572 . 3 Deferred income 8 530. 4 562 . 6 Other provisions 15 46 .0 4 4 . 1 Other payables 13 2,198.6 2 , 604 . 5 Investment contract benefits 11 106,964.7 110,349.8 Derivative financial instruments 11 3,26 6.3 1, 019 .5 Net asset value attributable to unit holders 11 36 ,628 .4 38 , 3 69. 0 Income tax liabilities – 6 .1 Total liabilities 150, 444 .6 154 ,610.7 Net assets 1, 260. 4 1 ,11 9. 2 Shareholders’ equity Share capital 20 81 .6 81 . 1 Share premium 2 2 7. 8 21 3 . 8 Shares in trust reserve (4 . 1) (8 . 5) Miscellaneous reserves 2.5 2. 5 Retained earnings 952 . 4 83 0. 3 Equity attributable to owners of the Parent Company 1, 2 60. 2 1, 119. 2 Non-controlling interests 0.2 – Total equity 1 , 260. 4 1 , 119 . 2 Pence Pence Net assets per share 2 31 .6 2 0 7. 1 The Consolidated Financial Statements on pages 188 to 254 were approved by the Board of Directors on 27 February 2023 and signed on its behalf by: Andrew Croft, Chief Executive Craig Gentle, Chief Financial Officer The Notes and information on pages 192 to 254 form part of these Consolidated Financial Statements. St. James’s Place plc Annual Report and Accounts 2022 ### 191 ## Consolidated Statement of Cash Flows Strategic Report Governance Other Information | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Cash flows from operating activities Cash (used in)/generated from operations 18 (9 7 5 . 1) 1 ,74 1 . 0 Interest received 61 . 8 1 9. 2 Interest paid (1 2 . 4) (1 0 . 2) Income taxes paid 7 (1 2 1 . 1) (3 1 9 . 1) Contingent consideration (6 . 3) (1 . 3) Net cash (outflow)/inflow from operating activities (1 , 0 5 3 . 1) 1,42 9. 6 Cash flows from investing activities Payments for property and equipment 9 (4 . 0) (3 . 4) Payment of software development costs 8 (1 6 . 1) (1 9. 2) Payments for acquisition of subsidiaries and other business combinations, net of cash acquired (1 3 . 9) (6 . 6) Proceeds from sale of shares in subsidiaries and other business combinations, net of cash disposed 4.0 4 .1 Proceeds from sale of financial assets held at amortised cost 262. 5 – Net cash inflow/(outflow) from investing activities 232 .5 (2 5 . 1) Cash flows from financing activities Financial Statements Proceeds from the issue of share capital and exercise of options 8.8 1 8 .7 Consideration paid for own shares (0 . 3) – Proceeds from borrowings 16 204 .0 5 76 . 4 Repayment of borrowings 16 (47 5 . 3) (4 8 6 . 1) Principal elements of lease payments 10 (1 3 . 8) (1 0 . 7) Dividends paid to Company’s shareholders 20 (30 3 . 6) (3 2 9 . 9) Dividends paid to non-controlling interests in subsidiaries (0 . 3) – Net cash (outflow) from financing activities (580.5) (2 31 . 6) Net (decrease)/increase in cash and cash equivalents (1 , 4 0 1 . 1) 1 ,1 72. 9 Cash and cash equivalents at 1 January 11 7, 8 32 . 9 6,660.1 Effects of exchange rate changes on cash and cash equivalents 1.0 (0 . 1) Cash and cash equivalents at 31 December 11 6,432 .8 7, 8 32 . 9 The Notes and information on pages 192 to 254 form part of these Consolidated Financial Statements. www.sjp.co.uk 192 Financial Statements # Notes to the Consolidated Financial Statements under International Financial Reporting Standards ## 1. Accounting policies St. James's Place plc (the Company) is a public company limited by shares which is incorporated and registered in England and Wales, domiciled in the United Kingdom and whose shares are publicly traded. ### i. Statement of compliance The Group Financial Statements consolidate those of the Company and its subsidiaries (together referred to as the Group). The Group Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. As at 31 December 2022, the following relevant amended standards, which the Group adopted as of 1 January 2022, have not had any material impact on the Group's Consolidated Financial Statements: - Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework; and - Annual Improvements to IFRS Standards 2018-2020. There were no new accounting standards adopted as of 1 January 2022. ### ii. New and amended accounting standards not yet adopted As at 31 December 2022, the following new and amended standards, which are relevant to the Group but have not been applied in the Financial Statements, were in issue but are not yet effective. All of the below had been adopted by the UK Endorsement Board as at 31 December 2022, except for Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current: - Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current; - Amendments to IAS 1 Presentation of Financial Statements – Disclosure of Accounting Policies; - Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates; - Amendments to IAS 12 Income Taxes – Deferred Tax related to Asset and Liabilities arising from a Single Transaction; and - IFRS 17 Insurance Contracts. The adoption of the above standards and amendments is not expected to have a material impact on the Group's Consolidated Financial Statements other than requiring additional disclosure or alternative presentation. Further detail regarding IFRS 17 Insurance Contracts is given below. ### IFRS 17 Insurance Contracts IFRS 17 was issued in May 2017 and is mandatory for annual reporting periods commencing on 1 January 2023. It incorporates revised principles for the recognition, measurement, presentation and disclosure of insurance contracts. Under IFRS 17, groups of insurance contracts are recognised and measured as: - the Fulfilment Cashflows, which comprise an estimate of future cash flows, adjusted to reflect the time value of money, the financial risks associated with the future cash flows and a risk adjustment for non-financial risk; and - the Contractual Service Margin, comprising the unearned profit within a group of contracts that will be recognised as the Group provides insurance services in the future. If a group of contracts is expected to be onerous (i.e. loss-making) over the remaining coverage period, a loss is recognised immediately. The Group closed to new insurance business, as defined under IFRS 17, in 2011. At 31 December 2022, on an IFRS 4 Insurance Contracts basis, the Group had £68.6 million of non-unit-linked insurance contract liabilities, which are substantially reinsured, and £414.9 million of unit-linked insurance contract liabilities. As a result, the Group's exposure on this business is not material (£2.2 million, being the net of £68.6 million non-unit-linked insurance liabilities and £56.4 million reinsurance assets). The Group has an established project group managing the implementation of IFRS 17, overseen by the Group Audit Committee. During 2022 the Group continued to refine its valuation approach and to develop the required models and reporting systems, with the associated governance processes due to be completed in 2023. Whilst these processes have yet to be completed, there is not expected to be a material impact on either equity or financial results on adopting IFRS 17. The Group intends to adopt the following key accounting policies: - the General Measurement Model will be applied to non-unit-linked insurance business and reassurance ceded, and the Variable Fee Approach to unit-linked insurance business measured under IFRS 17; - the fair value approach will be applied to all insurance contracts on transition to IFRS 17, as the Group considers that application of a fully retrospective approach is impracticable (since our accounting and actuarial systems hold information on historic business at a higher level of aggregation than that required for the fully retrospective approach); and - IFRS 17 requires an accounting policy decision as to whether to recognise all finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into other comprehensive income. All finance income and expense will be included in profit or loss. Adoption of IFRS 17 is not expected to have a material impact on alternative performance measures used by the Group. St. James's Place plc Annual Report and Accounts 2022 ### 193 Strategic Report Governance Other Information iii. Basis of preparation The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are The going concern basis has been adopted in preparing recognised in the year in which the estimate is revised if the these Financial Statements. revision affects only that year, or in the year of the revision and future years, if the revision affects both current and The Group’s business activities, together with the factors future years. likely to affect its future development, performance and position, are set out in the Chief Executive’s report and the Judgements made by management in the application of Chief Financial Officer’s report. The financial performance IFRSs that have material effect on the Financial Statements and financial position of the Group are described in the and estimates with a significant risk of material adjustment financial review. in the next year are discussed in Note 2. As shown in Section 3 of the financial review, the Group’s The Financial Statements are prepared in accordance capital position remains strong and well in excess of with the Companies Act 2006 as applicable to companies regulatory requirements. In addition, it has continued to reporting under IFRS and the accounting policies set out operate within its external banking covenants. The S&P rating below have been applied consistently to all years presented of SJPUK remains at A- (BBB at SJP PLC). Similarly, the Fitch in these Consolidated Financial Statements. rating remains at A+ for SJPUK (A at SJP PLC level). Further, the long-term nature of the business results in considerable positive cash flows arising from existing business. iv. Summary of significant accounting policies (a) Basis of consolidation The Board has considered the challenging macroeconomic The consolidated financial information incorporates the and geopolitical conditions which prevailed during 2022, assets, liabilities and results of the Company and of its noting that the business continued to be successful in this subsidiaries. Subsidiaries are those entities which the Group environment. For example, 2022 marked the second-best Financial Statements controls. Control exists if the Group is exposed to, or has year for gross inflows in the Group’s history; a strong rights to, variable returns from its involvement with the entity outcome that is testament to the enduring resilience and has the ability to affect those returns through its power of the business. This, along with the performance of our over the entity (including unit trusts in which the Group holds key outsource providers, monitored through our ongoing more than 30% of the units). Further information on how oversight, supports its view that the business will continue control is assessed, including the judgement taken in to remain operationally resilient. consolidating SJP Partner Loans No.1 Limited, the Group’s securitisation entity, is set out in Note 2. As a result of its review, the Board believes that the Group will continue to operate, with neither the intention nor the Associates are all entities over which the Group has necessity of liquidation, ceasing trading or seeking significant influence but not control and are accounted protection from creditors pursuant to laws or regulations, for at fair value through profit or loss. The Group uses the for a period of at least 12 months from the date of approval acquisition method of accounting to account for business of the Group Financial Statements. combinations and expenses all acquisition costs as they are incurred. The financial information of subsidiaries are The Financial Statements are presented in pounds Sterling, included in the Consolidated Financial Statements from rounded to the nearest one hundred thousand pounds. the date that control commences until the date that control They are prepared on a historical cost basis, except for ceases. Accounting policies of subsidiaries have been assets classified as investment property and financial changed where necessary to ensure consistency with assets and liabilities at fair value through profit and loss. policies adopted by the Group. The preparation of the Financial Statements in conformity Any contingent consideration to be transferred by the with IFRSs requires management to make judgements, Group is recognised at fair value at the acquisition date. estimates and assumptions that affect the application Subsequent changes to the fair value of the contingent of policies and reported amounts of assets and liabilities, consideration that is deemed to be an asset or liability is income and expenses. The estimates and associated recognised in accordance with IFRS 9 in the Consolidated assumptions are based on historical experience and Statement of Comprehensive Income. various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. www.sjp.co.uk ### 194 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued The provision of initial advice is a distinct performance ### 1. Accounting policies continued obligation. As a result, initial advice charges are recognised The treatment of transactions with non-controlling interests in full on acceptance and inception of the associated policy depends on whether, as a result of the transaction, the by the relevant product provider, which may be a Group Group alters control of the subsidiary. Changes in the company or a third party. Ongoing advice charges are Parent’s ownership interest in a subsidiary that do not result recognised as revenue on an ongoing basis, consistent with in a loss of control are accounted for as equity transactions; the nature of the performance obligation being discharged, any difference between the amount by which the non- rather than at a single point in time. controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in Third-party fee and commission income is recognised in equity and attributed to the owners of the Parent entity. full on acceptance and inception of the associated policy by Where the Group loses control of a subsidiary, at the date the relevant third-party product provider. The performance when control is lost the amount of any non-controlling obligation is the initial advice provided to a client which interest in that former subsidiary is derecognised and any leads to investment in a third-party product, hence it is investment retained in the former subsidiary is remeasured appropriate that this revenue stream is recognised on the to its fair value; the gain or loss that is recognised in profit or same basis as initial advice charges. Where the third-party loss on the partial disposal of the subsidiary includes the product provider retains the right to clawback of commission gain or loss on the remeasurement of the retained interest. on an indemnity basis, revenue on sale of these products is recognised to the extent that it is highly probable the Intra-Group balances, and any income and expenses or revenue will not be clawed back. A provision is recognised unrealised gains and losses arising from intra-Group for any amounts received which do not meet the ‘highly transactions, are eliminated in preparing the Consolidated probable’ threshold. Financial Statements. Wealth management fees, investment management The St. James’s Place Charitable Foundation is not fees, fund tax deductions, policyholder tax asymmetry consolidated within the financial information. This is and discretionary fund management fees relate to services because the Company does not control the Charitable provided on an ongoing basis, and revenue is recognised Foundation in accordance with IFRS 10. on an ongoing basis to reflect the nature of the performance obligations being discharged. (b) Fee and commission income Fee and commission income comprises: When initial product charges and dealing margins do not relate to a distinct performance obligation satisfied (i) advice charges (post-RDR) paid by clients who receive at inception of a contract, the income is deferred and advice alongside their investment in a St. James’s Place amortised over the anticipated period in which the product. Advice may be provided at initial investment, services will be provided. and on an ongoing basis; (ii) third-party fee and commission income, due from (c) Insurance and reinsurance premiums third-party product providers in respect of products Unit-linked insurance contract premiums are recognised sold on their behalf; as revenue when the liabilities arising from them are (iii) wealth management fees paid by clients for the recognised. All other premiums are accounted for when ongoing administration of their investment product; due for payment. (iv) investment management fees paid by clients for (d) Insurance claims and reinsurance recoveries all aspects of investment management, including Insurance contract death claims are accounted for on fees taken by the Group to pay third-party notification of death. Critical illness claims are accounted investment advisers; for when admitted. All other claims and surrenders are (v) fund tax deductions, which are fees charged to clients accounted for when payment is due. Reinsurance to match the policyholder tax expense; recoveries, in respect of insurance claims, are accounted for in the same period as the related claim. (vi) policyholder tax asymmetry, which is the difference between the deferred tax position and the offsetting (e) Investment return client balances; Investment return comprises investment income and (vii) discretionary fund management (DFM) fees generated investment gains and losses. Investment income includes through the services provided by our DFM business; and dividends, interest and rental income from investment (viii) amortisation of DIR, the unwinding of income that has properties under operating leases. Dividends are accrued been deferred. This relates to initial product charges on an ex-dividend basis, and rental income is recognised in and dealing margins from unit trusts. the Statement of Comprehensive Income on a straight-line basis over the term of the lease. Interest on assets classified as fair value through profit or loss are accounted for based on the actual coupon payments, whilst interest on financial assets measured at amortised cost are accounted for using the effective interest method. St. James’s Place plc Annual Report and Accounts 2022 ### 195 Strategic Report Governance Other Information (f) Expenses A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against (i) Payments to Partners which the asset can be utilised. Deferred tax assets are Payments to Partners comprise initial commission and initial reduced to the extent that it is no longer probable that advice fees (IAF) (paid for initial advice, at policy outset and the related tax benefit will be realised. within an initial period for regular contribution), renewal commission and renewal advice fees (payable on regular Deferred tax assets and liabilities are offset when there is a contributions) and fund fee commission or ongoing advice legally enforceable right to offset current tax assets against fees (OAF) (based on funds under management). Initial and current tax liabilities, and when the deferred tax assets and renewal commission and advice fees are recognised in line liabilities relate to income taxes levied by the same taxation with the associated premium income, but initial commission authority on either the taxable entity or different taxable on insurance and investment contracts may be deferred, entities where there is an intention to settle the balances as set out in accounting policy (k). Fund fee commission and on a net basis. ongoing advice fees are recognised on an accruals basis. (iii) Policyholder and shareholder tax (ii) Lease expenses The total income tax charge is a separate adjustment within Lease expenses under IFRS 16 comprise depreciation of the the Statement of Comprehensive Income based on the right-of-use asset and interest expense on the lease liability. movement in current and deferred income taxes in respect Further information on depreciation of the right-of-use asset of income, gains and expenses. The total charge reflects tax is set out in accounting policy (m). Interest expense on the incurred on behalf of policyholders as well as shareholders, lease liability is calculated using the effective interest and so it is useful to be able to identify these separately. method. It is charged to expenses within the Statement of Comprehensive Income. Shareholder tax is estimated by making an assessment of the effective rate of tax that is applicable to the shareholders The Group recognises lease payments associated with Financial Statements on the profits attributable to shareholders. This is calculated short-term leases and leases of low-value assets on a by applying the appropriate effective corporate tax rates to straight-line basis over the lease term. the shareholder profits. The remainder of the tax charge represents tax on policyholders’ investment returns. (g) Income taxes Income tax on the profit or loss for the year comprises (h) Dividends current and deferred tax payable by the Group in respect Interim dividend distributions to the Company’s of policyholders and shareholders. Income tax is recognised shareholders are recognised in equity in the period in which in the Statement of Comprehensive Income except to the they are paid. Final dividend distributions to the Company’s extent that it relates to items recognised directly in equity, shareholders are recognised in the period in which the in which case it is recognised in equity. Tax liabilities are dividends are declared: that is, when they are appropriately recognised when it is considered probable that there will authorised and no longer at the discretion of the Company. be a future outflow of funds to a taxing authority, and The final dividend for the financial year is disclosed but are measured using a best-estimate approach. shown as unpaid and awaiting approval by the Company’s shareholders at the Annual General Meeting. (i) Current tax Current tax is the expected tax payable on the taxable (i) Investment contract deposits and withdrawals income for the year, using tax rates enacted or substantively Investment contract payments in and out are not included enacted at the reporting date, and any adjustment to tax in the Statement of Comprehensive Income but are reported payable in respect of previous years. as deposits to or deductions from investment contract benefits in the Statement of Financial Position. The movement (ii) Deferred tax in investment contract benefits within the Statement of Deferred tax is provided using the liability method, providing Comprehensive Income principally represents the for temporary differences between the carrying amounts investment return credited to policyholders. of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following Explicit advice charges are payable by most clients differences are not provided for: the initial recognition of who wish to receive advice with their investment in a assets or liabilities that affect neither accounting nor taxable St. James’s Place retail investment product. St. James’s Place profit, and differences relating to investments in subsidiaries facilitates the payment of these charges for the client, by to the extent that they will probably not reverse in the arranging withdrawals from the client’s policy, which are foreseeable future. The amount of deferred tax provided is then recognised as income to the Group. A proportion of based on the expected manner of realisation or settlement the charge is then paid to the St. James’s Place adviser who of the carrying amount of assets and liabilities, using tax provides the advice (see (b) Fee and commission income (i) rates enacted or substantively enacted at the reporting and (f) Expenses (i)). date and taking into account excepted timing of utilisation. www.sjp.co.uk ### 196 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued An intangible asset is also recognised in respect of ### 1. Accounting policies continued acquired investment management contracts, representing (j) Goodwill the fair value of contractual rights acquired under those Goodwill represents the excess of the cost of an acquisition contracts. The purchased value of in-force business is over the fair value of the Group’s share of the identifiable expressed as a gross figure in the Statement of Financial net assets of the acquired entity at the date of acquisition. Position, with the associated tax included within deferred Where the fair value of the Group’s share of the identifiable tax liabilities. It is assessed for impairment at each reporting net assets of the acquired entity is greater than the cost date and any movement is charged to the Statement of of acquisition, the excess is recognised immediately in Comprehensive Income. the Statement of Comprehensive Income. The estimated useful economic life of acquired in-force Goodwill is recognised as an asset at cost and is reviewed business is 20 years. at least annually for impairment or when circumstances or events indicate there may be uncertainty over this value. (ii) Computer software and other specific If an impairment is identified, the carrying value of the software developments goodwill is written down immediately through the Statement Computer software is stated at cost less accumulated of Comprehensive Income and is not subsequently reversed. amortisation and any recognised impairment loss. At the date of disposal of a subsidiary, the carrying value The carrying value is reviewed for impairment when events of attributable goodwill is included in the calculation of the or changes in circumstances indicate that the carrying profit or loss on disposal except where it has been written value may not be recoverable. off directly to reserves in the past. Computer software, including cloud customisation costs, is (k) Deferred acquisition costs recognised as an intangible asset during development, with For insurance contracts, acquisition costs comprise both amortisation commencing when the software is operational. direct costs such as initial commission and the indirect Amortisation is charged to the Statement of Comprehensive costs of obtaining and processing new business. Acquisition Income to expenses on a straight-line basis over four years, costs which are incurred during a financial year, net of any being the estimated useful life of the intangible asset, except impairment losses, are deferred and then amortised to for software development additions which are estimated to expenses in the Statement of Comprehensive Income on have a useful life of five years. a straight-line basis over the period during which the costs are expected to be recoverable, and in accordance with (m) Property and equipment the incidence of future related margins. Property and equipment comprises both assets which are owned and those which are leased. For investment contracts, only directly attributable acquisition costs, which vary with and are related to securing (i) Initial and subsequent measurement of owned assets new contracts and renewing existing contracts, are deferred, Owned items of property and equipment are stated at and only to the extent that they are recoverable out of future cost less accumulated depreciation and impairment. revenue. These deferred acquisition costs, which represent Cost includes the original purchase price of the asset and the contractual right to benefit from providing investment the costs attributable to bringing the asset to its working management services, net of any impairment losses, are condition for its intended use. Depreciation is charged to amortised to expenses in the Statement of Comprehensive expenses within the Statement of Comprehensive Income Income on a straight-line basis over the expected lifetime on a straight-line basis over the estimated useful lives of of the Group’s investment contracts. All other costs are the property and equipment, which are as follows: recognised as expenses when incurred. Fixtures, fittings and office equipment: 5 to 15 years The periods over which costs are expected to be recoverable Computer equipment: 3 years. are as follows: Insurance contracts: 5 years (ii) Initial and subsequent measurement of leased assets Investment contracts: 14 years. A right-of-use asset is recognised within property and equipment for leased items which are not subject to the short-term or low-value lease exemptions set out in IFRS 16. (l) Intangible assets This comprises the Group’s leased property portfolio. (i) Purchased value of in-force business The right-of-use asset recognised on the commencement The purchased value of in-force business in respect of date of the lease is the value of the lease liability (refer to insurance business represents the present value of profits accounting policy (z)), plus expected dilapidation costs, that are expected to emerge from insurance business initial direct costs (that is, incremental costs that would acquired on business combinations. It is calculated at not have been incurred if the lease had not been obtained, the time of acquisition using best-estimate actuarial such as legal fees) and lease payments made before or assumptions for interest, mortality, persistency and at the commencement date of the lease. Following initial expenses, net of any impairment losses, and it is amortised recognition, depreciation is charged to expenses within on a straight-line basis as profits emerge over the the Statement of Comprehensive Income on a straight- anticipated lives of the related contracts in the portfolio. line basis over the lease term. St. James’s Place plc Annual Report and Accounts 2022 ### 197 Strategic Report Governance Other Information (iii) Impairment of owned and leased assets When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through The carrying value of owned and leased assets is reviewed arrangement, it evaluates if, and to what extent, it has for impairment when events or changes in circumstances retained the risks and rewards of ownership. When it has indicate that the carrying value may not be recoverable. Any neither transferred nor retained substantially all of the risks assets that may have suffered impairment are reviewed for and rewards of the asset, nor transferred control of the asset, possible reversal of the impairment at each reporting date. the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the (n) Reinsurance assets Group also recognises an associated liability. The transferred Reinsurance assets represent amounts recoverable from asset and the associated liability are measured on a basis reinsurers in respect of non-unit-linked insurance contract that reflects the rights and obligations that the Group liabilities, net of any future reinsurance premiums. has retained. (o) Other receivables (p) Investment property Other receivables are recognised initially at fair value Investment properties, which are all held within the unit- and subsequently measured at amortised cost using linked funds, are properties which are held to earn rental the effective interest method. income and/or for capital appreciation. They are stated at fair value. An external, independent valuer, having an Most shareholder other receivables are initially recognised appropriate recognised professional qualification and at fair value and subsequently held at amortised cost less recent experience in the location and category of property impairment losses, as the business model for these assets is being valued, values the portfolio every month. to hold to collect contractual cash flows, which consist solely of payments of principal and interest. The exception to this is The fair values are based on open market values, being the renewal income assets, which are classified as FVTPL and estimated amount for which a property could be exchanged are initially, and subsequently, recognised at fair value. The Financial Statements on the date of valuation between a willing buyer and a value of any impairment recognised is the difference willing seller in an arm’s-length transaction after proper between the asset’s carrying amount and the present value marketing wherein the parties had each acted of the estimated future cash flows, discounted at the original knowledgeably, prudently and without compulsion. effective interest rate. See accounting policy (ad) for information relating to the treatment of impaired amounts. Any gain or loss arising from a change in fair value is recognised in the Statement of Comprehensive Income Other receivables include prepayments, which are within investment income. Rental return from investment recognised where services are paid for in advance of being property is accounted for as described in accounting received. The prepayment reduces, and an expense is policy (e). recognised in the Statement of Comprehensive Income, as the service is received. (q) Equities, fixed income securities and investment in Collective Investment Schemes Commission and advice fees in respect of some insurance These financial assets are initially and subsequently and investment business may be paid to Partners in recognised at FVTPL, with all gains and losses recognised advance of renewal premiums and accelerated by up to five within investment income in the Statement of years. The unearned element of this accelerated Comprehensive Income. The vast majority of these remuneration is recognised as advanced payments to financial assets are quoted, and so the fair value is Partners within other receivables. Should the contributions based on the value within the bid-ask spread that is most reduce or stop within the initial period, any unearned representative of fair value. If the market for a financial amount is recovered. asset is not active, the Group establishes fair value by using valuation techniques such as recent arm’s-length (i) Derecognition transactions, reference to similar listed investments, A financial asset is primarily derecognised when the rights to discounted cash flow models or option pricing models. receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset Subsequent measurement of these financial assets at or has assumed an obligation to pay the received cash FVTPL is required by IFRS 9 for debt instruments for which flows in full without material delay to a third party under the objectives of the Group’s business model are not met a ‘pass-through’ arrangement; and either (a) the Group by either holding the instrument to collect contractual cash has transferred substantially all the risks and rewards of the flows or selling the instruments, or where the contractual asset, or (b) the Group has neither transferred nor retained terms of the instrument do not give rise to cash flows which substantially all the risk and rewards of the asset, but has are solely payments of principal and interest. Where both transferred control of the asset. the ‘business model’ and ‘solely payments of principal and interest’ tests are met, management has made an irrevocable decision to designate the debt instruments at FVTPL as doing so aligns the measurement of the financial assets with the measurement of their associated unit-linked liabilities. www.sjp.co.uk ### 198 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 1. Accounting policies continued (u) Investment contract benefits All of the Group’s investment contracts are unit-linked. Management has not made the irrevocable election to Unit-linked liabilities are measured at fair value by reference present changes in the fair value of equity instruments in to the value of the underlying net asset value of the Group’s other comprehensive income, and so all equity instruments unitised investment funds, on a bid valuation basis, at the are also designated at FVTPL. reporting date. An allowance for deductions due to (or from) the Group in respect of policyholder tax on capital gains The Group recognises purchases and sales of investments (and losses) in the life assurance funds is also reflected on trade date. The costs associated with investment in the measurement of unit-linked liabilities. Investment transactions are included within expenses in the Statement contract benefits are recognised when units are first of Comprehensive Income. allocated to the policyholder; they are derecognised when units allocated to the policyholder have been cancelled. (r) Derivative financial instruments The Group uses derivative financial instruments within The decision by the Group to designate its unit-linked some unit-linked funds, with each contract initially and liabilities at FVTPL reflects the fact that the matching subsequently recognised at fair value, based on observable investment portfolio, which underpins the unit-linked market prices. All changes in value are recognised within liabilities, is recognised at FVTPL. investment income in the Statement of Comprehensive Income. (v) Deferred income The initial margin on financial instruments (including dealing (s) Cash and cash equivalents margins from unit trusts) is deferred and recognised on a Cash and cash equivalents include cash in hand, deposits straight-line basis over the expected lifetime of the financial held at call with banks and other short-term highly liquid instrument, which is between six and 14 years. investments. (w) Net asset value attributable to unit holders Cash and cash equivalents held within unit-linked and unit The Group consolidates unit trusts in which it holds more trust funds are classified at FVTPL, as management has than 30% of the units and exercises control. The third-party made an irrevocable decision to designate them as such interests in these unit trusts are termed the net asset value in order to align the measurement of these financial assets attributable to unit holders and are presented in the with the measurement of their associated unit-linked Statement of Financial Position. They are classified at FVTPL, liabilities. Therefore, these cash and cash equivalents are hence are initially and subsequently measured at fair value. initially and subsequently recognised at FVTPL, with gains The decision by the Group to designate the net asset value and losses recognised within investment return in the attributable to unit holders at FVTPL reflects the fact that the Statement of Comprehensive Income. underlying investment portfolios are recognised at FVTPL. All other cash and cash equivalents are classified as Income attributable to the third-party interests is accounted amortised cost, as the business model for these assets for within investment return, offset by a corresponding is to hold to collect contractual cash flows, which consist change in investment contract benefits. solely of payments of principal and interest. They are initially recognised at fair value and subsequently measured at (x) Provisions amortised cost using the effective interest method, less impairment losses. Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that (t) Insurance contract liabilities probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount Insurance contract liability provisions are determined of the obligation. Provisions are charged as an expense to following an annual actuarial investigation of the long- profit or loss in the year that the Group becomes aware of term fund in accordance with regulatory requirements. the obligation, and are measured at the best estimate at The provisions are calculated on the basis of current the Statement of Financial Position date of the expenditure information and using the gross premium valuation required to settle the obligation, taking into account relevant method. The Group’s accounting policies for insurance risks and uncertainties. When payments are eventually contracts meet the minimum specified requirements for made, they are charged to the provision carried in the liability adequacy testing under IFRS 4, as they consider Statement of Financial Position. current estimates of all contractual cashflows, and of related cashflows such as claims handling costs. (y) Borrowings Insurance contract liabilities can never be definitive as to Borrowings are measured initially at fair value, net of directly either the timing or the amount of claims and are, therefore, attributable transaction costs, and subsequently stated at subject to reassessment on a regular basis. amortised cost. The difference between the proceeds and the redemption value is recognised in the Statement of Comprehensive Income over the borrowing period on an effective interest rate basis. Borrowings are recognised on drawdown and derecognised on repayment. St. James’s Place plc Annual Report and Accounts 2022 ### 199 Strategic Report Governance Other Information (z) Other payables (ii) Share-based payments Other payables are recognised initially at fair value and The Group operates a number of share-based payment subsequently measured at amortised cost using the plans for employees, Partners and advisers. The fair value effective interest method. of share-based payment awards granted is recognised as an expense spread over the vesting period of the instrument, Other payables include lease liabilities calculated in which accords with the period for which related services accordance with IFRS 16. On the commencement date of the are provided, with a corresponding increase in equity in the lease the lease liability is measured as the present value of case of equity-settled plans and the recognition of a liability the future lease payments to be made over the lease term. for cash-settled plans. For the Group, future lease payments include those which are fixed and those which vary depending on an index or The total amount to be expensed is determined by reference rate. The future lease payments are discounted at the to the fair value of the awards, which are measured using Group’s incremental borrowing rate at the commencement standard option pricing models as the fair value of the date of the lease, which varies depending on the lease term. services provided by employees, Partners and advisers The lease term includes the non-cancellable period for cannot be reliably measured. For equity-settled plans, which the Group has the right to use the leased asset, the fair value is determined at grant date and not plus periods covered by extension options where the option subsequently remeasured. is reasonably certain to be taken. Conversely, the non- cancellable period is reduced if it is reasonably certain For cash-settled plans, the fair value is remeasured at that a termination option will be taken. each reporting date and at the date of settlement, with any changes in fair value recognised in the Statement The incremental borrowing rate is management’s of Comprehensive Income for the period. judgement as to the rate of interest that the Group would have to pay to borrow, over a similar term and with similar At each reporting date, the Group revises its estimate Financial Statements security, the funds necessary to obtain an asset of a similar of the number of awards that are expected to vest and it value to the cost of the right-of-use asset. This has been recognises the impact of the revision of original estimates, determined with reference to the rate of interest of existing if any, in the Statement of Comprehensive Income, such that borrowings held by the Group and market rates adjusted the amounts recognised for employee, Partner and adviser to take into account the security and term associated with services are based on the number of awards that actually the lease. vest. The charge to the Statement of Comprehensive Income is not revised for any changes in market The Group applied the practical expedient on transition to vesting conditions. IFRS 16 on 1 January 2019 of applying a single discount rate to a portfolio of leases with reasonably similar characteristics (ab) Share capital by grouping leases by asset type and remaining lease term Ordinary shares are classified as equity. Where any Group on the date of transition. Similarly, the Group periodically entity purchases the Company’s equity share capital determines standard discount rates to apply for leases (shares held in trust), the consideration paid is deducted entered into since 1 January 2019 by asset type and from equity attributable to shareholders, as disclosed in the lease term. Shares in trust reserve. Where such shares are subsequently sold, reissued or otherwise disposed of, any consideration (i) Derecognition received is included in equity attributable to shareholders, A financial liability is derecognised when the obligation net of any directly attributable incremental transaction costs under the liability is discharged, cancelled or expired. and the related income tax effects. (aa) Employee benefits (ac) Product classification (i) Pension obligations The Group’s products are classified for accounting purposes as either insurance contracts or investment contracts. The Group operates a defined contribution personal pension plan for its employees. Contributions to this plan are (i) Insurance contracts recognised as an expense in the Statement of Comprehensive Income as incurred. The Group has no legal or constructive Insurance contracts are contracts that transfer significant obligations to pay further contributions if the fund does not insurance risk. The Group’s historic product range includes hold sufficient assets to pay all employees the benefits a variety of term assurance and whole-of-life protection relating to employee service in the current and prior periods. contracts involving significant insurance risk transfer. (ii) Investment contracts Contracts that do not transfer significant insurance risk are treated as investment contracts. The majority of the business written by the Group is unit-linked investment business and is classified as investment contracts. www.sjp.co.uk ### 200 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 1. Accounting policies continued (ae) Foreign currency translation The Group’s presentation and the Company’s functional (ad) Impairment currency is pounds Sterling. The Statement of Comprehensive (i) Non-financial assets Income and Statement of Cash Flows for foreign subsidiaries Assets that are subject to amortisation are reviewed for are translated into the Group’s presentation currency using impairment when circumstances or events indicate there exchange rates prevailing at the date of the transaction. may be uncertainty over their value. An impairment loss The Statement of Financial Position for foreign subsidiaries is recognised for the amount by which the asset’s carrying is translated at the year-end exchange rate. Exchange amount exceeds its recoverable amount. The recoverable rate differences arising from these translations are taken amount is the higher of an asset’s fair value less costs to to the Statement of Comprehensive Income. sell or its value in use. Refer to accounting policy (j) for the Group’s impairment policy for goodwill. Foreign currency transactions are translated into Sterling using the exchange rate prevailing at the date of the (ii) Financial assets transactions. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of Financial assets held at amortised cost are impaired using exchange ruling at the reporting date and the gain or an expected credit loss model. The model splits financial losses on translation are recognised in the Statement assets into performing, underperforming and non-performing of Comprehensive Income. categories based on changes in credit quality since initial recognition. At initial recognition financial assets are Non-monetary assets and liabilities which are held considered to be performing. They become underperforming at historical cost are translated using exchange rates where there has been a significant increase in credit risk prevailing at the date of the transaction; those held at since initial recognition, and non-performing when there fair value are translated using exchange rates ruling is objective evidence of impairment. 12 months of expected at the date on which the fair value was determined. credit losses are recognised within expenses in the Statement of Comprehensive Income and netted against the financial asset in the Statement of Financial Position for all performing (af) Segment reporting financial assets, with lifetime expected credit losses Operating segments are reported in a manner consistent recognised for underperforming and non-performing with the internal reporting provided to the Chief Operating financial assets. Decision-Maker. The Chief Operating Decision-Maker, responsible for allocating resources and assessing Expected credit losses are based on the historic levels performance of the operating segments, has been of loss experienced for the relevant financial assets, with identified as the Executive Board. due consideration given to forward-looking information. (ag) Current and non-current disclosure The most significant category of financial assets held at Assets which are expected to be recovered or settled no amortised cost for the Group are business loans to Partners, more than 12 months after the reporting date are disclosed which are explained in more detail in Note 12. The significant as current within the Notes to the Financial Statements. increase in credit risk which triggers the move from Those expected to be recovered or settled more than performing to underperforming for these assets is 12 months after the reporting date are disclosed as when they are more than 30 days past due, in line with non-current. the presumption set out in IFRS 9 Financial Instruments, or when the loan facility has expired and is in the process of Liabilities which are expected or due to be settled no being renegotiated. Business loans to Partners are classified more than 12 months after the reporting date are disclosed as non-performing when the loan is to a Partner who has as current within the Notes to the Financial Statements. left the St. James’s Place Partnership, or when the loan is to Those liabilities which are expected or due to be settled a Partner whom management considers to be at significant more than 12 months after the reporting date are disclosed risk of leaving the Partnership and where an orderly as non-current. settlement of debt is considered to be in question. The definition of non-performing loans in this context (ah) Alternative performance measures is a critical accounting judgement, about which more Within the Financial Statements, a number of alternative information is set out in Note 2. performance measures (APMs) are disclosed. An APM is a measure of financial performance, financial position or cash flows which is not defined by the relevant financial reporting framework, which for the Group is International Financial Reporting Standards as adopted by the UK Endorsement Board. APMs are used to provide greater insight into the performance of the Group and the way it is managed by the Directors. A definition of each of the APMs is included in the glossary of alternative performance measures, which explains why it is used and, where applicable, explains how the measure can be reconciled to the IFRS Financial Statements. St. James’s Place plc Annual Report and Accounts 2022 ### 201 Strategic Report Governance Other Information ### 2. Critical accounting estimates Determining the fair value of investment property ### and judgements in applying In accordance with IAS 40, the Group initially recognises investment properties at cost, and subsequently ### accounting policies remeasures its portfolio to fair value in the Statement of Financial Position. Fair value is determined at least monthly Estimates by professional external valuers. It is based on anticipated Critical accounting estimates are those which give rise to market values for the properties in accordance with the a significant risk of material adjustment to the balances guidance issued by the Royal Institution of Chartered recognised in the Financial Statements within the next Surveyors (RICS), being the estimated amount that would be 12 months. The Group’s critical accounting estimates are: received from a sale of the assets in an orderly transaction   determining the value of insurance contract liabilities; between market participants.   determining the fair value of investment property; and The valuation of investment property is inherently subjective   determining the fair value of Level 3 fixed income as it requires, among other factors, assumptions to be made securities and equities. regarding the ability of existing tenants to meet their rental obligations over the entire life of their leases, the estimation Estimates are also applied in calculating other assets of the of the expected rental income into the future, the assessment Financial Statements, including determining the value of of a property’s potential to remain as an attractive technical deferred tax assets, investment contract benefits, the configuration to existing and prospective tenants in a operational readiness prepayment and other provisions. changing market and a judgement on the attractiveness of a building, its location and the surrounding environment. Determining the value of insurance contract Wherever appropriate, sustainability and environmental liabilities matters are an integral part of the valuation approach. In a valuation context, sustainability encompasses a wide The assumptions used in the calculation of insurance Financial Statements range of physical, social, environmental and economic contract liabilities that have an effect on the Statement factors that can affect value. The range of issues includes of Comprehensive Income of the Group are: key environmental risks, such as flooding, energy efficiency   the lapse assumption, which is set based and climate, as well as matters of design, configuration, on an investigation of experience during the year; accessibility, legislation, management and fiscal considerations – and, additionally, current and historic land   the level of expenses, which for the year under review is use. As such, investment properties are classified as Level 3 based on actual expenses in 2022 and expected rates in the IFRS 13 fair value hierarchy because they are valued in 2023 and over the long term; using techniques which are not based on observable inputs.   the mortality and morbidity rates, which are based on the results of an investigation of experience during the year; Further details of the valuation of investment properties, and including sensitivity analysis, are set out in Note 17.   the assumed rate of investment return, which is based on current gilt yields. Greater detail on the assumptions applied, and sensitivity analysis, is shown in Note 14. Whilst the measurement of insurance contract liabilities is considered to be a critical accounting estimate for the Group, the vast majority of non-unit-linked insurance business written is reinsured. As a result, the impact of a change in estimate in determining the value of insurance contract liabilities would be mitigated to a significant degree by the impact of the change in estimate in determining the value of reinsurance assets. www.sjp.co.uk ### 202 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued A structured entity is one that has been designed so that ### 2. Critical accounting estimates and voting or similar rights are not the dominant factor in ### judgements in applying accounting deciding who controls the entity. As a result, factors such as ### policies continued whether a Group entity is able to direct the relevant activities of the entity and the extent to which the Group is exposed Determining the fair value of Level 3 fixed income to variability of returns are considered. In the case of SJP securities and equities Partner Loans No.1 Limited, it was determined that the Group In accordance with IFRS 9, the Group elects to classify does control the entity and hence it is consolidated. This is its portfolio of policyholder fixed income securities at fair due to an entity in the Group holding the junior tranche of value through profit and loss to match the accounting for loan notes, hence being subject to variability of returns, and policyholder liabilities. Its portfolio of equities is required to the same entity being able to direct the relevant activities be held at fair value through profit and loss. As a result, all of the structured entity through its role of servicer to the fixed income securities and equities are held at fair value, securitised portfolio. with the best evidence of the fair value at initial recognition typically being the transaction price i.e. the fair value of Unit trusts are consolidated when the Group holds more the consideration given or received. than 30% of the units in that unit trust. This is the threshold at which the Group is considered to achieve control, having During 2021 and 2022, a number of investments were regard to factors such as: made in private credit and private equity assets, which are recognised within fixed income securities and within   the scope of decision-making authority held by equities, respectively, on the Consolidated Statement St. James’s Place Unit Trust Group Limited, the unit of Financial Position. The fair value of these assets is trust manager; determined following a monthly valuation process   rights held by external parties to remove the unit trust which uses two different valuation models and includes manager; and verification by professional external valuers. The models use suitable market comparatives and an estimate of   the Group’s exposure to variable returns through its future cash flows expected to flow from the issuing entity. holdings in the unit trusts and its ability to influence the unit trust manager’s remuneration. The valuations are inherently subjective as they require a number of assumptions to be made, such as determining Determining non-performing business loans to which entities provide suitable market comparatives and Partners their relevant performance metrics (for example earnings Business loans to Partners are considered to be non- before interest, tax, depreciation and amortisation), performing (Stage 3), in the context of the definition determining appropriate discount rates and cash flow prescribed by IFRS 9, if they are in default. This is defined forecasts to use in models, the weighting to apply to each as a loan to either: valuation methodology, and the point in the range of   a Partner who has left the St. James’s Place Partnership; or valuations to select as the fair value. As the inputs to the valuation models are unobservable, the investments in   a Partner whom management considers to be at private credit and private equity assets are classified as significant risk of leaving the Partnership and where an Level 3 in the IFRS 13 fair value hierarchy. orderly settlement of debt is considered to be in question. Following the invasion of Ukraine by Russia, sanctions and Determining the derecognition of business loans to trading restrictions were placed on foreign investors. As a Partners result, fair value pricing was applied to Russian assets that Business loans to Partners are derecognised, in the context represents a significant markdown in the value of these assets. of the definition prescribed by IFRS 9, when: Further detail about the valuation models, including   the assets have been sold to a third party; sensitivity analysis, is set out in Note 17.   there is an obligation to pay received cash flows in full without material delay to a third party under a ‘pass- Judgements through’ arrangement; and The primary areas in which the Group has applied   the originator has transferred substantially all the risks judgement are as follows: and rewards of owning the assets. Consolidation See Note 12 for further information on the derecognition Entities are consolidated within the Group Financial of business loans to Partners. Statements if they are controlled by the Group. Control exists if the Group is exposed to, or has rights to, variable returns from its involvement with the entity and the Group has the ability to affect those returns through its power over the entity. Significant judgement can be involved in determining whether the Group controls an entity, such as in the case of the structured entity set up for the Group’s securitisation transaction, SJP Partner Loans No.1 Limited, and for the Group’s unit trusts. St. James’s Place plc Annual Report and Accounts 2022 ### 203 Strategic Report Governance Other Information ### 3. Segment reporting IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board, in order to allocate resources to each segment and assess its performance. The Group’s only reportable segment under IFRS 8 is a ‘wealth management’ business – which is a vertically-integrated business providing support to our clients through the provision of financial advice and assistance through our Partner network, and financial solutions including (but not limited to) wealth management products manufactured in the Group, such as insurance bonds, pensions, unit trust and ISA investments, and a DFM service. Separate geographical segmental information is not presented since the Group does not segment its business geographically. Most of its customers are based in the United Kingdom, as is management of the assets. In particular, the operation based in Asia is not yet sufficiently material for separate consideration. Segment revenue Revenue received from fee and commission income is set out in Note 4, which details the different types of revenue received from our wealth management business. Segment profit Two separate measures of profit are monitored on a monthly basis by the Board. These are the post-tax Underlying cash result and the pre-tax European Embedded Value (EEV) profit. Financial Statements Underlying cash result The measure of cash profit monitored on a monthly basis by the Board is the post-tax Underlying cash result. This reflects emergence of cash available for paying a dividend during the year. Underlying cash is based on the IFRS result excluding the impact of intangibles, principally DAC, DIR, PVIF, goodwill, deferred tax, and strategic expenses. As the cost associated with equity-settled share-based payments is reflected in changes in shareholder equity, they are also not included in the Underlying cash result. More detail is provided in Section 2.2 of the financial review. The Cash result should not be confused with the IFRS Consolidated Statement of Cash Flows, which is prepared in accordance with IAS 7. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Underlying cash result after tax 410.1 401.2 Equity-settled share-based payments (20.5) (20.4) Deferred tax impacts (30.5) 0.5 Restructuring – (9.7) Impact in the year of DAC/DIR/PVIF (9.3) (28.0) 1 Impact of policyholder tax asymmetry (see Note 4) 50.6 (52.9) Other 5.0 (3.1) IFRS profit after tax 405.4 287.6 Shareholder tax 96.4 66.2 Profit before tax attributable to shareholders’ returns 501.8 353.8 Tax attributable to policyholder returns (501.1) 488.6 IFRS profit before tax 0.7 842.4 1 Further information on policyholder tax asymmetry can also be found in Section 2.1 of the financial review. www.sjp.co.uk ### 204 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 3. Segment reporting continued EEV operating profit EEV operating profit is monitored on a monthly basis by the Board. The components of the EEV operating profit are included in more detail in the financial review within the Annual Report and Accounts. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million EEV operating profit before tax 1,589.7 1,545.4 Investment return variance (1,314.0) 894.5 Economic assumption changes 235.1 4.2 EEV profit before tax 510.8 2,444.1 Adjustments to IFRS basis: Deduct: amortisation of purchased value of in-force business (3.2) (3.2) Movement of balance sheet life value of in-force business (net of tax) 103.5 (824.5) Movement of balance sheet unit trust and DFM value of in-force business (net of tax) (94.9) (337.3) Corporation tax rate change – (412.7) Tax on movement in value of in-force business (14.4) (512.6) Profit before tax attributable to shareholders’ returns 501.8 353.8 Tax attributable to policyholder returns (501.1) 488.6 IFRS profit before tax 0.7 842.4 The movement in life, unit trust and DFM value of in-force business is the difference between the opening and closing discounted value of the profits that will emerge from the in-force book over time, after adjusting for DAC and DIR impacts which are already included under IFRS. Segment assets Funds under management (FUM) FUM, as reported in Section 1 of the financial review, is the measure of segment assets which is monitored on a monthly basis by the Board. 31 December 31 December 2022 2021 £’Million £’Million Investment 33,290.0 35,950.0 Pension 73,860.0 74,830.0 UT/ISA and DFM 41,220.0 43,210.0 Total FUM 148,370.0 153,990.0 Exclude client and third-party holdings in non-consolidated unit trusts and DFM (4,407.3) (4,811.5) Other 4,153.6 2,392.5 Gross assets held to cover unit liabilities 148,116.3 151,571.0 IFRS intangible assets 496.4 551.6 Shareholder gross assets 3,092.3 3,607.3 Total assets 151,705.0 155,729.9 Other represents liabilities included within the underlying unit trusts. The unit trust liabilities form a reconciling item between total FUM, which is reported net of these liabilities, and total assets, which exclude these liabilities. More detail on IFRS intangible assets and shareholder gross assets is provided in Section 2.2 of the financial review. St. James’s Place plc Annual Report and Accounts 2022 ### 205 Strategic Report Governance Other Information ### 4. Fee and commission income | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Advice charges (post-RDR) 987.6 946.7 Third-party fee and commission income 131.9 135.8 Wealth management fees 1,039.0 974.5 Investment management fees 60.8 63.4 Fund tax deductions (501.1) 486.9 Policyholder tax asymmetry 50.6 (52.9) Discretionary fund management fees 23.4 22.4 Fee and commission income before DIR amortisation 1,792.2 2,576.8 Amortisation of DIR 162.0 160.4 Total fee and commission income 1,954.2 2,737.2 Advice charges are received from clients for the provision of initial and ongoing advice in relation to a post-Retail Distribution Review (RDR) investment into a St. James’s Place or third-party product. Third-party fee and commission income is received from the product provider where an investment has been made into a third-party product. Financial Statements Wealth management fees represent charges levied on manufactured business. Investment management fees are received from clients for the provision of all aspects of investment management. Broadly, investment management fees match investment management expenses. Fund tax (refunds)/deductions represent amounts credited to, or deducted from, the life insurance business to match policyholder tax credits or charges. Life insurance tax incorporates a policyholder tax element, and the Financial Statements of a life insurance group need to reflect the liability to HMRC, with the corresponding deductions incorporated into policy charges (‘Fund tax deductions’ in the table above). The tax liability to HMRC is assessed using IAS 12 Income Taxes, which does not allow discounting, whereas the policy charges are designed to ensure fair outcomes between clients and so reflect a wide range of possible outcomes. This gives rise to different assessments of the current value of future cash flows and hence an asymmetry in the IFRS Consolidated Statement of Financial Position between the deferred tax position and the offsetting client balance. The net tax asymmetry balance reflects a temporary position, and in the absence of market volatility we expect it will unwind as future cash flows become less uncertain and are ultimately realised. Market conditions will impact the level of asymmetry experienced in a year and may be significant where there is market volatility. Market falls experienced in 2022 have resulted in a significant positive movement, unwinding the negative impact seen in 2021. Discretionary fund management fees are received from clients for the provision of DFM services. Where an investment has been made in a St. James’s Place product, the initial product charge and any dealing margin is deferred and recognised as a deferred income liability. This liability is extinguished, and income recognised, over the expected life of the investment. The income is the amortisation of DIR in the table above. www.sjp.co.uk ### 206 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 5. Expenses The following items are included within the expenses disclosed in the Statement of Comprehensive Income: | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Payments to Partners 1,011.8 988.0 Fees payable to the Company’s auditors and its associates: For the audit of the Company and Consolidated Financial Statements 0.4 0.3 For other services: – Audit of the Company’s subsidiaries (excluding unit trusts) 0.6 0.6 – Audit of the Company’s unit trusts 0.7 0.6 – Audit-related assurance services 0.5 0.5 – Other assurance services 0.1 0.1 Total fees payable to the Company’s auditors and its associates 2.3 2.1 Employee costs: Wages and salaries 194.9 186.5 Social security costs 22.3 26.8 Other pension costs 15.9 14.8 Cost of employee share awards and options 21.1 23.0 Restructuring costs – 11.8 Total employee costs 254.2 262.9 Average monthly number of persons employed by the Group during the year 2,669 2,695 Included within fees payable to the Company’s auditors and its associates for audit-related assurance services is £0.1 million (2021: £0.1 million) for non-audit services as defined by the Group’s Policy on Auditor Independence, which is available on our website at: www.sjp.co.uk. The above employee costs information includes Directors’ remuneration. Full details of the Directors’ remuneration, share options, pension entitlements and interests in shares are disclosed in the Directors’ Remuneration Report, and further information is also provided below. All pension costs related to defined contribution schemes and cash supplements in lieu of contributions to defined contribution pension schemes. At 31 December 2022, the number of Directors to whom retirement benefits are accruing, including those receiving a cash supplement in lieu of contributions to defined contribution pension schemes, is two (2021: three), with the total cost being £0.2 million (2021: £0.3 million). Retirement benefits are accruing in defined contribution pension schemes for one (2021: one) Director at the year-end. The number of Directors who exercised options over shares in the Company during the year is nil (2021: three). The number of Directors in respect of whose qualifying services shares were receivable under long-term incentive schemes is three (2021: three), and the total amount receivable by the Directors under long-term incentive schemes is £2.5 million (2021: £1.2 million). The aggregate gains made by Directors on the exercise of share options and the receipt of deferred bonus scheme shares during the year was £1.7 million (2021: £3.6 million). In 2021 the one-off cost of a restructuring exercise associated with an employee redundancy programme was recognised. St. James’s Place plc Annual Report and Accounts 2022 ### 207 Strategic Report Governance Other Information ### 6. Investment return and movement in investment contract benefits The majority of the business written by the Group is unit-linked investment business, and so investment contract benefits are measured by reference to the underlying net asset value of the Group’s unitised investment funds. As a result, investment return on the unitised investment funds and the movement in investment contract benefits are linked. Investment return | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Investment return on net assets held to cover unit liabilities Rental income 70.1 74.7 (Loss)/gain on revaluation of investment properties (244.5) 181.4 Net investment return on financial instruments classified as fair value through profit and loss (9,457.9) 11,400.2 (9,632.3) 11,656.3 Attributable to unit-linked insurance contract liabilities (66.2) 52.8 Attributable to unit-linked investment contract benefits (9,566.1) 11,603.5 (9,632.3) 11,656.3 Income attributable to third-party holdings in unit trusts (4,168.7) 3,583.2 (13,801.0) 15,239.5 Investment return on shareholder assets Financial Statements Net investment return on financial instruments classified as fair value through profit and loss (2.9) 17.7 Interest income on financial instruments held at amortised cost 32.0 18.2 29.1 35.9 Total investment return (13,771.9) 15,275.4 Included in the net investment return on financial instruments classified as fair value through profit and loss, within investment return on net assets held to cover unit liabilities, is dividend income of £1,216.0 million (2021: £985.1 million). Movement in investment contract benefits 2022 2021 £’Million £’Million Balance at 1 January 110,349.8 93,132.7 Deposits 12,194.6 12,438.1 Withdrawals (5,645.1) (5,607.5) Movement in unit-linked investment contract benefits (9,566.1) 11,603.5 Fees and other adjustments (368.5) (1,217.0) Balance at 31 December 106,964.7 110,349.8 Current 5,546.3 5,585.4 Non-current 101,418.4 104,764.4 106,964.7 110,349.8 Movement in unit liabilities Unit-linked investment contract benefits (9,566.1) 11,603.5 Third-party unit trust holdings (4,168.7) 3,583.2 Movement in investment contract benefits in the Consolidated Statement of Comprehensive Income (13,734.8) 15,186.7 See accounting policy (ag) for further information on the current and non-current disclosure . www.sjp.co.uk ### 208 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 7. Income and deferred taxes Tax for the year | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Current tax UK corporation tax – Current year charge 66.0 294.1 – Adjustment in respect of prior year 3.5 (6.7) Overseas taxes – Current year charge 10.2 6.1 – Adjustment in respect of prior year – 0.1 79.7 293.6 Deferred tax Unrealised capital (losses)/gains in unit-linked funds (504.0) 266.7 Unrelieved expenses – Additional expenses recognised in the year (9.9) (10.8) – Utilisation in the year 11.4 11.6 Capital losses – Revaluation in the year 4.0 (1.4) – Utilisation in the year 25.2 9.2 – Adjustment in respect of prior year (4.5) 4.0 DAC, DIR and PVIF (8.5) (8.9) Share-based payments 3.3 (8.7) Renewal income assets (3.0) 0.7 Fixed asset timing differences 1.0 (2.2) Other items (1.5) 1.0 Overseas losses 0.1 (1.1) Adjustment for change in tax rate – 0.4 Adjustments in respect of prior periods 2.0 0.7 (484.4) 261.2 Total tax (credit)/charge for the year (404.7) 554.8 Attributable to: – policyholders (501.1) 488.6 – shareholders 96.4 66.2 (404.7) 554.8 The prior year adjustment of £3.5 million in current tax above represents a charge of £7.3 million in respect of policyholder tax (2021: £6.0 million credit) and a credit of £3.8 million in respect of shareholder tax (2021: £0.7 million credit). The prior year adjustment of £2.5 million in deferred tax above represents a credit of £nil in respect of policyholder tax and a credit of £2.5 million in respect of shareholder tax (2021: deferred tax relates entirely to shareholder tax). In arriving at the profit before tax attributable to shareholders’ return, it is necessary to estimate the distribution of the total tax charge between that payable in respect of policyholders and that payable by shareholders. Shareholder tax is estimated by making an assessment of the effective rate of tax that is applicable to the shareholders on the profits attributable to shareholders. This is calculated by applying the appropriate effective corporate tax rates to the shareholder profits. The remainder of the tax charge represents tax on policyholders’ investment returns. This calculation method is consistent with the legislation relating to the calculation of tax on shareholder profits. St. James’s Place plc Annual Report and Accounts 2022 ### 209 Strategic Report Governance Other Information Reconciliation of tax charge to expected tax | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Profit before tax 0.7 842.4 Tax attributable to policyholders’ returns 501.1 (488.6) Profit before tax attributable to shareholders’ returns 501.8 353.8 Shareholder tax charge at corporate tax rate of 19% (2021: 19%) 95.3 19.0% 67.2 19.0% Adjustments: Lower rates of corporation tax in overseas subsidiaries (1.3) (0.3)% (1.2) (0.3%) Expected shareholder tax 94.0 18.7% 66.0 18.6% Effects of: Non-taxable income (1.5) (0.9) Revaluation of historic capital losses in the Group 4.0 (1.4) Adjustment for change in tax rates – 0.4 Adjustment in respect of prior year – Current tax (3.8) (0.7) – Deferred tax (2.5) 4.7 Differences in accounting and tax bases in relation to employee share schemes 2.5 (4.6) Financial Statements Impact of difference in tax rates between current and deferred tax (3.0) (2.4) Disallowable expenses 5.6 4.0 Provision for future liabilities 0.5 0.3 Tax losses not recognised 2.2 1.2 Other (1.6) (0.4) 2.4 0.5% 0.2 0.1% Shareholder tax charge 96.4 19.2% 66.2 18.7% Policyholder tax (credit)/charge (501.1) 488.6 Total tax (credit)/charge for the year (404.7) 554.8 Tax calculated on profit before tax at 19% (2021: 19%) would amount to £0.1 million (2021: £160.1 million). The difference of £404.8 million (2021: £394.7 million) between this number and the total tax credit of £404.7 million (2021: £554.8 million charge) is made up of the reconciling items above which total a charge of £1.1 million (2021: £1.0 million credit) and the effect of the apportionment methodology on tax applicable to policyholder returns of £405.9 million (2021: £395.7 million). Tax paid in the year | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Current tax charge for the year 79.7 293.6 Refunds due to be received/(Payments to be made) in future years in respect of current year 39.5 (3.6) Payments made in current year in respect of prior years 1.6 27.3 Other 0.3 1.8 Tax paid 121.1 319.1 Tax paid can be analysed as: – Taxes paid in UK 110.1 306.0 – Taxes paid in overseas jurisdictions 3.9 4.7 – Withholding taxes suffered on investment income received 7.1 8.4 Total 121.1 319.1 www.sjp.co.uk 210 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 7. Income and deferred taxes continued #### Deferred tax balances ##### Deferred tax assets | | Deferred acquisition costs (DAC) £'Million | Deferred income (DII) £'Million | Renewal income assets £'Million | Share-based payments £'Million | Fixed asset temporary differences £'Million | Other temporary differences £'Million | Total £'Million | | --- | --- | --- | --- | --- | --- | --- | --- | | At 1 January 2021 | (19.4) | 33.1 | (12.3) | 6.8 | 5.6 | 0.6 | 14.4 | | **Credit/(charge) to the Statement of Comprehensive Income** | | | | | | | | | – Utilised and created in year | 1.4 | (1.5) | (0.8) | 8.8 | 1.5 | (0.5) | 8.9 | | – Impact of tax rate change | (3.6) | 6.2 | (2.0) | 0.6 | 0.7 | (0.3) | 1.6 | | Total (charge)/credit | (2.2) | 4.7 | (2.8) | 9.4 | 2.2 | (0.8) | 10.5 | | Impact of acquisition | – | – | (4.3) | – | – | – | (4.3) | | **At 31 December 2021** | **(21.6)** | **37.8** | **(19.4)** | **16.2** | **7.8** | **(0.2)** | **20.6** | | **Credit/(charge) to the Statement of Comprehensive Income** | | | | | | | | | – Utilised and created in year | 1.2 | (0.1) | 3.1 | (3.3) | (3.9) | 1.2 | (1.8) | | Total credit/(charge) | 1.2 | (0.1) | 3.1 | (3.3) | (3.9) | 1.2 | (1.8) | | Impact of acquisition | – | – | (4.4) | – | – | – | (4.4) | | Reclassified to deferred tax liabilities | – | – | – | – | – | (0.5) | (0.5) | | **At 31 December 2022** | **(20.4)** | **37.7** | **(20.7)** | **12.9** | **3.9** | **0.5** | **13.9** | | **Expected utilisation period** | | | | | | | | | As at 31 December 2021 | 14 years | 14 years | 20 years | 3 years | 6 years | | | | **As at 31 December 2022** | **14 years** | **14 years** | **20 years** | **3 years** | **6 years** | | | ##### Deferred tax liabilities | | Unrealised expenses on life insurance business £'Million | Deferred acquisition costs (DAC) £'Million | Capital losses (available for future relief) £'Million | Unrealised capital gains on life insurance assets backing unit liabilities (BLAGAE) £'Million | Purchased value of in-force business (PVE) £'Million | Other temporary differences £'Million | Total £'Million | | --- | --- | --- | --- | --- | --- | --- | --- | | At 1 January 2021 | (39.8) | 32.1 | (35.5) | 417.3 | 3.3 | 0.7 | 378.1 | | **Charge/(credit) to the Statement of Comprehensive Income** | | | | | | | | | – Utilised and created in year | 0.7 | (8.4) | 11.7 | 266.8 | (0.6) | (0.5) | 269.7 | | – Impact of tax rate change | – | 4.3 | (3.0) | – | 0.7 | – | 2.0 | | Total charge/(credit) | 0.7 | (4.1) | 8.7 | 266.8 | 0.1 | (0.5) | 271.7 | | **At 31 December 2021** | **(39.1)** | **28.0** | **(26.8)** | **684.1** | **3.4** | **0.2** | **649.8** | | **Charge/(credit) to the Statement of Comprehensive Income** | | | | | | | | | – Utilised and created in year | 1.6 | (7.8) | 20.7 | (504.0) | (0.6) | (0.3) | (490.4) | | – Impact of tax rate change | – | – | 4.0 | – | – | – | 4.0 | | Total charge/(credit) | 1.6 | (7.8) | 24.7 | (504.0) | (0.6) | (0.3) | (486.4) | | Reclassified from deferred tax assets | – | – | – | – | – | (0.5) | (0.5) | | **At 31 December 2022** | **(37.5)** | **20.2** | **(2.1)** | **180.1** | **2.8** | **(0.6)** | **162.9** | | **Expected utilisation period** | | | | | | | | | As at 31 December 2021 | 6 years | 14 years | 5 years | 5 years | 4 years | | | | **As at 31 December 2022** | **6 years** | **14 years** | **1 years** | **6 years** | **3 years** | | | St. James's Place plc Annual Report and Accounts 2022 211 Appropriate investment income, gains or profits are expected to arise against which the tax assets can be utilised. Whilst the actual rates of utilisation will depend on business growth and external factors, particularly investment market conditions, they have been tested for sensitivity to experience and are resilient to a range of reasonably foreseeable scenarios. At the reporting date there were unrecognised deferred tax assets of £15.0 million (2021: £14.0 million) in respect of £92.1 million (2021: £82.2 million) of losses in companies where appropriate profits are not considered probable in the forecast period. These losses primarily relate to our Asia-based businesses and can be carried forward indefinitely. In the UK Budget of 3 March 2021, it was announced that the main rate of corporation tax will increase from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on 24 May 2021 within the Finance Act 2021 and as a result the relevant deferred tax balances were remeasured in 2021. In December 2022, the OECD published key documents on the implementation of the new Pillar Two model rules. This legislation will apply to St. James's Place as a large multinational with effect from 1 January 2024. We are reviewing the latest documents in detail to assess the likely impact. ## 8. Goodwill, intangible assets, deferred acquisition costs and deferred income | | Goodwill £'Million | Purchased value of in-force business £'Million | Computer software and other specific software developments £'Million | DAC £'Million | DIR £'Million | | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | At 1 January 2021 | 31.0 | 73.4 | 43.8 | 1,233.9 | (1,569.2) | | Additions | 0.5 | – | 19.2 | 41.2 | (143.1) | | Disposals | (0.4) | – | – | (130.9) | 113.2 | | Change in capitalisation policy^{1} | – | – | (7.7) | – | – | | **At 31 December 2021** | **31.1** | **73.4** | **55.3** | **1,144.2** | **(1,599.1)** | | Additions | 5.5 | – | 16.1 | 37.3 | (129.8) | | Disposals | – | – | (0.5) | (130.2) | 93.9 | | **At 31 December 2022** | **36.6** | **73.4** | **70.9** | **1,051.3** | **(1,635.0)** | ### Accumulated amortisation and impairment | At 1 January 2021 | – | 55.8 | 20.3 | 809.4 | (989.3) | | --- | --- | --- | --- | --- | --- | | Charge for the year | 1.5 | 3.2 | 10.6 | 86.1 | (160.4) | | Eliminated on disposal | – | – | – | (130.9) | 113.2 | | Change in capitalisation policy^{1} | – | – | (2.6) | – | – | | **At 31 December 2021** | **1.5** | **59.0** | **28.3** | **764.6** | **(1,036.5)** | | Charge for the year | 1.5 | 3.2 | 9.3 | 79.6 | (162.0) | | Eliminated on disposal | – | – | – | (130.2) | 93.9 | | **At 31 December 2022** | **3.0** | **62.2** | **37.6** | **714.0** | **(1,104.6)** | ### Carrying value | At 1 January 2021 | 31.0 | 17.6 | 23.5 | 424.5 | (579.9) | | --- | --- | --- | --- | --- | --- | | At 31 December 2021 | 29.6 | 14.4 | 27.0 | 379.6 | (562.6) | | **At 31 December 2022** | **33.6** | **11.2** | **33.3** | **337.3** | **(530.4)** | | Current | – | 3.2 | 9.7 | 72.2 | (145.6) | | Non-current | 33.6 | 8.0 | 23.6 | 265.1 | (364.8) | | | **33.6** | **11.2** | **33.3** | **337.3** | **(530.4)** | ### Outstanding amortisation period | At 31 December 2021 | n/a | 4 years | 5 years | 14 years | 6 to 14 years | | --- | --- | --- | --- | --- | --- | | **At 31 December 2022** | **n/a** | **3 years** | **5 years** | **14 years** | **6 to 14 years** | $^{1}$ The March 2021 IFRS Interpretations Committee update included an agenda decision on 'Configuration and Customisation Costs in a Cloud Computing Arrangement' which was ratified by the IASB in April 2021. As a result of the decision the carrying value of computer software assets has been reassessed, and the impact of the revised capitalisation policy has been charged to the Statement of Comprehensive Income. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information 212 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 8. Goodwill, intangible assets, deferred acquisition costs and deferred income continued #### Goodwill The carrying value of goodwill split by acquisition is as follows: | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | JEWM Ltd (see Note 24) | 4.8 | – | | Lewington Wealth Management Ltd (formerly Jamie Lewington & Co Limited) | 0.5 | 0.5 | | Policy Services companies | 7.7 | 7.7 | | Rowan Dartington companies | 1.8 | 1.8 | | SJP Asia companies | 10.1 | 10.1 | | Technical Connection Limited | 3.7 | 3.7 | | Thompson Private Clients Limited (see Note 24) | 0.7 | – | | Wilson Grange businesses | 4.3 | 5.8 | | **Total goodwill** | **33.6** | **29.6** | Goodwill is reviewed at least annually for impairment, or when circumstances or events indicate there may be uncertainty over its value. The recoverable amount has been based on value-in-use calculations using pre-tax cash flows. Details of the assumptions made in these calculations are provided below: | Key assumptions based on experience: | Value of new business and expenses | | --- | --- | | Projection period: | Five years extrapolated into perpetuity/10 years | | Pre-tax discount rate based on a risk-free rate plus a risk margin: | 7.0% to 12.0% (2021: 3.4% to 9.2%) | It is considered that no reasonably possible levels of change in the key assumptions would result in impairment of the goodwill, with the exception of Wilson Grange businesses. #### Purchased value of in-force business/DAC/computer software Amortisation is charged to expenses in the Statement of Comprehensive Income. Amortisation profiles are reassessed annually. #### DIR Amortisation is credited within fee and commission income in the Statement of Comprehensive Income. Amortisation profiles are reassessed annually. St. James's Place plc Annual Report and Accounts 2022 213 ## 9. Property and equipment, including leased assets | | Fixtures, titings and office equipment £'Million | Computer equipment £'Million | Leased assets: properties £'Million | Total £'Million | | --- | --- | --- | --- | --- | | **Cost** | | | | | | At 1 January 2021 | 72.4 | 5.5 | 164.0 | 241.9 | | Additions | 2.2 | 1.2 | 1.5 | 4.9 | | Disposals | (19.5) | – | (6.9) | (25.4) | | **At 31 December 2021** | **56.1** | **6.7** | **158.6** | **221.4** | | Additions | 2.0 | 2.0 | 9.8 | 13.8 | | Acquisition of subsidiary | – | – | 0.2 | 0.2 | | Disposals | (1.9) | (0.1) | (0.6) | (2.6) | | **At 31 December 2022** | **56.2** | **8.6** | **168.0** | **232.8** | | **Accumulated depreciation** | | | | | | At 1 January 2021 | 33.9 | 3.3 | 30.3 | 67.5 | | Charge for the year | 5.8 | 1.4 | 14.9 | 22.1 | | Eliminated on disposal | (15.8) | – | (6.9) | (22.7) | | **At 31 December 2021** | **23.9** | **4.7** | **38.3** | **66.9** | | Charge for the year | 5.2 | 1.3 | 15.2 | 21.7 | | Acquisition of subsidiary | – | – | 0.2 | 0.2 | | Eliminated on disposal | (1.5) | (0.1) | (0.1) | (1.7) | | **At 31 December 2022** | **27.6** | **5.9** | **53.6** | **87.1** | | **Net book value** | | | | | | At 1 January 2021 | 38.5 | 2.2 | 133.7 | 174.4 | | At 31 December 2021 | 32.2 | 2.0 | 120.3 | 154.5 | | **At 31 December 2022** | **28.6** | **2.7** | **114.4** | **145.7** | | **Depreciation period (estimated useful life)** | | | | | | At 31 December 2021 | 5 to 15 years | 3 years | 1 to 21 years | | | **At 31 December 2022** | **5 to 15 years** | **3 years** | **1 to 19 years** | | ## 10. Leases This note provides information on leases where the Group is a lessee. For information on leases where the Group is a lessor, refer to Note 11. ### The Group's leasing activities and how these are accounted for The Group leases a portfolio of office properties, equipment and vehicles. The exemptions available under IFRS 16 for low-value or short-term leases have been applied to all leased equipment and vehicles, and so the leased assets and lease liabilities on the Consolidated Statement of Financial Position, and the depreciation charge for leased assets and interest expense on lease liabilities in the Consolidated Statement of Comprehensive Income, relate to the Group's portfolio of office properties only. Leases are negotiated on an individual basis and hence contain a variety of different terms and conditions. They contain covenants and restrictions but generally these are standard and to be expected in a modern, commercial lease created under open-market terms. Typical covenants include paying the annual rent, insurance premiums, service charge, rates and VAT and keeping the property in good repair and condition throughout the lease. Typical restrictions include permitting office use only and not transferring or assigning the lease to a third party without the lessor's consent. There are no residual value guarantees. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 214 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 10. Leases continued The Group is exposed to variability in lease payments, as a number of leases include rent reviews during the lease term which are linked to an index or market rates. In accordance with IFRS 16, these variable lease payments are initially measured based on the index or rate at the commencement date of the lease. Estimates of future rent changes are not made; these changes are taken into account in the lease liabilities and leased assets only when the lease payments change and so the variability is resolved. There are no variable lease payments which are not linked to an index or market rates. The Group has not entered into any sale and leaseback transactions. Details regarding the accounting policies applied to leases are set out in Note 1: refer to policies (f)(ii) Lease expenses, (m) Property and equipment and (z) Other payables. Amounts recognised in the Consolidated Statement of Financial Position The following amounts are recognised in the Consolidated Statement of Financial Position. 31 December 31 December 2022 2021 £’Million £’Million Within the property and equipment balance – refer to Note 9 Leased assets: properties 114.4 120.3 Within the other payables balance – refer to Note 13 Lease liabilities: properties 116.6 124.1 A movement schedule for leased assets, setting out additions during the year and depreciation charged, is presented in Note 9. A movement schedule for lease liabilities is presented below. Amounts recognised in the Consolidated Statement of Comprehensive Income The following amounts relating to leases are recognised within expenses in the Consolidated Statement of Comprehensive Income. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Depreciation charge for leased assets: properties 15.2 14.9 Interest expense on lease liabilities: properties 3.0 3.2 Lease expense relating to short-term leases 0.2 0.1 Lease expense relating to low-value assets 1.4 1.1 Total lease expense for the year 19.8 19.3 Total cash outflow for leases during the year 16.8 13.9 Reconciliation of lease liabilities: properties The following movement schedule reconciles the opening and closing lease liabilities relating to properties in the Consolidated Statement of Financial Position. 2022 2021 £’Million £’Million Balance at 1 January 124.1 132.7 Additions 6.3 2.2 Disposals – (0.1) Interest charged 3.0 3.2 Lease payments made (16.8) (13.9) Balance at 31 December 116.6 124.1 St. James’s Place plc Annual Report and Accounts 2022 ### 215 Strategic Report Governance Other Information The lease payments disclosed in the table above link to the principal lease payments set out in the Consolidated Statement of Cash Flows as follows: | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Interest payments 3.0 3.2 Principal lease payments 13.8 10.7 Lease payments made 16.8 13.9 ### 11. Investments, investment property and cash and cash equivalents Net assets held to cover unit liabilities Included within the Statement of Financial Position are the following assets and liabilities making up the net assets held to cover unit liabilities. The assets held to cover unit liabilities are set out in adjustment 1 of the IFRS to Solvency II Net Assets Balance Sheet reconciliation in Section 2.2 of the financial review. 31 December 31 December 2022 2021 £’Million £’Million Assets Investment property 1,294.5 1,568.5 Financial Statements Equities 103,536.0 106,782.3 Fixed income securities 27,544.8 29,298.1 Investment in Collective Investment Schemes 4,463.7 3,907.9 Cash and cash equivalents 6,179.5 7,587.2 Other receivables 1,604.8 1,332.4 Derivative financial instruments 3,493.0 1,094.6 Total assets 148,116.3 151,571.0 Liabilities Other payables 842.0 1,344.9 Derivative financial instruments 3,266.3 1,019.5 Total liabilities 4,108.3 2,364.4 Net assets held to cover linked liabilities 144,008.0 149,206.6 Investment contract benefits 106,964.7 110,349.8 Net asset value attributable to unit holders 36,628.4 38,369.0 Unit-linked insurance contract liabilities 414.9 487.8 Net unit-linked liabilities 144,008.0 149,206.6 Net assets held to cover linked liabilities, and third-party holdings in unit trusts, are considered to have a maturity of up to one year since the corresponding unit liabilities are repayable and transferable on demand. See accounting policy (ag) for further information on current and non-current disclosure. Investment property 2022 2021 £’Million £’Million Balance at 1 January 1,568.5 1,526.7 Capitalised expenditure on existing properties 23.6 19.2 Disposals (53.1) (158.8) Changes in fair value (244.5) 181.4 Balance at 31 December 1,294.5 1,568.5 The Group is the lessor for a portfolio of properties which meet the definition of investment property. The portfolio is held within unit-linked funds, leased out under operating leases, and is considered current. However, since investment properties are not traded in an organised public market they are relatively illiquid compared with many other asset classes. There are no restrictions on the realisability of the Group’s individual properties, or on the remittance of income or disposal proceeds. www.sjp.co.uk ### 216 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 11. Investments, investment property and cash and cash equivalents continued The Group follows various strategies to minimise the risks associated with any rights the Group retains in the investment properties. These strategies include:   actively reviewing and monitoring the condition of the properties and undertaking appropriate repairs, capital works projects and investments;   engaging professional legal advisers in drafting prudent lease terms governing the use of the properties and engaging specialist asset managers to oversee adherence to these terms on an ongoing basis;   actively reviewing and monitoring lessee financial covenant positions;   maintaining appropriate and prudent insurance for the properties; and   senior management regularly reviewing the investment property portfolio to oversee diversification and performance, and to maximise value and occupancy rates. Investment property is valued at least monthly by external chartered surveyors in accordance with the guidance issued by the Royal Institution of Chartered Surveyors. The investment property valuation has been prepared using the ‘market approach’ valuation technique: that is, using prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets. The historical cost of investment properties held at 31 December 2022 is £1,475.7 million (2021: £1,577.0 million). This represents the price paid for investment properties, prior to any subsequent revaluation. The rental income and direct operating expenses recognised in the Consolidated Statement of Comprehensive Income in respect of investment properties are set out below. All expenses relate to property generating rental income. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Rental income 70.1 74.7 Direct operating expenses 5.2 10.0 At the year-end contractual obligations to purchase, construct or develop investment property amounted to £3.0 million (2021: £4.3 million). The most significant contractual obligations at 31 December 2022 were for refurbishments of warehouse units in Leeds and Poyle totalling £2.4 million. Contractual obligations to dispose of investment property amounted to £nil (2021: £1.4 million). A maturity analysis of undiscounted contractual rental income to be received on an annual basis for the next five years, and the total to be received thereafter, is set out below. 31 December 31 December 2022 2021 £’Million £’Million Undiscounted contractual rental income to be received in: Year 1 70.1 66.9 Year 2 67.6 64.2 Year 3 59.1 59.8 Year 4 52.3 51.7 Year 5 46.5 42.8 Year 6 onwards 268.6 265.2 Total undiscounted contractual rental income to be received 564.2 550.6 St. James’s Place plc Annual Report and Accounts 2022 217 ## Cash and cash equivalents | | 31 December 2022 £'Million | 31 December 2021 £'Million | | --- | --- | --- | | Cash and cash equivalents not held to cover unit liabilities | 253.3 | 245.7 | | Balances held to cover unit liabilities | 6,179.5 | 7,587.2 | | **Total cash and cash equivalents** | **6,432.8** | **7,832.9** | All cash and cash equivalents are considered current. ## 12. Other receivables | | 31 December 2022 £'Million | 31 December 2021 £'Million | | --- | --- | --- | | Receivables in relation to unit liabilities excluding policyholder interests | 397.0 | 433.6 | | Other receivables in relation to insurance and unit trust business | 81.4 | 71.7 | | Operational readiness prepayment | 278.3 | 296.3 | | Advanced payments to Partners | 83.8 | 71.0 | | Other prepayments and accrued income | 84.3 | 84.3 | | Business loans to Partners | 315.6 | 521.6 | | Renewal income assets | 115.5 | 102.5 | | Miscellaneous | 18.9 | 6.6 | | **Total other receivables on the Solvency II Net Assets Balance Sheet** | **1,374.8** | **1,587.6** | | Policyholder interests in other receivables (see Note 11) | 1,604.8 | 1,332.4 | | Other | 3.2 | 3.0 | | **Total other receivables** | **2,982.8** | **2,923.0** | | Current | 2,363.0 | 2,106.1 | | Non-current | 619.8 | 816.9 | | | **2,982.8** | **2,923.0** | All items within other receivables meet the definition of financial assets with the exception of prepayments and advanced payments to Partners. The fair value of those financial assets held at amortised cost is not materially different from amortised cost. Receivables in relation to unit liabilities relate to outstanding market trade settlements (sales) in the life unit-linked funds and the consolidated unit trusts. Other receivables in relation to insurance and unit trust business primarily relate to outstanding policy-related settlement timings. Both of these categories of receivables are short-term. The operational readiness prepayment relates to the Bluedoor administration platform which has been developed by our key outsourced back-office administration provider. Management has assessed the recoverability of this prepayment against the expected cost saving benefit of lower future tariff costs arising from the platform. It is believed that no reasonably possible change in the assumptions applied within this assessment, notably levels of future business, the anticipated future service tariffs and the discount rate, would have an impact on the carrying value of the asset. Renewal income assets represent the present value of future cash flows associated with business combinations or books of business acquired by the Group. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 218 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 12. Other receivables continued Business loans to Partners 31 December 31 December 2022 2021 £’Million £’Million Business loans to Partners directly funded by the Group 315.6 307.6 Securitised business loans to Partners – 214.0 Total business loans to Partners 315.6 521.6 Business loans to Partners are interest-bearing (linked to Bank of England base rate plus a margin), repayable in line with the terms of the loan contract and secured against the future income streams of the respective Partner. During the year, £262.5 million of business loans to Partners previously recognised in the Consolidated Statement of Financial Position were sold to a third-party. The sale occurred at book value and met the derecognition criteria of IFRS 9 as substantially all risks and rewards of ownership were transferred. The risks and rewards of ownership were assessed as transferred primarily due to the following:   the loans were sold to a third-party Special Purpose Vehicle (SPV) which the Group does not manage or control;   the third-party SPV has the ability to remove the Group as the servicing party;   there is no exposure from the loans sold to the third-party SPV through clawback, or any residual credit risk; and   the transaction was structured by identifying a portfolio of loans (totalling £276.3 million), selling 95% of the full individual loans within that portfolio (realising proceeds of £262.5 million) without recourse and retaining 5% of the full individual loans within the portfolio as required under the Securitisation regulation. The loans were assessed for derecognition on an individual basis and the retained 5% do not meet the derecognition criteria of IFRS 9. As a result, these business loans to Partners are no longer recognised on the Consolidated Statement of Financial Position. The Group has a continued involvement with the derecognised assets through the servicing of the transferred loan portfolio. A servicing fee is received in respect of this servicing which is immaterial to the Group. The servicing fee is included within fee and commission income on the face of the Consolidated Statement of Comprehensive Income. The sale included £222.8 million of securitised business loans to Partners, reducing the securitised loan balance to £nil (2021: £214.0 million). The senior tranche of securitisation loan notes that were secured upon those securitised business loans to Partners were repaid as part of the transaction. See Note 16 for further information. Prior to the sale, legal ownership of the securitised business loans to Partners had been transferred to a structured entity, SJP Partner Loans No.1 Limited, which issued loan notes secured upon them. Note 16 provides information on these loan notes. The securitised business loans to Partners were ring-fenced from the other assets of the Group, which means that the cash flows associated with these business loans to Partners could only have been used to purchase new loans which go into the structure, or to repay the note holders, plus associated issuance fees and costs. Holders of the loan notes had no recourse to the Group’s other assets. The securitised business loans to Partners were recognised on the Group Statement of Financial Position as the Group controls SJP Partner Loans No.1 Limited; refer to the Consolidation section within Note 2 for further information. Reconciliation of the business loans to Partners opening and closing gross loan balances | | | | Stage 2 | | Stage 3 | | --- | --- | --- | --- | --- | --- | | | Stage 1 | | under- | | non- | | performing | | performing | | performing Total | | £’Million £’Million £’Million £’Million Gross balance at 1 January 2022 500.5 21.0 4.1 525.6 Business loans to Partners classification changes: – Transfer to underperforming (4.8) 4.8 – – – Transfer to non-performing (0.5) (0.9) 1.4 – – Transfer to performing 5.2 (5.2) – – Sale to a third party during the year (262.5) – – (262.5) New lending activity during the year 216.6 2.1 0.4 219.1 Interest charged during the year 20.6 0.9 0.2 21.7 Repayment activity during the year (178.0) (5.0) (1.5) (184.5) Gross balance at 31 December 2022 297.1 17.7 4.6 319.4 St. James’s Place plc Annual Report and Accounts 2022 ### 219 Strategic Report Governance Other Information | | | | Stage 2 | | Stage 3 | | | --- | --- | --- | --- | --- | --- | --- | | | Stage 1 | | under- | | | non- | | performing | | performing | | performing Total | | | £’Million £’Million £’Million £’Million Gross balance at 1 January 2021 450.8 22.3 7.6 480.7 Business loans to Partners classification changes: – Transfer to underperforming (10.7) 10.8 (0.1) – – Transfer to non-performing (0.4) (0.2) 0.6 – – Transfer to performing 6.7 (6.7) – – New lending activity during the year 265.8 6.6 0.4 272.8 Interest charged during the year 16.3 1.5 0.2 18.0 Repayment activity during the year (228.0) (13.3) (4.6) (245.9) Gross balance at 31 December 2021 500.5 21.0 4.1 525.6 Business loans to Partners: provision The expected loss impairment model for business loans to Partners is based on the levels of loss experienced in the portfolio, with due consideration given to forward-looking information. For those business loans to Partners sold to a third party, full credit risk has been transferred. The provision held against business loans to Partners as at 31 December 2022 was £3.8 million (2021: £4.0 million). During the year, £0.3 million of the provision was released (2021: £nil), £0.2 million was utilised (2021: £0.5 million) and new provisions and adjustments to existing provisions increased the total by £0.3 million (2021: £0.5 million). Financial Statements There is no provision held against any other receivables held at amortised cost. Business loans to Partners as recognised on the Statement of Financial Position 31 December 31 December 2022 2021 £’Million £’Million Gross business loans to Partners 319.4 525.6 Provision (3.8) (4.0) Net business loans to Partners 315.6 521.6 Renewal income assets Movement in renewal income assets 2022 2021 £’Million £’Million Balance at 1 January 102.5 87.4 Additions 36.1 34.6 Disposals (7.8) (10.5) Revaluation (15.3) (9.0) Balance at 31 December 115.5 102.5 The key assumptions used for the assessment of the fair value of the renewal income are as follows: 31 December 31 December 2022 2021 1 Lapse rate – SJP Partner renewal income 5.0% to 15.0% 5.0% to 15.0% 1 Lapse rate – non-SJP renewal income 15.0% to 25.0% 15.0% to 25.0% Discount rate 12.0% to 13.7% 3.4% to 10.1% 1 Future income streams are projected making use of retention assumptions derived from the Group’s experience of the business or, where insufficient data exists, from external industry experience. These assumptions are reviewed on an annual basis. These assumptions have been used for the analysis of each business combination classified within renewal income. www.sjp.co.uk 220 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 13. Other payables | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | Payables in relation to unit liabilities excluding policyholder interests | 326.2 | 178.9 | | Other payables in relation to insurance and unit trust business | 417.8 | 448.9 | | Accrual for ongoing advice fees | 133.2 | 141.2 | | Other accruals | 105.8 | 103.6 | | Contract payment | 95.8 | 107.1 | | Lease liabilities: properties (see Note 10) | 116.6 | 124.1 | | Other payables in relation to Partner payments | 74.8 | 86.7 | | Miscellaneous | 67.3 | 63.9 | | **Total other payables on the Solvency II Net Assets Balance Sheet** | **1,337.5** | **1,254.4** | | Policyholder interests in other payables (see Note 11) | 842.0 | 1,344.9 | | Other (see adjustment 2 on page 80) | 19.1 | 5.2 | | **Total other payables** | **2,198.6** | **2,604.5** | | Current | 2,018.5 | 2,405.2 | | Non-current | 180.1 | 199.3 | | | **2,198.6** | **2,604.5** | Payables in relation to unit liabilities relate to outstanding market trade settlements (purchases) in the life unit-linked funds and the consolidated unit trusts. Other payables in relation to insurance and unit trust business primarily relate to outstanding policy-related settlement timings. Both of these categories of payables are short-term. The contract payment of £95.8 million (2021: £107.1 million) represents payments made by a third-party service provider to the Group as part of a service agreement, which are non-interest-bearing and repayable over the life of the service agreement. The contract payment received prior to 2020 is repayable on a straight-line basis over the original 12-year term, with repayments commencing on 1 January 2017. The contract payment received in 2020 is repayable on a straight-line basis over 13 years and 4 months, with repayments commencing on 1 September 2020. The Lease liabilities: properties line item represents the present value of future cash flows associated with the Group's portfolio of property leases. The fair value of financial instruments held at amortised cost within other payables is not materially different from amortised cost. Policyholder interests in other payables are short-term in nature and can vary significantly from period to period due to prevailing market conditions and underlying trading activity. St. James's Place plc Annual Report and Accounts 2022 221 ## 14. Insurance contract liabilities and reinsurance assets ### Risk Insurance risk arises from inherent uncertainties as to the occurrence, amount and timing of insurance liabilities. The Group assumes insurance risk by issuing insurance contracts under which the Group agrees to compensate the client (or other beneficiary) if a specified future event (the insured event) occurs. The Group insures mortality and morbidity risks but has no longevity risk as we have never written any annuity business. The Group has a low appetite for insurance risk, only actively pursuing it where financially beneficial, or in support of strategic objectives. | Risk | Description | Management | | --- | --- | --- | | **Underwriting** | Failure to price appropriately for a risk, or the impact of anti-selection. | The Group ceased writing new protection business in April 2011 and has fully reinsured the remaining UK insurance risk. Experience is monitored regularly and for most business the premium or deduction rates can be reviewed. | | **Epidemic/disaster** | An unusually large number of claims arising from a single incident or event. | Protection is provided through reinsurance. The Group has fully reinsured the UK insurance risk. | | **Expense** | Administration costs exceed expense allowance. | Administration is outsourced and a tariff of costs is agreed. The contract is monitored regularly to rationalise costs incurred. Internal overhead expenses are monitored and closely managed. | | **Retention** | Unexpected movement in future profit due to more (or fewer) clients than anticipated withdrawing their funds. | Retention of insurance contracts is closely monitored and unexpected experience is investigated. Retention experience has continued in line with assumptions. | ### Insurance contract liabilities | | 2022 £Million | 2021 £Million | | --- | --- | --- | | Balance at 1 January | 572.3 | 562.6 | | Movement in unit-linked liabilities | (72.9) | 21.7 | | Movement in non-unit-linked liabilities: | | | | – Existing business | (0.7) | (1.3) | | – Assumption changes | (18.0) | (6.0) | | – Experience variance | 2.8 | (4.7) | | Total movement in liabilities | (15.9) | (12.0) | | **Balance at 31 December** | **483.5** | **572.3** | | Unit-linked | 414.9 | 487.8 | | Non-unit-linked | 68.6 | 84.5 | | | **483.5** | **572.3** | | Current | 106.7 | 124.0 | | Non-current | 376.8 | 448.3 | | | **483.5** | **572.3** | See accounting policy (ag) for further information on the current and non-current disclosure. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 222 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 14. Insurance contract liabilities and reinsurance assets continued #### Reinsurance assets | | 2022 £'Million | 2021 £'Million | | --- | --- | --- | | **Reconciliation of the movement in the net reinsurance balance** | | | | Balance at 1 January | 82.4 | 92.3 | | Reinsurance component of change in insurance liabilities | (16.0) | (9.9) | | **Balance at 31 December** | **66.4** | **82.4** | | Current | 14.7 | 15.9 | | Non-current | 51.7 | 66.5 | | | **66.4** | **82.4** | The overall impact of reinsurance on the profit for the year was a net expense of £24.7 million (2021: £16.2 million). #### Assumptions used in the calculation of insurance liabilities and reinsurance assets The principal assumptions used in the calculation of the liabilities are: | Assumption | Description | | --- | --- | | **Interest rate** | The valuation interest rate is calculated by reference to the long-term gilt yield at 31 December 2022. The specific rates used are between 2.8% and 3.6% depending on the tax regime (0.5% and 0.8% at 31 December 2021). | | **Mortality** | Mortality is based on Group experience and is set at 72% of the TM/F92 tables with an additional loading for smokers. There has been no change since 2006. | | **Morbidity – Critical illness** | Morbidity is based on Group experience. There was no change during 2022. Sample annual rates per £ for a male non-smoker are: | | | Age | | | Rate – 2021 and 2022 | | | 25 0.076% | | | 35 0.133% | | | 45 0.319% | | **Morbidity – Permanent Health insurance** | Morbidity is based on Group experience. There was no change during 2022. Sample annual rates per £ income benefit for a male non-smoker are: | | | Age | | | Rate – 2021 and 2022 | | | 25 0.274% | | | 35 0.723% | | | 45 1.569% | | **Expenses** | Contract liabilities are calculated allowing for the actual costs of administration of the business. The assumption has been amended to allow for changes to the underlying administration costs. | | | Product | | | Annual cost | | | 2022 2021 | | | Protection business £37.10 £34.40 | | **Persistence** | Allowance is made for a prudent level of lapses within the calculation of the liabilities. There was no change during 2022. Sample annual lapse rates are: | | | 2021 and 2022 | | | Lapses | | | Year 1 Year 5 Year 10 | | | Protection business 7% 9% 8% | St. James's Place plc Annual Report and Accounts 2022 ### 223 Strategic Report Governance Other Information Sensitivity analysis The table below sets out the sensitivity of the profit on insurance business and net assets to changes in key assumptions. The levels of sensitivity tested are consistent with those proposed in the EEV principles and reflect reasonably possible levels of change in the assumptions. The analysis reflects the change in the variable/assumption shown while all other variables/ assumptions are left unchanged. In practice variables/assumptions may change at the same time, as some may be correlated (for example, an increase in interest rates may also result in an increase in expenses if the increase reflects higher inflation). It should also be noted that in some instances sensitivities are non-linear. The sensitivity percentage has been applied in proportion to the assumption: for example, application of a 10% sensitivity to a withdrawal assumption of 8% will increase it to 8.8%. | | | Change in | | Change in | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | profit/(loss) | | profit/(loss) | | Change in | | Change in | | | | Change in | before tax | | before tax | | net assets | | net assets | | | | assumption | | 2022 | | 2021 | | 2022 | | 2021 | | Sensitivity analysis | Percentage £’Million £’Million £’Million £’Million | | | | | | | | | Withdrawal rates 10% 0.7 0.9 0.6 0.9 Expense assumptions 10% (0.1) (0.2) (0.1) (0.2) Mortality/morbidity 5% 0.0 0.0 0.0 0.0 A change in interest rates will have no material impact on insurance profit or net assets. ### 15. Other provisions and contingent liabilities Financial Statements Complaints Lease Clawback Total provision provision provision provisions £’Million £’Million £’Million £’Million At 1 January 2021 20.4 10.4 3.5 34.3 Additional provisions 34.1 – – 34.1 Utilised during the year (15.6) (0.1) (0.3) (16.0) Release of provision (8.0) (0.3) – (8.3) At 31 December 2021 30.9 10.0 3.2 44.1 Additional provisions 28.5 3.5 – 32.0 Utilised during the year (14.0) (0.1) (0.2) (14.3) Release of provision (15.7) (0.1) – (15.8) At 31 December 2022 29.7 13.3 3.0 46.0 Current 22.4 1.6 1.0 25.0 Non-current 7.3 11.7 2.0 21.0 29.7 13.3 3.0 46.0 The provision for the cost of redress of complaints is based on estimates of the total number of complaints expected to be upheld, the estimated cost of redress and the expected timing of settlement. The lease provision is based on the square footage of leased properties and typical costs per square foot for restoring similar buildings to their original state. The clawback provision is based on estimates of the indemnity commission that may be repaid. It is considered that any reasonably possible level of changes in estimates would not have a material impact on the value of the best estimate of the provision. In the course of its business, the Group could be subject to legal proceedings and/or regulatory activity. Should such an event arise, the Board would consider its best estimate of the amount required to settle the obligation and, where appropriate and material, establish a provision. While there can be no assurances that circumstances will not change, based upon information currently available to them the Directors do not believe there is any possible activity or event that could have a material adverse effect on the Group’s financial position. For further information, see the list of principal risks and uncertainties in the risk and risk management section of the Strategic report. During the normal course of business, the Group may from time to time provide guarantees to Partners, clients or other third parties. However, based upon the information currently available to them the Directors do not believe there are any guarantees which would have a material adverse effect on the Group’s financial position, and so the fair value of any guarantees has been assessed as £nil (2021: £nil). www.sjp.co.uk 224 Financial Statements # Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ## 16. Borrowings and financial commitments ### Borrowings Borrowings are a liability arising from financing activities. The Group has two different types of borrowings: - senior unsecured corporate borrowings which are used to manage working capital, bridge intra-group cash flows and fund investment in the business; and - securitisation loan notes which are secured only on a legally segregated pool of the Group's business loans to Partners, and hence are non-recourse to the Group's other assets. Further information about business loans to Partners is provided in Note 12. ### Senior unsecured corporate borrowings | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | Corporate borrowings: bank loans | – | 106.8 | | Corporate borrowings: loan notes | 163.8 | 163.8 | | **Senior unsecured corporate borrowings** | **163.8** | **270.6** | The primary senior unsecured corporate borrowings are: - a revolving credit facility, which was renewed during the year. The facility increased from £340 million to £345 million which is repayable at maturity in 2027 with a variable interest rate. At 31 December 2022 the undrawn credit available under this facility was £345 million (2021: £233 million); - a Note Purchase Agreement for £64 million. The notes are repayable in instalments over ten years, ending in 2027, with variable interest rates; and - a Note Purchase Agreement for £100 million. The notes are repayable in one amount in 2031, with variable interest rates. The Group has a number of covenants within the terms of its senior unsecured corporate borrowing facilities. These covenants are monitored on a regular basis and reported to lenders on a six-monthly basis. During the course of the year all covenants were complied with. As at 31 December 2022 and 31 December 2021 the Group had sufficient headroom available under its covenants to fully draw the remaining commitment under its senior unsecured corporate borrowing facilities. ### Total borrowings | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | Senior unsecured corporate borrowings | 163.8 | 270.6 | | Senior tranche of non-recourse securitisation loan notes | – | 162.4 | | **Total borrowings** | **163.8** | **433.0** | | Current | 12.8 | – | | Non-current | 151.0 | 433.0 | | | **163.8** | **433.0** | During the year the senior tranche of securitisation loan notes were repaid as a result of the sale of a portfolio of Partner business loans, including all of the securitised business loans, to a third party. Prior to the sale, the senior tranche of securitisation loan notes were AAA-rated and repayable over the expected life of the securitisation (estimated to be five years) with a variable interest rate. They were held by third-party investors and secured on a legally segregated portfolio of business loans to Partners, and on the other net assets of the securitisation entity SJP Partner Loans No.1 Limited. Holders of the securitisation loan notes had no recourse to the assets held by any other entity within the Group. For further information on business loans to Partners, including the sale of securitised business loans to Partners during the year, refer to Note 12. In addition to the senior tranche of securitisation loan notes, a junior tranche has been issued to another entity within the Group. The junior notes were eliminated on consolidation in the preparation of the Group Financial Statements and so do not form part of Group borrowings. St. James's Place plc Annual Report and Accounts 2022 225 | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | Junior tranche of non-recourse securitisation loan notes | 2.1 | 61.2 | | Senior tranche of non-recourse securitisation loan notes | – | 162.4 | | **Total non-recourse securitisation loan notes** | **2.1** | **223.6** | | **Backed by** | | | | Securitised business loans to Partners (see Note 12) | – | 214.0 | | Other net assets of SJP Partner Loans No.1 Limited | 2.1 | 9.6 | | **Total net assets held by SJP Partner Loans No.1 Limited** | **2.1** | **223.6** | ### Movement in borrowings Borrowings are liabilities arising from financing activities. The cash and non-cash movements in borrowings over the year are set out below, with the cash movements also set out in the Consolidated Statement of Cash Flows. | | Senior unsecured corporate borrowings 2022 £ Million | Senior tranche of securitisation loan notes 2022 £ Million | Total borrowings 2022 £ Million | Senior unsecured corporate borrowings 2021 £ Million | Senior tranche of securitisation loan notes 2021 £ Million | Total borrowings 2021 £ Million | | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 January | 270.6 | 162.4 | 433.0 | 226.5 | 115.3 | 341.8 | | Additional borrowing during the year | 145.0 | 59.0 | 204.0 | 487.0 | 89.4 | 576.4 | | Repayment of borrowings during the year | (252.0) | (223.3) | (475.3) | (443.4) | (42.7) | (486.1) | | Costs on additional borrowings during the year | (1.6) | – | (1.6) | (0.1) | (0.1) | (0.2) | | Unwind of borrowing costs (non-cash movement) | 0.6 | 0.5 | 1.1 | 0.6 | 0.5 | 1.1 | | Reclassification of prepaid loan facility expense to prepayments | 1.2 | 1.4 | 2.6 | – | – | – | | **Balance at 31 December** | **163.8** | **–** | **163.8** | **270.6** | **162.4** | **433.0** | The fair value of the outstanding borrowings is not materially different from amortised cost. Interest expense on borrowings is recognised within expenses in the Consolidated Statement of Comprehensive Income. ### Financial commitments #### Guarantees The Group guarantees loans provided by third parties to Partners. In the event of default on any individual Partner loan, the Group guarantees to repay the full amount of the loan, with the exception of Metro Bank. For this third party the Group guarantees to cover losses up to 50% of the value to the total loans drawn. These loans are secured against the future income streams of the Partner. The value of the loans guaranteed is as follows: | | Loans drawn | | Facility | | | --- | --- | --- | --- | --- | | | 31 December 2022 £ Million | 31 December 2021 £ Million | 31 December 2022 £ Million | 31 December 2021 £ Million | | Bank of Scotland | 28.7 | 51.9 | 70.0 | 70.0 | | Investec | 28.8 | 33.1 | 50.0 | 50.0 | | Metro Bank | 27.3 | 37.0 | 40.0 | 61.0 | | NatWest | 37.9 | 28.8 | 75.0 | 50.0 | | Santander | 167.7 | 119.9 | 179.0 | 169.9 | | **Total loans** | **290.4** | **270.7** | **414.0** | **400.9** | The fair value of these guarantees has been assessed as £nil (2021: £nil). Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 226 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 17. Financial risk Risk management objectives and risk policies The Group’s financial risk can usefully be considered by looking at two categories of assets:   assets backing unit liabilities (see Note 11); and   shareholder assets. In general, the policyholder bears the financial risk arising on assets backing the unitised business, and risk arising on shareholder assets is minimised through investment in liquid assets with a strong credit rating. Exposure to the following risks for the two categories of assets is analysed separately in the following sections, in line with the requirements of IFRS 7:   credit risk;   liquidity risk;   market risk; and   currency risk. Credit risk is the risk of loss due to a debtor’s non-payment of a loan or other line of credit. Credit risk also arises from holdings of cash and cash equivalents, deposits and formal loans with banks and financial institutions. The Group has adopted a risk-averse approach to such risk and has a stated policy of not actively pursuing or accepting credit risk except when necessary to support other objectives. Risk Description Management Shareholders’ assets Loss of assets or Shareholder funds are predominantly invested in AAA-rated unitised reduction in value. money market funds, which are classified as investments in Collective Investment Schemes (CIS), and deposits with approved banks, but may be invested in sovereign fixed interest securities such as UK gilts where regulatory constraints on other assets apply. Maximum counterparty limits are set for each company within the Group and aggregate limits are also set at a Group level. Reinsurance Failure of counterparty, Credit ratings of potential reinsurers must meet or exceed AA-. or counterparty unable Consideration is also given to size, risk concentrations/exposures and to meet liabilities. ownership in the selection of reinsurers. The Group also seeks to diversify its reinsurance credit risk through the use of a spread of reinsurers. Business loans Inability of Partners Loans and advances are managed in line with the Group’s secured to Partners to repay loans or lending policy. Loans are secured on the future renewal income stream advances from expected from a Partner’s portfolio and loan advances vary in relation to the Group. the projected future income of the relevant Partner. Outstanding balances are regularly reviewed and assessed on a conservative basis. Support is provided to help Partners manage their businesses appropriately. Expected credit losses are recognised as provisions against the loans. Liquidity risk is the risk that the Group, although solvent, either does not have available sufficient financial resources to enable it to meet its obligations as they fall due, or can secure such resources only at excessive cost. The Group is averse to liquidity risk and seeks to minimise this risk by not actively pursuing it except where necessary to support other objectives. Risk Description Management Cash or expense A significant cash or The majority of free assets are invested in cash or cash equivalents and requirement expense requirement the cash position and forecast are monitored on a monthly basis. The needs to be met at Group also maintains a margin of free assets in excess of the minimum short notice. required solvency capital within its regulated entities. Further, the Group has established committed borrowing facilities (see Note 16) intended to further mitigate liquidity risk St. James’s Place plc Annual Report and Accounts 2022 ### 227 Strategic Report Governance Other Information Market risk is the impact a fall in the value of equity or other asset markets may have on the business. The Group adopts a risk-averse approach to market risk, with a stated solvency policy of not actively pursuing or accepting market risk except where necessary to support other objectives. However, the Group accepts the risk that a fall in equity or other asset markets will reduce the level of annual management charge income derived from policyholder assets and the consequent risk of lower future profits. The table below summarises the main market risks that the business is exposed to and the methods by which the Group seeks to mitigate them. Risk Description Management Client liabilities As a result of a This risk is substantially mitigated by the Group’s strategic focus reduction in equity on unitised business, by not providing guarantees to clients on values, the Group policy values and by the matching of assets and liabilities. may be unable to meet client liabilities. Retention Loss of future profit on Retention of investment contracts is closely monitored and unexpected investment contracts experience variances are investigated. Retention has remained due to more clients consistently strong throughout 2022 despite the volatile market than anticipated conditions experienced. withdrawing their funds, particularly as a result of poor investment performance. New business Poor performance in The benefit to clients of longer-term equity investment as part of Financial Statements the financial markets a diversified portfolio of assets is fundamental to our philosophy. in absolute terms, Advice becomes even more important when market values fall, and and relative to inflation, greater attention is required to support and give confidence to existing leads to existing and and future clients in such circumstances. In addition, as controls against future clients rejecting poor performance the Group monitors asset allocations across portfolios investment in longer- to ensure they are working as expected to meet long-term goals, and term assets. monitors funds against their objectives to ensure an appropriate level of investment risk. Where necessary, fund managers are changed. The Group is not subject to any significant direct currency risk, since all material shareholder financial assets and financial liabilities are denominated in Sterling. However, since future profits are dependent on charges based on FUM, changes in FUM as a result of currency movements will impact future profits. www.sjp.co.uk ### 228 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 17. Financial risk continued Shareholder assets Categories of financial assets and financial liabilities The categories and carrying values of the shareholder financial assets and financial liabilities held in the Group’s Statement of Financial Position are summarised in the table below. The impact of climate change does not have a material impact on the fair values of the assets summarised below. | | Financial assets at | | | Financial liabilities | | Financial assets | | Financial liabilities | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | fair value through | | | at fair value through | | | measured at | | measured at | | | | profit and loss | | | profit and loss | amortised cost | | | amortised cost Total | | 31 December 2022 | | | £’Million £’Million £’Million £’Million £’Million | | | | | | | Financial assets Fixed income securities 7.9 – – – 7.9 1 Investment in Collective Investment Schemes 1,271.7 – – – 1,271.7 2 Other receivables – Business loans to Partners – – 315.6 – 315.6 – Renewal income assets 115.5 – – – 115.5 – Other – – 500.5 – 500.5 Total other receivables 115.5 – 816.1 – 931.6 Cash and cash equivalents – – 253.3 – 253.3 Total financial assets 1,395.1 – 1,069.4 – 2,464.5 Financial liabilities Borrowings – – – 163.8 163.8 Other payables – Lease liabilities : properties – – – 116.6 116.6 – Contingent consideration – 8.3 – – 8.3 – Other – – – 1,231.7 1,231.7 Total other payables – 8.3 – 1,348.3 1,356.6 Total financial liabilities – 8.3 – 1,512.1 1,520.4 | | Financial assets at | | | Financial liabilities at | | | Financial assets | | Financial liabilities | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | fair value through | | | | fair value through | | | measured at | | measured at | | | | profit and loss | | | | profit and loss | amortised cost | | | amortised cost Total | | 31 December 2021 | | | £’Million £’Million £’Million £’Million £’Million | | | | | | | | Financial assets Fixed income securities 7.8 – – – 7.8 1 Investment in Collective Investment Schemes 1,605.3 – – – 1,605.3 2 Other receivables – Business loans to Partners – – 521.6 – 521.6 – Renewal income assets 102.5 – – – 102.5 – Other – – 514.8 – 514.8 Total other receivables 102.5 – 1,036.4 – 1,138.9 Cash and cash equivalents – – 245.7 – 245.7 Total financial assets 1,715.6 – 1,282.1 – 2,997.7 Financial liabilities Borrowings – – – 433.0 433.0 Other payables – Lease liabilities : properties – – – 124.1 124.1 – Contingent consideration – 8.3 – – 8.3 – Other – – – 1,127.2 1,127.2 Total other payables – 8.3 – 1,251.3 1,259.6 Total financial liabilities – 8.3 – 1,684.3 1,692.6 1 All assets included as shareholder investment in Collective Investment Schemes are holdings of high-quality, highly liquid money market funds, containing assets which are cash and cash equivalents. 2 Other receivables exclude prepayments and advanced payments to Partners, which are not considered financial assets. St. James’s Place plc Annual Report and Accounts 2022 ### 229 Strategic Report Governance Other Information Income, expense, gains and losses arising from financial assets and financial liabilities The income, expense, gains and losses arising from shareholder financial assets and financial liabilities are summarised in the table below: | | Financial assets at | | | Financial assets | | Financial liabilities | | | --- | --- | --- | --- | --- | --- | --- | --- | | | fair value through | | | | measured at | | measured at | | | | profit and loss | | amortised cost | | | amortised cost Total | | Year ended 31 December 2022 | | | £’Million £’Million £’Million £’Million | | | | | Financial assets Fixed income securities (0.7) – – (0.7) Investment in Collective Investment Schemes 14.9 – – 14.9 Other receivables – Business loans to Partners – 20.6 – 20.6 – Renewal income assets (15.2) – – (15.2) Total other receivables (15.2) 20.6 – 5.4 Cash and cash equivalents – 2.6 – 2.6 Total financial assets (1.0) 23.2 – 22.2 Financial liabilities Borrowings – – (9.4) (9.4) Other payables – Lease liabilities: properties – – (3.0) (3.0) Financial Statements Total other payables – – (3.0) (3.0) Total financial liabilities – – (12.4) (12.4) | | Financial assets at | | | Financial assets | | Financial liabilities | | | --- | --- | --- | --- | --- | --- | --- | --- | | | fair value through | | | | measured at | | measured at | | | | profit and loss | | amortised cost | | | amortised cost Total | | Year ended 31 December 2021 | | | £’Million £’Million £’Million £’Million | | | | | Financial assets Fixed income securities 0.5 – – 0.5 Investment in Collective Investment Schemes 0.2 – – 0.2 Other receivables – Business loans to Partners – 14.3 – 14.3 – Renewal income assets (9.0) – – (9.0) Total other receivables (9.0) 14.3 – 5.3 Cash and cash equivalents – – – – Total financial assets (8.3) 14.3 – 6.0 Financial liabilities Borrowings – – (7.0) (7.0) Other payables – Lease liabilities: properties – – (3.2) (3.2) Total other payables – – (3.2) (3.2) Total financial liabilities – – (10.2) (10.2) Losses on renewal income assets have been recognised within the investment return line in the Statement of Comprehensive Income. www.sjp.co.uk 230 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 17. Financial risk continued #### Fair value estimation Financial assets and liabilities which are held at fair value in the Financial Statements are required to have disclosed their fair value measurements by level of the following fair value measurement hierarchy: - quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). The following table presents the Group's shareholder assets and liabilities measured at fair value. | | Level 1 £'Million | Level 2 £'Million | Level 3 £'Million | Total balance £'Million | | --- | --- | --- | --- | --- | | **31 December 2022** | | | | | | **Financial assets** | | | | | | Fixed income securities | 7.9 | – | – | 7.9 | | Investment in Collective Investment Schemes^{1} | 1,271.7 | – | – | 1,271.7 | | Renewal income assets | – | – | 115.5 | 115.5 | | **Total financial assets** | **1,279.6** | – | **115.5** | **1,395.1** | | **Financial liabilities** | | | | | | Contingent consideration | – | – | 8.3 | 8.3 | | **Total financial liabilities** | – | – | **8.3** | **8.3** | | | Level 1 £'Million | Level 2 £'Million | Level 3 £'Million | Total balance £'Million | | --- | --- | --- | --- | --- | | **31 December 2021** | | | | | | **Financial assets** | | | | | | Fixed income securities | 7.8 | – | – | 7.8 | | Investment in Collective Investment Schemes^{1} | 1,605.3 | – | – | 1,605.3 | | Renewal income assets | – | – | 102.5 | 102.5 | | **Total financial assets** | **1,613.1** | – | **102.5** | **1,715.6** | | **Financial liabilities** | | | | | | Contingent consideration | – | – | 8.3 | 8.3 | | **Total financial liabilities** | – | – | **8.3** | **8.3** | $^{1}$ All assets included as shareholder investment in Collective Investment Schemes are holdings of high-quality, highly liquid unitised money market funds, containing assets which are cash and cash equivalents. The fair value of financial instruments traded in active markets is based on quoted bid prices at the reporting date. These instruments are included in Level 1. Level 2 financial assets and liabilities are valued using observable prices for identical current arm's-length transactions. The renewal income assets are Level 3 and are valued using a discounted cash flow technique and the assumptions outlined in Note 12. The effect of applying reasonably possible alternative assumptions of a movement of 100bps on the discount rate and a 10% movement in the lapse rate would result in an unfavourable change in valuation of £8.2 million (2021: £8.9 million) and a favourable change in valuation of £10.4 million (2021: £9.9 million), respectively. The contingent consideration liability is classified as Level 3 and is valued based on the terms set out in the various sale and purchase agreements. Given the nature of the valuation basis the effect of applying reasonably possible alternative assumptions would result in an unfavourable change of £nil (2021: £nil) and favourable change of £8.3 million (2021: £8.3 million). There were no transfers between Level 1 and Level 2 during the year, nor into or out of Level 3. St. James's Place plc Annual Report and Accounts 2022 231 The following tables present the changes in Level 3 financial assets and liabilities at fair value through the profit and loss: #### Financial assets | | 2022 £'Million | 2021 £'Million | | --- | --- | --- | | **Renewal income assets** | | | | Balance at 1 January | 102.5 | 87.4 | | Additions during the year | 36.1 | 34.6 | | Disposals during the year | (7.8) | (10.5) | | Unrealised losses recognised in the Statement of Comprehensive Income | (15.3) | (9.0) | | **Balance at 31 December** | **115.5** | **102.5** | Unrealised losses on renewal income assets are recognised within investment return in the Consolidated Statement of Comprehensive Income. #### Financial liabilities | | 2022 £'Million | 2021 £'Million | | --- | --- | --- | | **Contingent consideration** | | | | Balance at 1 January | 8.3 | – | | Additions during the year | 6.3 | 8.3 | | Payments made during the year | (6.3) | – | | **Balance at 31 December** | **8.3** | **8.3** | #### Credit risk The following table sets out the maximum credit risk exposure and ratings of shareholder financial and other assets which are susceptible to credit risk: | | AAA £'Million | AA £'Million | A £'Million | BB £'Million | Unrated £'Million | Total £'Million | | --- | --- | --- | --- | --- | --- | --- | | **31 December 2022** | | | | | | | | Fixed income securities | – | 7.9 | – | – | – | 7.9 | | Investment in Collective Investment Schemes^{1} | 1,271.7 | – | – | – | – | 1,271.7 | | Reinsurance assets | – | 66.4 | – | – | – | 66.4 | | Other receivables | – | 5.6 | – | – | 926.0 | 931.6 | | Cash and cash equivalents | – | 53.8 | 197.4 | 2.1 | – | 253.3 | | **Total** | **1,271.7** | **133.7** | **197.4** | **2.1** | **926.0** | **2,530.9** | | | AAA £'Million | AA £'Million | A £'Million | BB £'Million | Unrated £'Million | Total £'Million | | --- | --- | --- | --- | --- | --- | --- | | **31 December 2021** | | | | | | | | Fixed income securities | – | 7.8 | – | – | – | 7.8 | | Investment in Collective Investment Schemes^{1} | 1,605.3 | – | – | – | – | 1,605.3 | | Reinsurance assets | – | 82.4 | – | – | – | 82.4 | | Other receivables | – | 9.9 | – | – | 1,129.0 | 1,138.9 | | Cash and cash equivalents | – | 47.8 | 196.0 | 1.9 | – | 245.7 | | **Total** | **1,605.3** | **147.9** | **196.0** | **1.9** | **1,129.0** | **3,080.1** | $^{1}$ Investment of shareholder assets in Collective Investment Schemes refers to investment in unitised money market funds, containing assets which are cash and cash equivalents. Other receivables includes £315.6 million (2021: £521.6 million) of business loans to Partners, which are interest-bearing (linked to Bank of England base rate plus a margin), repayable in line with the terms of the loan contract and secured against the future renewal income streams of the respective Partner. Impairment of these loans is determined using the expected loss model set out in IFRS 9. Expected credit losses are based on the historic levels of loss experienced on business loans to Partners, with due consideration given to forward-looking information. A range of factors, including the nature or type of the loan and the security held, are taken into account in calculating the provision. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 232 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 17. Financial risk continued The loan balance is presented net of a £3.8 million provision (2021: £4.0 million); see Note 12. The movement in the impairment provision will reflect utilisation of the existing provision during the year, but the overall cost of business loans to Partners (including new provisions) recognised within administration expenses in the Statement of Comprehensive Income during the year was a charge of £1.7 million (2021: £3.9 million). #### Contractual maturity and liquidity analysis The following table sets out the contractual maturity analysis of the Group's financial assets and financial liabilities. All financial liabilities are undiscounted. | 31 December 2022 | Up to 1 year £'Million | 1 to 5 years £'Million | Over 5 years £'Million | Total £'Million | | --- | --- | --- | --- | --- | | **Financial assets** | | | | | | Fixed income securities | 7.9 | – | – | 7.9 | | Investment in Collective Investment Schemes | 1,271.7 | – | – | 1,271.7 | | Other receivables | | | | | | – Business loans to Partners | 63.5 | 186.1 | 66.0 | 315.6 | | – Renewal income | 14.0 | 28.3 | 73.2 | 115.5 | | – Other | 500.5 | – | – | 500.5 | | **Total other receivables** | **578.0** | **214.4** | **139.2** | **931.6** | | Cash and cash equivalents | 253.3 | – | – | 253.3 | | **Total financial assets** | **2,110.9** | **214.4** | **139.2** | **2,464.5** | | **Financial liabilities** | | | | | | Borrowings | 12.8 | 51.0 | 100.0 | 163.8 | | Other payables | | | | | | – Lease liabilities: properties | 17.7 | 56.8 | 59.2 | 133.7 | | – Contingent consideration | 6.4 | 1.9 | – | 8.3 | | – Other | 1,158.5 | 58.0 | 37.0 | 1,253.5 | | **Total other payables** | **1,182.6** | **116.7** | **98.2** | **1,395.5** | | **Total financial liabilities** | **1,195.4** | **167.7** | **196.2** | **1,559.3** | | 31 December 2021 | Up to 1 year £'Million | 1 to 5 years £'Million | Over 5 years £'Million | Total £'Million | | --- | --- | --- | --- | --- | | **Financial assets** | | | | | | Fixed income securities | 7.8 | – | – | 7.8 | | Investment in Collective Investment Schemes | 1,605.3 | – | – | 1,605.3 | | Other receivables | | | | | | – Business loans to Partners | 117.4 | 301.6 | 102.6 | 521.6 | | – Renewal income | 18.2 | 43.6 | 40.7 | 102.5 | | – Other | 514.8 | – | – | 514.8 | | **Total other receivables** | **650.4** | **345.2** | **143.3** | **1,138.9** | | Cash and cash equivalents | 245.7 | – | – | 245.7 | | **Total financial assets** | **2,509.2** | **345.2** | **143.3** | **2,997.7** | | **Financial liabilities** | | | | | | Borrowings | – | 320.2 | 112.8 | 433.0 | | Other payables | | | | | | – Lease liabilities: properties^{1} | 17.2 | 59.1 | 70.9 | 147.2 | | – Contingent consideration | 6.4 | 1.9 | – | 8.3 | | – Other^{2} | 1,034.6 | 58.0 | 51.5 | 1,144.1 | | **Total other payables** | **1,058.2** | **119.0** | **122.4** | **1,299.6** | | **Total financial liabilities** | **1,058.2** | **439.2** | **235.2** | **1,732.6** | 1 Lease liabilities: properties has been restated to reflect the undiscounted cashflows. The restatement increased 1 to 5 years by £4.0 million and over 5 years by £18.2 million. 2 Other has been restated to reflect the undiscounted cashflows. The restatement decreased 1 to 5 years by £0.4 million and increased over 5 years by £17.3 million. St. James's Place plc Annual Report and Accounts 2022 ### 233 Strategic Report Governance Other Information Sensitivity analysis to market risks Financial assets and liabilities held outside unitised funds primarily consist of fixed interest securities, units in money market funds, cash and cash equivalents, and other accounting assets and liabilities. The fixed interest securities are short-term and are held as an alternative to cash. Similarly, cash held in unitised money market funds and at bank is valued at par and is unaffected by movement in interest rates. Other assets and liabilities are similarly unaffected by market movements. As a result of these combined factors, the Group’s financial assets and liabilities held outside unitised funds are not materially subject to market risk, and movements at the reporting date in interest rates and equity values have an immaterial impact on the Group’s profit after tax and equity. Future profits from annual management charges may be affected by movements in interest rates and equity values. Unit liabilities and associated assets Categories of financial assets and financial liabilities Assets held to cover unit liabilities are summarised in Note 11, and all are held at fair value through profit or loss. Equities, investments in unit trusts which sit within investment in Collective Investment Schemes, and derivative financial assets are required to be held at fair value through profit or loss by IFRS 9, as they are equity instruments or derivatives. All other assets held to cover unit liabilities are elected to be held at fair value through profit or loss to match the fair value through profit or loss classification which is required for unit liabilities. They are designated as such upon initial recognition. Income, expense, gains and losses arising from financial assets, investment properties and financial liabilities The income, expense, gains and losses arising from financial assets, investment properties and financial liabilities are | summarised in the table below: | | | | | Financial Statements | | --- | --- | --- | --- | --- | --- | | | 31 December | | 31 December | | | | | | 2022 | | 2021 | | £’Million £’Million Financial assets and investment properties Investment properties (226.6) 246.1 Other assets backing unit liabilities (9,458.0) 11,400.2 Total financial assets and investment properties (9,684.6) 11,646.3 1 Financial liabilities Unit liabilities 9,930.1 (10,384.0) Total financial liabilities 9,930.1 (10,384.0) 1 None of the change in the fair value of financial liabilities at fair value through profit or loss is attributable to changes in their credit risk. Losses have been recognised within the investment return line in the Statement of Comprehensive Income. www.sjp.co.uk 234 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 17. Financial risk continued #### Fair value estimation Financial assets and liabilities which are held at fair value in the Financial Statements are required to have disclosed their fair value measurements, split by level in the fair value measurement hierarchy. The following table presents the Group's unit liabilities and associated assets measured at fair value: | | Level 1 £'Million | Level 2 £'Million | Level 3 £'Million | Total balance £'Million | | --- | --- | --- | --- | --- | | **31 December 2022** | | | | | | **Financial assets and investment properties** | | | | | | Investment property | – | – | 1,294.5 | 1,294.5 | | Equities | 101,944.0 | – | 1,592.0 | 103,536.0 | | Fixed income securities | 7,322.0 | 19,856.4 | 366.4 | 27,544.8 | | Investment in Collective Investment Schemes | 4,459.8 | – | 3.9 | 4,463.7 | | Derivative financial instruments | – | 3,493.0 | – | 3,493.0 | | Cash and cash equivalents | 6,179.5 | – | – | 6,179.5 | | **Total financial assets and investment properties** | **119,905.3** | **23,349.4** | **3,256.8** | **146,511.5** | | **Financial liabilities** | | | | | | Investment contract benefits | – | 106,964.7 | – | 106,964.7 | | Derivative financial instruments | – | 3,266.3 | – | 3,266.3 | | Net asset value attributable to unit holders | 36,628.4 | – | – | 36,628.4 | | **Total financial liabilities** | **36,628.4** | **110,231.0** | **–** | **146,859.4** | | | Level 1 £'Million | Level 2 £'Million | Level 3 £'Million | Total balance £'Million | | --- | --- | --- | --- | --- | | **31 December 2021** | | | | | | **Financial assets and investment properties** | | | | | | Investment property | – | – | 1,568.5 | 1,568.5 | | Equities | 105,735.2 | – | 1,047.1 | 106,782.3 | | Fixed income securities | 7,712.1 | 21,277.9 | 308.1 | 29,298.1 | | Investment in Collective Investment Schemes | 3,904.0 | – | 3.9 | 3,907.9 | | Derivative financial instruments | – | 1,094.6 | – | 1,094.6 | | Cash and cash equivalents | 7,587.2 | – | – | 7,587.2 | | **Total financial assets and investment properties** | **124,938.5** | **22,372.5** | **2,927.6** | **150,238.6** | | **Financial liabilities** | | | | | | Investment contract benefits | – | 110,349.8 | – | 110,349.8 | | Derivative financial instruments | – | 1,019.5 | – | 1,019.5 | | Net asset value attributable to unit holders | 38,369.0 | – | – | 38,369.0 | | **Total financial liabilities** | **38,369.0** | **111,369.3** | **–** | **149,738.3** | In respect of the derivative financial liabilities, £103.1 million of collateral had been posted as at 31 December 2022 (£102.7 million), comprising cash and treasury bills, in accordance with the terms and conditions of the derivative contracts. The fair value of financial instruments traded in active markets is based on quoted bid prices at the reporting date. These instruments are included in Level 1. St. James's Place plc Annual Report and Accounts 2022 ### 235 Strategic Report Governance Other Information The Group closely monitors the valuation of assets in markets that have become less liquid. Determining whether a market is active requires the exercise of judgement and is determined based upon the facts and circumstances of the market for the instrument being measured. Where it is determined that there is no active market, fair value is established using a valuation technique. The techniques applied incorporate relevant information available and reflect appropriate adjustments for credit and liquidity risks. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. The relative weightings given to differing sources of information and the determination of non-observable inputs to valuation models can require the exercise of significant judgement. If all significant inputs required to fair-value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Note that all of the resulting fair value estimates are included in Level 2, except for certain equities, fixed income securities, investments in Collective Investment Schemes and investment properties as detailed below. Specific valuation techniques used to value Level 2 financial assets and liabilities include the use of observable prices for identical current arm’s-length transactions, specifically:   the fair value of fixed income securities are determined by inputs including interest rates and market observable yield curves of similar instruments in the market;   the fair value of unit-linked liabilities is assessed by reference to the value of the underlying net asset value of the Group’s unitised investment funds, determined on a bid value basis, at the reporting date; and   the Group’s derivative financial instruments are valued using valuation techniques commonly used by market participants. These consist of discounted cash flow and option pricing models, which typically incorporate observable market data, principally interest rates, basis spreads, foreign exchange rates, equity prices and counterparty credit. Financial Statements Specific valuation techniques used to value Level 3 financial assets and liabilities include:   the use of unobservable inputs, such as expected rental values and equivalent yields; and   other techniques, such as discounted cash flow and historic lapse rates, which are used to determine fair value for the remaining financial instruments. There were no transfers between Level 1 and Level 2 during the year. Transfers into and out of Level 3 portfolios The Group’s policy is to recognise transfers into and out of levels as of the end of each reporting period except for material transfers which are recognised as of the date of the event or change in circumstances that caused the transfer. Transfers out of Level 3 portfolios arise when inputs that could have a significant impact on the instrument’s valuation become market-observable; conversely, transfers into the portfolios arise when consistent sources of data cease to be available. Transfers in of certain investments in Collective Investment Schemes occur when asset valuations can no longer be obtained from an observable market price; e.g. where they have become illiquid, in liquidation, suspended etc. The converse is true if an observable market price becomes available. During the period, £4.8 million of Russian equities (2021: £nil) transferred from Level 1 to Level 3 as the valuation has been calculated using a markdown on the quoted price, with the markdown being a significant unobservable input. www.sjp.co.uk ### 236 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 17. Financial risk continued The following table presents the changes in Level 3 financial assets and liabilities at fair value through the profit and loss: Collective | | Investment | | Fixed income | | Investment | | --- | --- | --- | --- | --- | --- | | | | property | | securities Equities | Schemes | | 2022 | | £’Million £’Million £’Million £’Million | | | | Balance at 1 January 2022 1,568.5 308.1 1,047.1 3.9 Transfer into Level 3 0.0 6.0 4.8 0.7 Additions during the year 23.6 57.8 425.8 – Disposed during the year (53.1) (29.7) (77.1) (0.8) (Losses)/gains recognised in the income statement (244.5) 24.2 191.4 0.1 Balance at 31 December 2022 1,294.5 366.4 1,592.0 3.9 Realised (losses)/gains (192.7) 9.1 11.9 – Unrealised (losses)/gains (51.8) 15.1 179.5 0.1 (Losses)/gains recognised in the income statement (244.5) 24.2 191.4 0.1 Collective | | Investment | | Fixed income | | Investment | | --- | --- | --- | --- | --- | --- | | | | property | | securities Equities | Schemes | | 2021 | | £’Million £’Million £’Million £’Million | | | | Balance at 1 January 2021 1,526.7 309.4 465.8 1.8 Transfer into Level 3 – – – 2.3 Additions during the year 19.2 135.0 568.2 – Disposed during the year (158.8) (132.5) (142.8) (0.2) Gains/(losses) recognised in the income statement 181.4 (3.8) 155.9 – Balance at 31 December 2021 1,568.5 308.1 1,047.1 3.9 1 Realised gains 139.9 6.9 124.8 – 1 Unrealised gains/(losses) 41.5 (10.7) 31.1 – Gains/(losses) recognised in the income statement 181.4 (3.8) 155.9 – 1 Realised gains and unrealised gains/(losses) have been re-presented to correct the classification of the categories. Unrealised and realised gains/(losses) for all Level 3 assets are recognised within investment return in the Statement of Comprehensive Income. Level 3 valuations Investment property At 31 December 2022 the Group held £1,294.5 million (2021: £1,568.5 million) of investment property, all of which is classified as Level 3 in the fair value hierarchy. It is initially measured at cost including related acquisition costs and subsequently valued at least monthly by professional external valuers at the properties’ respective fair values at each reporting date. The fair values derived are based on anticipated market values for the properties in accordance with guidance issued by the Royal Institution of Chartered Surveyors, being the estimated amount that would be received from a sale of the assets in an orderly transaction between market participants. The valuation of investment property is inherently subjective as it requires, among other factors, assumptions to be made regarding the ability of existing tenants to meet their rental obligations over the entire life of their leases, the estimation of the expected rental income into the future; the assessment of a property’s potential to remain as an attractive technical configuration to existing and prospective tenants in a changing market and a judgement on the attractiveness of a building, its location and the surrounding environment. St. James’s Place plc Annual Report and Accounts 2022 ### 237 Strategic Report Governance Other Information Investment property classification 31 December 2022 Office Industrial Retail and leisure All 1 Gross ERV (per sq ft) Range £14.00 to £107.50 £5.00 to £22.50 £2.50 to £88.94 £2.50 to £107.50 Weighted average £46.18 £12.71 £13.54 £17.20 True equivalent yield Range 4.3% to 9.7% 5.2% to 6.3% 6.0% to 10.5% 4.3% to 10.5% Weighted average 5.9% 5.5% 7.2% 6.2% Investment property classification 31 December 2021 Office Industrial Retail and leisure All 1 Gross ERV (per sq ft) Range £15.00 to £95.06 £4.75 to £19.00 £2.50 to £99.98 £2.50 to £99.98 Weighted average £42.19 £11.10 £13.18 £16.58 True equivalent yield Range 4.2% to 11.5% 3.1% to 5.2% 5.1% to 20.3% 3.1% to 20.3% Weighted average 5.4% 3.7% 6.7% 5.1% 1 Equivalent rental value (per square foot). Fixed income securities and equities Financial Statements At 31 December 2022 the Group held £366.4 million (2021: £308.1 million) in private credit investments, and £1,587.3 million (2021: £1,047.1 million) in private market investments through the St. James’s Place Diversified Assets (FAIF) Unit Trust. These are recognised within fixed income securities and equities, respectively, in the Consolidated Statement of Financial Position. They are measured at fair value, with the best evidence of the fair value at initial recognition being the transaction price i.e. the fair value of the consideration given or received. Following initial recognition a monthly valuation process occurs which includes verification by suitably qualified professional external valuers, who are members of various industry bodies including the British Private Equity and Venture Capital Association. The fair values of the private credit investments are principally determined using two valuation methods: 1. the shadow rating method, which assigns a shadow credit rating to the debt-issuing entity and determines an expected yield with reference to observable yields for comparable companies with a public credit rating in the loan market; and 2. the weighted average cost of capital (WACC) method, which determines the debt-issuing entity’s WACC with reference to observable market comparatives. The expected yield and WACC are used as the discount rates to calculate the present value of the expected future cash flows under the shadow rating and WACC methods respectively, which is taken to be the fair value. The fair values of the private market investments are principally determined using two valuation methods: 1. a market approach with reference to suitable market comparatives; and 2. an income approach using discounted cash flow analysis which assesses the fair value of each asset based on its expected future cash flows. The output of each method for both the private credit and private market investments is a range of values, from which the mid-point is selected to be the fair value in the majority of cases. The mid-point would not be selected if further information is known about an investment which cannot be factored into the valuation method used. A weighting is assigned to the values determined following each method to determine the final valuation. The valuations are inherently subjective as they require a number of assumptions to be made, such as determining which entities provide suitable market comparatives and their relevant performance metrics (for example earnings before interest, tax, depreciation and amortisation), determining appropriate discount rates and cash flow forecasts to use in models, the weighting to apply to each valuation methodology, and the point in the range of valuations to select as the fair value. www.sjp.co.uk 238 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 17. Financial risk continued #### Sensitivity of Level 3 valuations ##### Investment in Collective Investment Schemes The valuation of certain investments in Collective Investment Schemes are based on the latest observable price available. Whilst such valuations are sensitive to estimates, it is believed that changing the price applied to a reasonably possible alternative would not change the fair value significantly. ##### Investment property As set out on the previous page, investment property is initially measured at cost including related acquisition costs and subsequently valued at least monthly by professional external valuers at the properties' respective fair values at each reporting date. The following table sets out the effect of applying reasonably possible alternative assumptions, being a 10% movement in estimated rental value and a 50 bps movement in relative yield, to the valuation of the investment properties. Any change in the value of investment property is matched by an associated movement in the policyholder liability, and therefore would not impact on the shareholder net assets. | | Investment property significant unobservable inputs | Effect of reasonable possible alternative assumptions | | | | --- | --- | --- | --- | --- | | | | Carrying value £'Million | Favourable changes £'Million | Unfavourable changes £'Million | | **31 December 2022** | **Expected rental value/relative yield** | **1,294.5** | **1,410.8** | **1,186.6** | | 31 December 2021 | Expected rental value/relative yield | 1,568.5 | 1,921.0 | 1,292.3 | ##### Fixed income securities and equities As set out on the previous page and above, the fair values of the Level 3 fixed income securities and equities are selected from the valuation range determined through the monthly valuation process. The following table sets out the effect of valuing each of the assets at the high and low point of the range. As for investment property, any change in the value of these fixed income securities or equities is matched by an associated movement in the policyholder liability, and therefore would not impact on the shareholder net assets. | | | Effect of reasonable possible alternative assumptions | | | | --- | --- | --- | --- | --- | | | | Carrying value £'Million | Favourable changes £'Million | Unfavourable changes £'Million | | **31 December 2022** | **Fixed income securities** | **366.4** | **374.2** | **358.3** | | | **Equities** | **1,587.3** | **1,783.5** | **1,380.3** | | 31 December 2021 | Fixed income securities | 308.1 | 311.5 | 304.5 | | | Equities | 1,047.1 | 1,193.4 | 943.4 | ##### Credit risk Credit risk relating to unit liabilities is borne by the unit holders. ##### Contractual maturity and liquidity analysis Unit liabilities (and the associated assets) are deemed to have a maturity of up to one year since they are repayable and transferable on demand. In practice the contractual maturities of the assets may be longer than one year, but the majority of assets held within the unit-linked and unit trust funds are highly liquid and the Group also actively monitors fund liquidity. ##### Sensitivity analysis to market risks The majority of the Group's business is unitised and the direct associated market risk is therefore borne by unit holders. For completeness, we note that there is an indirect risk associated with market performance as future shareholder income is dependent upon markets; however, the direct risk has been mitigated through the Group's approach to matching assets and liabilities. St. James's Place plc Annual Report and Accounts 2022 ### 239 Strategic Report Governance Other Information ### 18. Cash generated from operations | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Cash flows from operating activities Profit before tax for the year 0.7 842.4 Adjustments for: Amortisation of purchased value of in-force business 8 3.2 3.2 Amortisation of computer software 8 9.3 10.6 Change in capitalisation policy 8 – 5.1 Depreciation 9 21.7 22.1 Impairment of goodwill 8 1.5 1.5 Loss on disposal of computer software 8 0.5 – Loss on disposal of property and equipment, including leased assets 9 0.9 2.7 Share-based payment charge 21 20.5 22.9 Interest income (61.8) (19.2) Interest expense 12.4 10.2 Increase in provisions 15 1.9 9.8 Exchange rate (gains)/losses (0.7) 0.1 Financial Statements 9.4 69.0 Changes in operating assets and liabilities Decrease in deferred acquisition costs 8 42.3 44.9 Decrease/(increase) in investment property 274.0 (41.8) Decrease/(increase) in other investments 2,378.9 (24,358.4) Increase in investment in associates – (1.4) Decrease in reinsurance assets 16.0 9.9 Increase in other receivables (298.8) (326.9) (Decrease)/increase in insurance contract liabilities (88.8) 9.7 (Decrease)/increase in financial liabilities (excluding borrowings) (1,138.3) 17,486.7 Decrease in deferred income 8 (32.2) (17.3) (Decrease)/increase in other payables (397.7) 574.3 (Decrease)/increase in net assets attributable to unit holders (1,740.6) 7,449.9 (985.2) 829.6 Cash (used in)/generated from operations (975.1) 1,741.0 ### 19. Capital management and allocation The Group’s capital management policy, set by the Board, is to maintain a strong capital base in order to:   protect clients’ interests;   meet regulatory requirements;   protect creditors’ interests; and   create shareholder value through support for business development. The policy requires that each subsidiary manages its own capital, in particular to maintain regulatory solvency, in the context of a Group capital plan. Any capital in excess of planned requirements is returned to the Group’s Parent Company, St. James’s Place plc, normally by way of dividends. The Group capital position is monitored by the Audit Committee on behalf of the St. James’s Place plc Board. www.sjp.co.uk 240 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 19. Capital management and allocation continued #### Regulatory capital The Group's capital management policy is, for each subsidiary, to hold the higher of: - the capital required by any relevant supervisory body, uplifted by a specified margin to absorb changes; or For our insurance companies, we hold capital based on our own internal assessment, recognising the regulatory requirement. For other regulated companies we generally hold capital based on the regulatory requirement uplifted by a specified margin. The following entities are subject to regulatory supervision and have to maintain a minimum level of regulatory capital: | Entity | Regulatory body and jurisdiction | | --- | --- | | Capstone Financial (HK) Limited | Securities and Futures Commission (Hong Kong): Member of the Hong Kong Confederation of Insurance Brokers | | Perennial Financial Management Limited | FCA: Personal Investment Firm | | Policy Services Limited | FCA: Personal Investment Firm | | Rowan Dartington & Co Limited | FCA: Investment Firm | | St. James's Place (Hong Kong) Limited | Securities and Futures Commission (Hong Kong): Member of the Hong Kong Confederation of Insurance Brokers | | St. James's Place International (Hong Kong) Limited | Insurance Authority (Hong Kong) | | St. James's Place International plc | Central Bank of Ireland: Life insurance business | | St. James's Place Investment Administration Limited | FCA: Investment Firm | | St. James's Place Partnership Services Limited | FCA: Consumer Credit Firm | | St. James's Place (Singapore) Private Limited | Monetary Authority of Singapore: Member of the Association of Financial Advisers | | St. James's Place UK plc | PRA and FCA: Long-term insurance business | | St. James's Place Unit Trust Group Limited | FCA: UCITS Management Company | | St. James's Place Wealth Management plc | FCA: Personal Investment Firm | In addition, the St. James's Place Group is regulated as an insurance group under Solvency II, with the PRA as the lead regulator. More information about the capital position of the Group under Solvency II regulations is set out in the separate Solvency and Financial Condition Report document. The overall capital position for the Group at 31 December 2022, assessed on the standard formula basis, is presented in the following table: | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | IFRS total assets | 151,705.0 | 155,729.9 | | Less Solvency II valuation adjustments and unit-linked liabilities | (150,325.1) | (154,484.6) | | **Solvency II net assets** | **1,379.9** | **1,245.3** | | Solvency II VIF | 5,580.4 | 5,640.1 | | Risk margin | (1,516.4) | (1,622.9) | | **Own funds (A)** | **5,443.9** | **5,262.5** | | **Standard formula SCR (B)** | **(3,522.5)** | **3,939.1** | | **Solvency II free assets (A-B)** | **1,921.4** | **1,323.4** | | **Solvency II ratio (A/B)** | **155%** | **134%** | | | 31 December 2022 £ Million | 31 December 2021 £ Million | | --- | --- | --- | | Solvency II net assets | 1,379.9 | 1,245.3 | | Less: management solvency buffer (MSB) | (532.7) | (518.0) | | **Excess of free assets over MSB** | **847.2** | **727.3** | An overall internal capital assessment is required for insurance groups. This is known as an ORSA (Own Risk and Solvency Assessment) and is described in more detail in the ORSA section within the risk and risk management report. St. James's Place plc Annual Report and Accounts 2022 241 The regulatory capital requirements of companies within the Group, and the associated solvency of the Group, are assessed and monitored by the Finance Oversight Group, a committee of the Executive Board, with oversight by the Audit Committee on behalf of the Group Board. Ultimate responsibility for individual companies' regulatory capital lies with the relevant subsidiary boards. For the year ended 31 December 2022, we reviewed the level of our MSB and maintained the MSB for the Life businesses at £355.0 million (31 December 2021: £355.0 million). There has been no other material change in the level of capital requirements of individual companies during the year, nor in the Group's management of capital. All regulated entities exceeded the minimum solvency requirements at the reporting date and during the year. See Section 3 of the financial review for further information. ### IFRS capital composition The principal forms of capital are included in the following balances on the Consolidated Statement of Financial Position: | | 31 December 2022 £'Million | 31 December 2021 £'Million | | --- | --- | --- | | Share capital | 81.6 | 81.1 | | Share premium | 227.8 | 213.8 | | Shares in trust reserve | (4.1) | (8.5) | | Miscellaneous reserves | 2.5 | 2.5 | | Retained earnings | 952.4 | 830.3 | | **Shareholders' equity** | **1,260.2** | **1,119.2** | | Non-controlling interests | 0.2 | – | | **Total equity** | **1,260.4** | **1,119.2** | The above assets do not all qualify as regulatory capital. The required minimum regulatory capital, and analysis of the assets that qualify as regulatory capital, is outlined in section 3 of the financial review, which demonstrates that the Group has met its internal capital objectives. The Group and its individually regulated operations have complied with all externally and internally imposed capital requirements throughout the year. ## 20. Share capital, earnings per share and dividends ### Share capital | | Number of ordinary shares | Called-up share capital £'Million | | --- | --- | --- | | At 1 January 2021 | 537,343,466 | 80.6 | | – Issue of shares | 850,985 | 0.1 | | – Exercise of options | 2,336,078 | 0.4 | | **At 31 December 2021** | **540,530,529** | **81.1** | | – Issue of shares | 459,028 | 0.1 | | – Exercise of options | 3,246,200 | 0.4 | | **At 31 December 2022** | **544,235,757** | **81.6** | Ordinary shares have a par value of 15 pence per share (2021: 15 pence per share) and are fully paid. Included in the issued share capital are 2,207,186 (2021: 1,685,250) shares held in the Shares in trust reserve with a nominal value of £0.3 million (2021: £0.3 million). The shares are held by the SJP Employee Share Trust and the St. James's Place 2010 SIP Trust to satisfy certain share-based payment schemes. The Trustees of the SJP Employee Share Trust retain the right to dividends on the shares held by the Trust but have chosen to waive their entitlement to the dividends on 815,737 shares at 31 December 2022 and 285,033 shares at 31 December 2021. No dividends were waived on shares held in the St. James's Place 2010 SIP Trust in 2022 or 2021. Share capital increases are included within the 'exercise of options' line of the table above where they relate to the Group's share-based payment schemes. Other share capital increases are included within the 'issue of shares' line. The number of shares reserved for issue under options and contracts for sale of shares, including terms and conditions, is included within Note 21. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information ### 242 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 20. Share capital, earnings per share and dividends continued Earnings per share | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Earnings Profit after tax attributable to equity shareholders (for both basic and diluted EPS) 405.0 286.7 Million Million Weighted average number of shares Weighted average number of ordinary shares in issue (for basic EPS) 542.7 537.7 Adjustments for outstanding share options 5.1 8.5 Weighted average number of ordinary shares (for diluted EPS) 547.8 546.2 Pence Pence Earnings per share (EPS) Basic earnings per share 74.6 53.3 Diluted earnings per share 73.9 52.5 Dividends The following dividends have been paid by the Group: | Year ended | | Year ended | | Year ended | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 December | | 31 December | | 31 December | | 31 December | | | | 2022 | | 2021 | | 2022 | | 2021 | | Pence per | | Pence per | | | | | | | | share | | share £’Million £’Million | | | | | Withheld 2019 dividend – 11.22 – 60.3 Final dividend in respect of 2020 – 38.49 – 207.2 Interim dividend in respect of 2021 – 11.55 – 62.4 Final dividend in respect of 2021 40.41 – 218.9 – Interim dividend in respect of 2022 15.59 – 84.7 – Total dividends 56.00 61.26 303.6 329.9 In respect of 2022 the Directors have recommended a 2022 final dividend of 37.19 pence per share. This amounts to £202.4 million and will, subject to shareholder approval at the Annual General Meeting, be paid on 31 May 2023 to those shareholders on the register as at 5 May 2022 . St. James’s Place plc Annual Report and Accounts 2022 243 ## 21. Share-based payments During the year ended 31 December 2022, the Group operated a number of different equity-settled and cash-settled share-based payment arrangements, which are aggregated as follows: ### Share option schemes - Save As You Earn (SAYE) Plan – this is an equity-settled scheme that is available to all employees where individuals may contribute up to £300 per month over the three-year vesting period to purchase shares at a price not less than 80% of the market price at the date of the invitation to participate. A total of 420,798 (2021: 413,468) SAYE options were granted on 25 March 2022 (2021: 25 March 2021 and 24 September 2021). There are no other vesting conditions. - Partner Performance Share Plan – this is an equity-settled plan under which Partners are entitled to purchase shares in the future at nominal value (15 pence). The number of shares the Partners are entitled to purchase will depend on their personal business volumes in a specified 12-month period and validation over the following three years. The first award under the scheme was made on 29 July 2016, when 3,456,281 shares were granted. No further awards were granted in either 2021 or 2022 in relation to the original grants made in 2016. - Partner and Adviser Chartered Plan – this is an equity-settled scheme that was launched during 2015 as part of the Partner Performance Share Plan, whereby Partners and advisers are entitled to purchase shares in the future at nominal value (15 pence). The number of shares the Partners are entitled to purchase will depend upon achieving specific professional qualifications and a threshold new business level in a specified 12-month period and validation over the following three years. The first award under the scheme was made on 29 July 2016, when 2,019,000 shares were granted. No grants were made in 2022 (2021: nil). - Associate Partner Plan – this is an equity-settled scheme that was launched during 2017 whereby Partners and advisers are entitled to purchase a set number of shares in the future at the market price at the date of the invitation if they meet the required business volumes over the following three years. No grants were made in 2022 (2021: nil). ### Share awards - Share Incentive Plan (SIP) – this is an equity-settled scheme, available to all employees, where individuals may invest up to an annual limit of £1,800 of pre-tax salary in St. James's Place plc shares, to which the Group will add a further 10%. The vesting period is three years; however, if the shares are held for five years they may be sold free of income tax or capital gains tax. There are no other vesting conditions. A total of 6,653 (2021: 4,472) shares were granted under the SIP on 25 March 2022 (2021: 25 March 2021). - Executive Deferred Bonus Schemes – under these plans the deferred element of the annual bonus is used to purchase shares at market value in the Company. The shares are held in trust over the three-year vesting period and may be subject to further non-market-based performance conditions. The plans are predominantly equity-settled. A total of 532,147 (2021: nil) shares were granted under the Deferred Bonus Schemes on 25 March 2022 (2021: 25 March 2021). - Executive Performance Share Plan – the Remuneration Committee of the Group Board may make awards of performance shares to the Executive Directors and other senior managers. Two thirds of shares awarded to Directors are subject to an earnings growth condition of the Group and one third of shares awarded to Directors are subject to a comparative total shareholder return condition, both measured over a three-year vesting period. Further information regarding the vesting conditions of the earnings-growth-dependent and total-shareholder-return-dependent portions of the award is given in the Directors' Remuneration Report. Awards made to senior managers are typically only subject to the earnings growth condition of the Group. This is predominantly an equity-settled scheme. A total of 1,120,077 (2021: 1,277,152) shares were granted under the Executive Performance Share Plan across one grant made on 25 March 2022 (2021: three grants made on 25 March 2021, 29 April 2021 and 24 September 2021). - Restricted Share Plan – under this plan employees are awarded performance-related shares with the vesting condition being linked to Group funds under management. The plan is predominantly equity-settled. A total of 162,643 (2021: 45,853) awards were granted under the Restricted Share Plan on 25 March 2022 (2021: 24 September 2021). Share options and awards outstanding under the various share-based payment schemes set out above at 31 December 2022 amount to 12.6 million shares (2021: 13.8 million). Of these, 2.9 million (2021: 3.9 million) are under option to Partners and advisers of the St. James's Place Partnership, 8.5 million (2021: 8.5 million) are under option to Executive Directors and senior management (including 0.9 million (2021: 1.1 million) under option to Directors as disclosed in the Directors' Remuneration Report) and 1.2 million (2021: 1.4 million) are under option through the SAYE and SIP schemes. These are exercisable on a range of future dates. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 244 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 21. Share-based payments continued #### Financial assumptions underlying the calculation of fair value The fair value expense has been based on the fair value of the instruments granted, as calculated using appropriate derivative pricing models. The table below shows the weighted average assumptions and models used to calculate the grant-date fair value of each award: | Valuation model | SAYE Plan^{1} Black-Scholes | Share Incentive Plan Black-Scholes | Executive Deferred Bonus Black-Scholes | Executive Performance Share Plan^{1,2,3} Monte Carlo | Restricted Share Plan Monte-Carlo | | --- | --- | --- | --- | --- | --- | | | **Awards in 2022** | | | | | | Fair value (pence) | 404.8 | 1,447.0 | 1,447.0 | 911.6/1,447.0 | 1,300.9 | | Share price (pence) | 1,447.0 | 1,447.0 | 1,447.0 | 1,447.0 | 1,447.0 | | Exercise price (pence) | 1,111.0 | – | – | – | – | | Expected volatility (% pa)^{1} | 33 | N/A | N/A | 33 | 33 | | Expected dividends (% pa)^{2} | 3.6 | – | – | 3.6 | 3.6 | | Risk-free interest rate (% pa) | 1.43 | N/A | N/A | N/A | N/A | | Expected life (years) | 3.5 | 3 | 3 | 3 | 3 | | Volatility of competitors (% pa) | N/A | N/A | N/A | 23–80 | N/A | | Correlation with competitors (%) | N/A | N/A | N/A | 20 | N/A | | **Awards in 2021** | | | | | | | Fair value (pence) | 372.8 | | | 879.3/1,272.5 | | | | 396.1 | 1,272.5 | N/A | 1,221.3/1,578.0^{1,3} | 1,439.1 | | Share price (pence) | 1,272.5 | | | 1,272.5 | | | | 1,578.0 | 1,272.5 | N/A | 1,578.0 | 1,578.0 | | Exercise price (pence) | 940.0 | | | | | | | 1,281.0 | – | – | – | – | | Expected volatility (% pa)^{1} | 31 | | | 31 | | | | 32 | N/A | N/A | 32 | 32 | | Expected dividends (% pa)^{2} | 2.4 | | | 2.4 | | | | 3.1 | – | – | 3.1 | 3.1 | | Risk-free interest rate (% pa) | 0.11 | N/A | N/A | N/A | N/A | | Expected life (years) | 3.5 | 3 | N/A | 3 | 3 | | Volatility of competitors (% pa) | N/A | N/A | N/A | 22–67 | N/A | | | | | | 22–68 | | | Correlation with competitors (%) | N/A | N/A | N/A | 20 | N/A | 1 Expected volatility is based on an analysis of the Company's historic share price volatility over a period which is commensurate with the expected term of the options or the awards. 2 For schemes where dividends are payable on the shares during the vesting period, the dividend yield assumption in the Black-Scholes option pricing model is set at zero. 3 Two SAYE awards were made during 2021, on 25 March and 24 September, and three Executive Performance Share Plan awards were made during 2021, on 25 March, 29 April and 24 September, the assumptions for which are shown in the table above as the first and second figures (with the same assumptions for 25 March and 29 April Executive Performance Share Plan awards), respectively. There was a single award in 2022. St. James's Place plc Annual Report and Accounts 2022 ### 245 Strategic Report Governance Other Information 4 The awards made under the Executive Performance Share Plan are dependent upon earnings growth in the Company (two thirds of the award) and a total shareholder return of a comparator group of companies (one-third of the award). This results in having two fair values for each of the awards made in the table above: the first being in relation to the comparator total shareholder return, which is a market-based performance condition and so valued using a Monte Carlo simulation; and the second relating to the Company’s earnings growth, which is a non-market-based performance condition and so valued using the Black-Scholes model. 5 The awards made under the Executive Performance Share Plan for members of the Executive Board Committee are subject to a two-year holding period once the award has vested. This results in discounted fair values for the Executive Board Committee population of 820.4/1,447.0 (2021: 794.0/1,272.5) pence per share, to reflect the reduced marketability of the awards. Share option schemes | Year ended | | | Year ended | | | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 31 December | | | 31 December | | | 31 December | | | 31 December | | | | | | 2022 | | | 2022 | | | 2021 | | | 2021 | | | | | | Weighted | | | | | | Weighted | | | | Number | | | average | | | Number | | | average | | | of options | | | exercise price | | | of options | | | exercise price | | | SAYE Plan Outstanding at start of year 1,405,475 £8.18 1,400,927 £7.38 Granted 420,798 £11.11 413,468 £10.89 Forfeited (157,596) £9.90 (156,205) £8.19 Exercised (528,946) £7.46 (252,715) £8.85 Outstanding at end of year 1,139,731 £9.76 1,405,475 £8.18 Exercisable at end of year 2,233 £8.06 19,158 £9.06 Partner Performance Share Plan Financial Statements Outstanding at start of year 440,702 £0.15 896,052 £0.15 Granted – – – – Forfeited – – (7,948) £0.15 Exercised (440,702) £0.15 (447,402) £0.15 Outstanding at end of year – £0.15 440,702 £0.15 Exercisable at end of year – £0.15 440,702 £0.15 Partner and Adviser Chartered Plan Outstanding at start of year 176,378 £0.15 314,944 £0.15 Granted – – – – Forfeited (2,000) £0.15 (500) £0.15 Exercised (174,378) £0.15 (138,066) £0.15 Outstanding at end of year – £0.15 176,378 £0.15 Exercisable at end of year – £0.15 176,378 £0.15 Associate Partner Plan Outstanding at start of year 3,274,033 £10.91 5,206,250 £10.95 Granted – – – – Forfeited (33,750) £10.91 (539,525) £11.34 Exercised (331,100) £10.85 (1,392,692) £10.93 Outstanding at end of year 2,909,183 £10.91 3,274,033 £10.91 Exercisable at end of year 2,909,183 £10.91 3,274,033 £10.91 The average share price during the year was 1,248.7 pence (2021: 1,437.5 pence). The SAYE Plan options outstanding at 31 December 2022 had exercise prices of 771 pence (7,627 options), 813 pence (422,714 options), 940 pence (239,439 options), 1,281 pence (90,999 options) and 1,111 pence (378,952 options) and a weighted average remaining contractual life of 1.3 years. The options outstanding under the Partner Performance Share Plan and the Partner and Adviser Chartered Plan at 31 December 2022 were all exercisable with an exercise price of 15 pence, hence their weighted average remaining contractual life was nil. The options outstanding under the Associate Partner Plan at 31 December 2022 had an exercise price of 1,083 pence (2,460,958 options) and 1,135 pence (448,225 options) and a weighted average remaining contractual life of nil years. www.sjp.co.uk ### 246 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 21. Share-based payments continued Share awards All share awards under the below schemes have exercise prices of nil. | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | | 31 December | | | 31 December | | | | | | 2022 | | | 2021 | | | Number | | | Number | | | | of shares | | | of shares | | Share Incentive Plan Outstanding at start of year 38,039 46,963 Granted 6,653 4,472 Forfeited – – Exercised (5,443) (13,396) Outstanding at end of year 39,249 38,039 Exercisable at end of year 11,937 11,061 Executive Deferred Bonus Scheme Outstanding at start of year 1,026,985 1,801,549 Granted 532,147 – Forfeited (12,724) (10,869) Exercised (561,137) (763,695) Outstanding at end of year 985,271 1,026,985 Exercisable at end of year 646 – Executive Performance Share Plan Outstanding at start of year 7,424,110 7,964,846 Granted 1,120,077 1,277,152 Forfeited (441,929) (1,402,339) Exercised (729,088) (415,549) Outstanding at end of year 7,373,170 7,424,110 Exercisable at end of year 1,840,660 227,687 Restricted Share Plan Outstanding at start of year 45,853 – Granted 162,643 45,853 Forfeited (11,205) – Exercised – – Outstanding at end of year 197,291 45,853 Exercisable at end of year – – Early exercise assumptions An allowance has been made for the impact of early exercise once options have vested in the SAYE Plan, where all option holders are assumed to exercise half-way through the six-month exercise window. Allowance for performance conditions The Executive Performance Share Plan includes a market-based performance condition based on the Company’s total shareholder return relative to an index of comparator companies. The impact of this performance condition has been modelled using Monte Carlo simulation techniques, which involve running many thousands of simulations of future share price movements for both the Company and the comparator index. For the purpose of these simulations it is assumed that the share price of the Company and the comparator index are 20% (2021: 20%) correlated and that the comparator index has volatilities ranging between 23% p.a. and 80% p.a. (2021: 22% p.a. and 68% p.a.). The performance condition is based on the Company’s performance relative to the comparator index over a three-year period commencing on 1 January each year. The fair-value calculations for the awards that were made in 2022 therefore include an allowance for the actual performance of the Company’s share price relative to the index over the period between 1 January 2022 and the various award dates. St. James’s Place plc Annual Report and Accounts 2022 ### 247 Strategic Report Governance Other Information Charge to the Consolidated Statement of Comprehensive Income The table below sets out the charge to the Consolidated Statement of Comprehensive Income in respect of the share-based payment awards: | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Equity-settled share-based payment expense 20.5 20.4 Cash-settled share-based payment expense 0.5 2.5 Total share-based payment expense 21.0 22.9 Liabilities recognised in the Statement of Financial Position The liabilities recognised in the Statement of Financial Position in respect of the cash-settled share-based payment awards, and National Insurance obligations arising from share-based payment awards, are as follows. These liabilities are included within other payables on the face of the Statement of Financial Position. None of the liability in respect of cash-settled share-based payment awards at 31 December 2022 or 31 December 2021 is in respect of vested cash-settled share-based payments. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Financial Statements Liability for cash-settled share-based payments 2.5 2.9 Liability for employer National Insurance contributions on cash-settled and equity-settled share-based payments 7.8 9.2 ### 22. Interests in unconsolidated entities Unconsolidated structured entities The Group operates investment vehicles, such as unit trusts. Clients are able to invest in these directly, but also indirectly through products offered by SJPUK and SJPI. As a result, the Group’s insurance companies can be significant investors in the unit trusts. Note 2 sets out the judgements inherent in determining when the Group controls, and therefore consolidates, the relevant investment vehicles. The majority of the risk from a change in the value of the Group’s investment in unconsolidated unit trusts is matched by a change in unit holder liabilities. The maximum exposure to loss, prior to considering unit holder liabilities, is equal to the carrying value of the investment. This is recognised within investments in Collective Investment Schemes. The following unit trust is not consolidated within the Group Financial Statements; however, the Group does act as the fund manager of this unit trust. | Percentage of | | Net asset value | | --- | --- | --- | | ownership interest | | as at 31 December | | 2022 2021 2022 2021 | Nature of relationship Measurement method | | % % £’Million £’Million St. James’s Place Property Unit Trust 0.98 0.36 Manager Fair value through 1,021.4 1,174.9 of unit trust profit or loss As at 31 December 2022 the value of the Group’s interests in St. James’s Place Property Unit Trust was £10.0 million (2021: £4.2 million). The 31 December 2021 ownership interest has been restated from 0.00% to 0.36% to reflect an interest held which had been omitted from the disclosure. www.sjp.co.uk ### 248 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 23. Interests in other entities Principal subsidiaries 1 Investment Holding Companies St. James’s Place Wealth Management Group Limited 1 St. James’s Place DFM Holdings Limited Life Assurance St. James’s Place UK plc 2 St. James’s Place International plc (incorporated in Ireland) Unit Trust Management St. James’s Place Unit Trust Group Limited Unit Trust Administration and ISA Management St. James’s Place Investment Administration Limited Distribution St. James’s Place Wealth Management plc 3 Management Services St. James’s Place Management Services Limited Treasury Company St. James’s Place Partnership Services Limited Adviser Acquisitions St. James’s Place Acquisition Services Limited Asia Distribution St. James’s Place International Distribution Limited Discretionary Fund Management Rowan Dartington & Co. Limited 1 Directly held by St. James’s Place plc. 2 The Company also operates a branch in Singapore. 3 The Company also operates a branch in the Republic of Ireland. Ongoing solvency requirements within the life assurance, unit trust and financial services companies of the Group restrict their ability to distribute all their distributable reserves. Included below is a full list of the entities within the St. James’s Place plc Group at 31 December 2022: | | | Principal | Audit | | --- | --- | --- | --- | | Entity Company number Registered office Country of incorporation | | activity | exemption | | Baxter Holding Company | 09805128 * England and Wales Financial Advice Yes | | | Limited Baxter & Lindley Financial 02307706 * England and Wales Financial Advice Yes Services Limited | Cabot Portfolio Nominees | 03636010 Temple Point, Redcliffe | | England and Wales Nominee Company Yes | | --- | --- | --- | --- | | Limited | | Way, Bristol BS1 6NL | | | Capstone Financial (HK) Limited 1256431 8F Kailey Tower, 16 | | | Hong Kong Financial Advice No | Stanley Street, Central, Hong Kong CGA Financial & Investment 02666180 * England and Wales Financial Advice Yes Services Limited Dartington Portfolio Nominees 01489542 Temple Point, Redcliffe England and Wales Nominee Company Yes Limited Way, Bristol23. BS1 6NL Future Proof Limited 07608319 * England and Wales Financial Advice Yes JEWM Ltd (formerly Janine 09229694 * England and Wales Financial Advice Yes Edwards Wealth Management Limited) Lewington Wealth Management 04290504 * England and Wales Financial Advice Yes Limited Linden House Financial Services 02990295 * England and Wales Financial Advice Yes Limited M.H.S. (Holdings) Limited 00559995 * England and Wales Non-trading Yes Perennial Financial 04609753 * England and Wales Financial Advice Yes Management Limited St. James’s Place plc Annual Report and Accounts 2022 ### 249 Strategic Report Governance Other Information | | | Principal | Audit | | --- | --- | --- | --- | | Entity Company number Registered office Country of incorporation | | activity | exemption | | Policy Services Limited SC230167 Oracle Campus, | Scotland Financial Advice No | | | Blackness Road, Linlithgow, West Lothian EH49 7BF, United Kingdom Reflect Financial Limited 04373946 * England and Wales Financial Advice Yes Richard Barnes Wealth 06320112 * England and Wales Financial Advice Yes Management Ltd Rowan Dartington & Co. Limited 02752304 * England and Wales Stockbroker and No Investment Manager Rowan Dartington Holdings 07470226 * England and Wales Holding Company Yes Limited SJP Legacy Holdings Ltd SC492906 Oracle Campus, Scotland Holding Company Yes Blackness Road, Linlithgow, West Lothian EH49 7BF, United Kingdom SJP Partner Loans No. 1 Limited 11390901 10th Floor, 5 Churchill England and Wales Securitisation No Place, London E14 5HU, United Kingdom St. James’s Place (Hong Kong) 275275 1st Floor, Henley Building, Hong Kong Overseas Distribution No Limited 5 Queen’s Road Central, Financial Statements Hong Kong St. James’s Place (PCP) Limited 02706684 * England and Wales Transaction and Servicing Yes of SJP Income Streams St. James’s Place (Shanghai) 310000400640051 Unit 101-102, Building 9, China Overseas Distribution No Limited Yuejie Shankangli, No. (HUANGPU) 358, Kangding Road, Jing’an District, Shanghai, China St. James’s Place (Singapore) 200406398R 1 Raffles Place, #15-61 Singapore Financial Advice No Private Limited One Raffles Place, Singapore 048616 St. James’s Place Acquisition 07730835 * England and Wales Adviser Acquisitions Yes Services Limited St. James’s Place Corporate 09131866 * England and Wales Corporate Secretary Yes Secretary Limited St. James’s Place DFM Holdings 09687687 * England and Wales Holding Company Yes Limited St. James’s Place International 2207694 1st Floor, Henley Building, Hong Kong Life Assurance No (Hong Kong) Limited 5 Queen’s Road Central, Hong Kong St. James’s Place International 08798683 * England and Wales Holding Company Yes Distribution Limited | St. James’s Place International | 185345 Fleming Court, Flemings | | Ireland Life Assurance No | | | | --- | --- | --- | --- | --- | --- | | plc | | Place, Dublin 4, Ireland | | | | | St. James’s Place Investment | 08764231 * England and Wales Unit Trust Administration | | | | No | | Administration Limited | | | | and ISA Manager | | | St. James’s Place Management | 02661044 * England and Wales Management Services No | | | | | Services Limited St. James’s Place Nominees 08764214 * England and Wales Nominee Company Yes Limited St. James’s Place Partnership 08201211 * England and Wales Treasury Company No Services Limited www.sjp.co.uk ### 250 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 23. Interests in other entities continued Principal Audit Entity Company number Registered office Country of incorporation activity exemption St. James’s Place UK plc 02628062 * England and Wales Life Assurance No St. James’s Place Unit Trust 00947644 * England and Wales Unit Trust Management No Group Limited | St. James’s Place Wealth | 1511517 1st Floor, Henley Building, | | Hong Kong Overseas Distribution No | | --- | --- | --- | --- | | Management (Shanghai) | | 5 Queen’s Road Central, | | | Limited | | Hong Kong | | | St. James’s Place Wealth | 02627518 * England and Wales Holding Company No | | | Management Group Limited | St. James’s Place Wealth | 201323453N 1 Raffles Place, #15-61 | | Singapore Holding Company No | | --- | --- | --- | --- | | Management International Pte. | | One Raffles Place, | | | Ltd | | Singapore 048616 | | | St. James’s Place Wealth | 04113955 * England and Wales UK Distribution No | | | Management plc Stafford House Investments 03866935 * England and Wales Financial Advice Yes Limited Technical Connection Limited 03178474 * England and Wales Tax and Advisory ServicesYes Thompson Private Clients 11258200 * England and Wales Financial Advice Yes Limited Tivoli Private Clients Limited 14320641 * England and Wales Non-trading Yes Tring Financial Management 05487108 * England and Wales Policy Administration Yes Limited Virtue Money Limited SC346827 Oracle Campus, Scotland Holding Company Yes Blackness Road, Linlithgow, West Lothian EH49 7BF, United Kingdom * Indicates that the registered office is St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP. The Group acquired JEWM Ltd (09229694), formerly Janine Edwards Wealth Management Limited, on 18 May 2022 and Thompson Private Clients Limited (11258200) on 17 June 2022. The Group incorporated Tivoli Private Clients Limited (14320641) on 26 August 2022. Where indicated in the table, subsidiaries of St. James’s Place plc have taken advantage, or are expected to take advantage, of the exemption from statutory audit granted by section 479A of the Companies Act 2006. In accordance with section 479C, St. James’s Place plc has guaranteed all the outstanding liabilities as at 31 December 2022 of these companies. All Group companies have an accounting reference date of 31 December. Unless otherwise stated, the tax residency of each subsidiary is the same as the country of incorporation. 100% of the equity share capital is held for the subsidiaries listed in the table above, with the exception of:   SJP Partner Loans No. 1 Limited (11390901), where 100% of the equity share capital is held by a third-party entity outside of the Group. Note that all assets and liabilities of SJP Partner Loans No.1 Limited are restricted and ring-fenced from the other assets and liabilities of the Group; and   Lewington Wealth Management Limited (04290504) where 25% of the equity share capital is held by a third-party entity outside of the Group. St. James’s Place plc Annual Report and Accounts 2022 ### 251 Strategic Report Governance Other Information Following an assessment of control in accordance with IFRS 10 it was determined that SJP Partner Loans No. 1 Limited and Lewington Wealth Management are controlled by the Group and thus consolidated. In addition, the Group Financial Statements consolidate the following unit trusts, all of which are registered in England and Wales. The registered address of the unit trust manager, St. James’s Place Unit Trust Group Limited, is St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire GL7 1FP, United Kingdom. St. James’s Place Adventurous Growth Unit Trust St. James’s Place Global Unit Trust St. James’s Place Adventurous International Growth Unit Trust St. James’s Place Global Value Unit Trust St. James’s Place Asia Pacific Unit Trust St. James’s Place Greater European Progressive Unit Trust St. James’s Place Balance InRetirement Unit Trust St. James’s Place Growth InRetirement Unit Trust St. James’s Place Balanced Growth Unit Trust St. James’s Place Index Linked Gilts Unit Trust St. James’s Place Balanced International Growth Unit Trust St. James’s Place International Equity Unit Trust St. James’s Place Balanced Managed Unit Trust St. James’s Place Investment Grade Corporate Bond Unit Trust St. James’s Place Conservative Growth Unit Trust St. James’s Place Japan Unit Trust St. James’s Place Conservative International Growth St. James’s Place Managed Growth Unit Trust Unit Trust St. James’s Place Money Market Unit Trust St. James’s Place Continental European Unit Trust St. James’s Place North American Unit Trust St. James’s Place Corporate Bond Unit Trust St. James’s Place Polaris 1 Unit Trust St. James’s Place Diversified Assets (FAIF) Unit Trust St. James’s Place Polaris 2 Unit Trust St. James’s Place Diversified Bond Unit Trust St. James’s Place Polaris 3 Unit Trust Financial Statements St. James’s Place Emerging Markets Equity Unit Trust St. James’s Place Polaris 4 Unit Trust St. James’s Place Gilts Unit Trust St. James’s Place Prudence InRetirement Unit Trust St. James’s Place Global Absolute Return Unit Trust St. James’s Place Strategic Income Unit Trust St. James’s Place Global Emerging Markets Unit Trust St. James’s Place Strategic Managed Unit Trust St. James’s Place Global Equity Unit Trust St. James’s Place Sustainable & Responsible Equity Unit Trust St. James’s Place Global Growth Unit Trust St. James’s Place UK Equity Income Unit Trust St. James’s Place Global High Yield Bond Unit Trust St. James’s Place UK Unit Trust St. James’s Place Global Quality Unit Trust St. James’s Place Worldwide Income Unit Trust St. James’s Place Global Smaller Companies Unit Trust Individually immaterial associates The Group also has interests in individually immaterial associates that are accounted for using the equity method. | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Aggregate carrying value of individually immaterial associates 1.4 1.4 Aggregate amounts of the Group’s share of total comprehensive income – – www.sjp.co.uk 252 Financial Statements ## Notes to the Consolidated Financial Statements under International Financial Reporting Standards continued ### 24. Business combinations During the year the Group acquired the following subsidiaries in line with the Group's strategic objective of growing and supporting the Partnership: | Business acquired | Principal activity | % shareholding | Date of acquisition | | --- | --- | --- | --- | | JEWM Ltd (formerly Janine Edwards Wealth Management Limited) | Provision of financial services | 60% | 18 May 2022 | | Thompson Private Clients Limited | Provision of financial services | 100% | 17 June 2022 | Thompson Private Clients Limited owns 40% of the share capital of JEWM Ltd. From 17 June 2022, following its acquisition, the Group now holds 100% of the share capital of JEWM Ltd. Acquisition-related costs of £0.1 million have been charged to administration expenses in the Consolidated Statement of Comprehensive Income for the year ended 31 December 2022. #### JEWM Ltd The acquisition contributed £nil to fee and commission income and a £3.4 million profit before income tax for the period between the acquisition date and 31 December 2022. Had the acquisition been consolidated from 1 January 2022, the acquisition would have contributed £nil to fee and commission income and £5.5 million profit before income tax. The net assets, fair value adjustments and consideration for this acquisition are summarised below (all values shown as at their acquisition date): | | Book value £'Million | Fair value adjustment £'Million | Total £'Million | | --- | --- | --- | --- | | Financial assets | 4.3 | 14.0 | 18.3 | | Cash and cash equivalents | 2.0 | – | 2.0 | | Financial liabilities | (1.0) | (3.8) | (4.8) | | **Total net assets acquired** | **5.3** | **10.2** | **15.5** | | **Consideration** | | | | | Cash consideration on completion | | | 11.4 | | Shares issued on completion^{1} | | | 5.7 | | Deferred contingent consideration | | | 3.2 | | **Total consideration** | | | **20.3** | | **Goodwill** | | | **4.8** | $^{1}$ Shares issued refer to St. James's Place plc ordinary shares. Goodwill comprises the future value generated from new business opportunities. It is expected that the deferred contingent consideration will be paid in full on 1 December 2023 with no changes to the amount initially recognised. St. James's Place plc Annual Report and Accounts 2022 253 ### Thompson Private Clients Limited The acquisition contributed £nil to fee and commission income and a £nil profit before income tax for the period between the acquisition date and 31 December 2022. Had the acquisition been consolidated from 1 January 2022, the acquisition would have contributed £nil to fee and commission income and £0.3 million profit before income tax. The net assets, fair value adjustments and consideration for this acquisition are summarised below (all values shown as at their acquisition date). | | Book value £'Million | Fair value adjustment £'Million | Total £'Million | | --- | --- | --- | --- | | Financial assets | 3.4 | 0.6 | 4.0 | | Cash and cash equivalents | – | – | – | | Financial liabilities | (2.6) | (0.9) | (3.5) | | **Total net assets acquired** | **0.8** | **(0.3)** | **0.5** | | **Consideration** | | | | | Cash consideration on completion | | | 0.5 | | Deferred contingent consideration | | | 0.7 | | **Total consideration** | | | **1.2** | | **Goodwill** | | | **0.7** | It is expected that the deferred contingent consideration will be paid in full on 16 December 2023 with no changes to the amount initially recognised. ## 25. Related-party transactions ### Transactions with St. James's Place unit trusts In respect of the non-consolidated St. James's Place managed unit trusts that are held as investments in the St. James's Place life and pension funds, there were losses recognised of £0.7 million (2021: £11.0 million) and the total value of transactions with those non-consolidated unit trusts was £6.5 million (2021: £14.1 million). Net management fees receivable from these unit trusts amounted to £nil (2021: £1.8 million). The value of the investment into the non-consolidated unit trusts at 31 December 2022 was £10.0 million (2021: £4.2 million). ### Transactions with associates and non-wholly owned subsidiaries Outstanding at the year-end was a business loan of £1.2 million (2021: £0.9 million) to an associate of the Group. During the year £0.3 million (2021: £nil) was advanced and £nil (2021: £nil) was repaid. Business loans to associates are interest-bearing (linked to the Bank of England base rate plus a margin) and repayable in line with the terms of the loan contract. Interest of £nil was received during 2022 (2021: £nil). In addition, commission, advice fees and other payments of £4.3 million were paid, under normal commercial terms, to non-wholly owned Group companies. The outstanding amount receivable at 31 December 2022 was £0.1 million. As at 31 December 2021 there were no entities for which disclosure was required. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 254 Financial Statements ## Notes to the Consolidated Financial Statements under ## International Financial Reporting Standards continued ### 25. Related-party transactions continued Transactions with key management personnel Key management personnel have been defined as the Board of Directors and members of the Executive Board. The remuneration paid to the Board of Directors of St. James’s Place plc is set out in the Directors’ Remuneration Report, in addition to the disclosure below. The Directors’ Remuneration Report also sets out transactions with the Directors under the Group’s share-based payment schemes, together with details of the Directors’ interests in the share capital of the Company. Compensation of key management personnel is as follows: | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Short-term employee benefits 6.3 6.1 Post-employment benefits 0.5 0.5 Share-based payment 6.5 5.7 Total 13.3 12.3 The total value of Group FUM held by related parties of the Group as at 31 December 2022 was £41.1 million (2021: £35.3 million). The total value of St. James’s Place plc dividends paid to related parties of the Group during the year was £0.8 million (2021: £0.9 million). Total consideration of £20.3 million (2021: £nil) was agreed under normal commercial terms to key management personnel and their connected parties for the acquisition of JEWM Ltd (formerly Janine Edwards Wealth Management Limited). As at 31 December 2022 there was deferred contingent consideration outstanding of £3.2 million (2021: £nil). Commission, advice fees and other payments of £3.2 million (2021: £6.2 million) were paid, under normal commercial terms, to St. James’s Place advisers who were related parties by virtue of being connected persons with key management personnel. The outstanding amount payable at 31 December 2022 was £0.1 million (2021: £0.8 million). Outstanding at the year-end were Partner loans of £nil (2021: £3.3 million) due from St. James’s Place advisers who were related parties by virtue of being connected persons with key management personnel. The Group either advanced, or guaranteed, these loans. During the year £0.5 million (2021: £nil) was advanced and £3.0 million (2021: £0.8 million) was repaid by advisers who were related parties. The remaining balance was derecognised as a related party due to changes in key management personnel during the year. Business loans to Partners are interest-bearing (linked to the Bank of England base rate plus a margin), repayable in line with the terms of the loan contract and secured against the future renewal income streams of the respective Partner. Interest of £0.1 million was received during 2022 (2021: £0.1 million). At the start of the year, related parties of key management personnel held nil (2021: 28,517) shares and options under various St. James’s Place plc share option schemes. During the year nil (2021: nil) shares and options were granted, nil (2021: nil) options lapsed and nil (2021: 28,517) options were exercised. St. James’s Place plc Annual Report and Accounts 2022 ### 255 ## Parent Company Financial ## Statements under Financial ## Reporting Standard 101 Parent Company Statement Financial Statements of Financial Position 256 Parent Company Statement of Changes in Equity 257 Notes to the Parent Company Financial Statements 258 Other InformationStrategic Report Governance www.sjp.co.uk ### 256 Financial Statements ## Parent Company Statement of Financial Position Registered number: 03183415 | | | | As at | | As at | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Investment in subsidiaries 2 1,378.8 1,212.8 Current assets Amounts owed by Group undertakings 6 283.9 281.1 Cash and cash equivalents 0.1 0.1 Current liabilities Corporation tax liabilities (1.7) (2.2) Other payables (0.1) (0.1) Net current assets 282.2 278.9 Net assets 1,661.0 1,491.7 Equity Share capital 3 81.6 81.1 Share premium 227.8 213.8 Share option reserve 274.1 253.6 Miscellaneous reserves 0.1 0.1 Retained earnings 1,077.4 943.1 Total shareholders’ funds 1,661.0 1,491.7 In publishing the Parent Company Financial Statements, the Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form part of these Parent Company Financial Statements. The Company is not required to present a Statement of Comprehensive Income. The Company’s profit after tax for the financial year was £437.9 million (2021: £318.3 million) which can be seen in the Statement of Changes in Equity. The Parent Company Financial Statements were approved by the Board of Directors on 27 February 2023 and signed on its behalf by: Andrew Croft, Chief Executive Craig Gentle, Chief Financial Officer The Notes and information on pages 258 to 261 form part of these Parent Company Financial Statements. St. James’s Place plc Annual Report and Accounts 2022 257 ## Parent Company Statement of Changes in Equity | | Note | Share capital £'Million | Share premium £'Million | Share option reserve £'Million | Miscellaneous reserves £'Million | Retained earnings £'Million | Total shareholders' funds £'Million | | --- | --- | --- | --- | --- | --- | --- | --- | | At 1 January 2021 | | 80.6 | 185.3 | 233.2 | 0.1 | 954.7 | 1453.9 | | Profit and total comprehensive income for the year | | – | – | – | – | 318.3 | 318.3 | | Dividends | 5 | – | – | – | – | (329.9) | (329.9) | | Issue of share capital | | 0.1 | 10.2 | – | – | – | 10.3 | | Exercise of options | 3 | 0.4 | 18.3 | – | – | – | 18.7 | | Cost of share options expensed in subsidiaries | | – | – | 20.4 | – | – | 20.4 | | **At 31 December 2021** | | **81.1** | **213.8** | **253.6** | **0.1** | **943.1** | **1,491.7** | | Profit and total comprehensive income for the year | | – | – | – | – | 437.9 | 437.9 | | Dividends | 5 | – | – | – | – | (303.6) | (303.6) | | Issue of share capital | | 0.1 | 5.6 | – | – | – | 5.7 | | Exercise of options | 3 | 0.4 | 8.4 | – | – | – | 8.8 | | Cost of share options expensed in subsidiaries | | – | – | 20.5 | – | – | 20.5 | | **At 31 December 2022** | | **81.6** | **227.8** | **274.1** | **0.1** | **1,077.4** | **1,661.0** | The Notes and information on pages 258 to 261 form part of these Parent Company Financial Statements. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk 258 Financial Statements # Notes to the Parent Company Financial Statements ## 1. Accounting policies ### Basis of preparation St. James's Place plc (the Company) is a public company limited by shares which is incorporated and registered in England and Wales, domiciled in the United Kingdom and whose shares are publicly traded. The Company offers a range of insurance, investment and other wealth management services through its subsidiaries, which are incorporated in the UK, Ireland and Asia. The Financial Statements have been prepared under the historical cost convention, on a going concern basis and in accordance with Financial Reporting Standard 101 (FRS 101) Reduced Disclosure Framework and the Companies Act 2006 as applicable to companies using FRS 101. The preparation of these Financial Statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies. No significant accounting judgements have been made. ### Adoption of new and amended accounting standards There were no new or amended accounting standards adopted as of 1 January 2022. ### FRS 101 – Reduced disclosure exemptions The Company has taken advantage of the following disclosure exemptions under FRS 101: - the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment; - the requirements of IFRS 7 Financial Instruments: Disclosures; - the requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement; - the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of paragraph 79(a)(iv) of IAS 1; - the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements; - the requirements of IAS 7 Statement of Cash Flows; - the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; - the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures; - the requirements in IAS 24 Related Party Disclosures to disclose related-party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; and - the requirements of paragraphs 130(f)(i), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of Assets, provided that equivalent disclosures are included in the Consolidated Financial Statements of the group in which the entity is consolidated. ### Going concern The Company is a non-trading investment holding company which has positive net assets. Going concern has been evaluated by the Directors of the Company. As part of this the Directors have reviewed and take comfort from the Group's assessment of going concern as set out in Note 1 to the Consolidated Financial Statements. The Board believes the Company will continue to be in business, with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations for a period of at least 12 months from the date of approval of the Company Financial Statements. As a result, the Company continues to adopt the going concern basis in preparing these Financial Statements. ### Significant accounting policies The following principal accounting policies have been applied consistently to all the years presented. #### (a) Investment return Investment return comprises dividends from subsidiaries. Interim dividends are accounted for when received. Final dividends are accounted for when the dividend has been declared and approved by the subsidiary. #### (b) Taxation Taxation is based on profits and income for the year as determined in accordance with the relevant tax legislation, together with adjustments to provisions for prior years. St. James's Place plc Annual Report and Accounts 2022 259 # **(c) Investment in subsidiaries** Investments in subsidiaries are carried at cost stated after any impairment losses, plus the cost of equity-settled share awards granted by the Company of its own shares. # **(d) Receivables** Receivables are initially recognised at fair value and subsequently held at amortised cost less impairment losses. Financial assets held at amortised cost are impaired using an expected credit loss model. Expected credit losses are based on the historic levels of loss experienced for the relevant financial assets, with due consideration given to forward-looking information. The most significant category of financial assets held at amortised cost for the Company is amounts owed by Group undertakings. The significant increase in credit risk which triggers the move from performing to underperforming for these assets is when they are more than 30 days past due, in line with the presumption set out in IFRS 9 Financial Instruments. # **(e) Amounts owed by Group undertakings** Amounts owed by Group undertakings initially are recognised at fair value and subsequently held at amortised cost, as the business model for these assets is held to collect contractual cash flows, which consist solely of payments of principal and interest. # **2. Investment in subsidiaries** | | Cost £'Million | Share awards £'Million | Impairment provision £'Million | Net book value £'Million | | --- | --- | --- | --- | --- | | At 1 January 2021 | 353.0 | 233.2 | (181.8) | 404.4 | | Share awards granted | – | 20.4 | – | 20.4 | | Share capital injection | 8.0 | – | – | 8.0 | | Capital contribution | 780.0 | – | – | 780.0 | | **At 31 December 2021** | **1,141.0** | **253.6** | **(181.8)** | **1,212.8** | | Share awards granted | – | 20.5 | – | 20.5 | | Share capital injection | 9.0 | – | – | 9.0 | | Capital contribution | 136.5 | – | – | 136.5 | | **At 31 December 2022** | **1,286.5** | **274.1** | **(181.8)** | **1,378.8** | The investment in subsidiaries' net book value is broken down as follows: | | 31 December 2022 £'Million | 31 December 2021 £'Million | | --- | --- | --- | | St. James's Place Wealth Management Group Limited | 1,004.1 | 867.6 | | St. James's Place DFM Holdings Limited | 100.6 | 91.6 | | **Directly held investments** | **1,104.7** | **959.2** | | St. James's Place Management Services Limited | 205.9 | 186.7 | | St. James's Place Wealth Management plc | 62.1 | 62.2 | | Rowan Dartington & Co. Limited | 5.0 | 4.3 | | St. James's Place International plc | 0.8 | 0.2 | | Stafford House Investments Limited | 0.2 | 0.2 | | Technical Connection Limited | 0.1 | – | | **Investments held due to share awards granted** | **274.1** | **253.6** | | **Total** | **1,378.8** | **1,212.8** | During the year the Company made a capital contribution of £136.5 million (2021: £780.0 million) to St. James's Place Wealth Management Group Limited. The carrying value is reviewed at least annually for impairment, or when circumstances or events indicate there may be uncertainty over its value. The investments are supported by the value in use of the subsidiaries. The key assumptions used are the value of in-force business together with a discount rate of 7.0% (2021: 3.4%). It is considered that any reasonably possible levels of change in the key assumptions would not result in an impairment. www.sjp.co.uk Strategic Report Governance Financial Statements Other Information ### 260 Financial Statements ## Notes to the Parent Company Financial Statements continued ### 3. Share capital Number of Called-up ordinary shares share capital £’Million At 1 January 2021 537,343,466 80.6 – Issue of shares 850,985 0.1 – Exercise of options 2,336,078 0.4 At 31 December 2021 540,530,529 81.1 – Issue of shares 459,028 0.1 – Exercise of options 3,246,200 0.4 At 31 December 2022 544,235,757 81.6 Ordinary shares have a par value of 15 pence per share (2021: 15 pence per share) and are fully paid. The Company received consideration of £8.8 million (2021: £18.7 million) for the shares issued during the year, including those issued to satisfy the exercise of options. ### 4. Auditors’ remuneration The total audit fee in respect of the Group is set out in Note 5 to the Consolidated Financial Statements. The audit fee charged to the Company for the year ended 31 December 2022 is £30,487 (2021: £25,512), which is borne by another entity within the Group. ### 5. Dividends The following dividends have been paid by the Company: | Year ended | | Year ended | | Year ended | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 December | | 31 December | | 31 December | | 31 December | | | | 2022 | | 2021 | | 2022 | | 2021 | | Pence per | | Pence per | | | | | | | | share | | share £’Million £’Million | | | | | Withheld 2019 dividend – 11.22 – 60.3 Final dividend in respect of 2020 – 38.49 – 207.2 Interim dividend in respect of 2021 – 11.55 – 62.4 Final dividend in respect of 2021 40.41 – 218.9 – Interim dividend in respect of 2022 15.59 – 84.7 – Total dividends 56.00 61.26 303.6 329.9 In respect of 2022 the Directors have recommended a 2022 final dividend of 37.19 pence per share. This amounts to £202.4 million and will, subject to shareholder approval at the Annual General Meeting, be paid on 31 May 2023 to those shareholders on the register as at 5 May 2023. ### 6. Related-party transactions and balances At the year-end the following related party balances existed, in addition to the investments in subsidiaries which are set out in Note 2 above. 31 December 31 December 2022 2021 £’Million £’Million Amounts owed by Group undertakings St. James’s Place Partnership Services Limited 283.9 281.1 Total 283.9 281.1 The amounts owed by Group undertakings are loans granted by the Company which are unsecured and repayable on demand. The loans incur interest at an agreed rate above the Bank of England’s base rate, as stated in the loan agreements. Amounts owed by Group undertakings continue to be classified as performing; see accounting policy (d). St. James’s Place plc Annual Report and Accounts 2022 261 During the year, the Company received £431.0 million (2021: £309.0 million) of dividends from subsidiary undertakings. The total value of St. James's Place FUM held by related parties of the Company as at 31 December 2022 was £411 million (2021: £35.4 million). The total value of dividends paid to related parties of the Company during the year was £0.8 million (2021: £0.9 million). The following wholly-owned subsidiaries of St. James's Place plc have taken advantage of the exemption from statutory audit granted by section 479A of the Companies Act 2006. In accordance with section 479C, St. James's Place plc has therefore guaranteed all the outstanding liabilities as at 31 December 2022 of: | Baxter & Lindley Financial Services Limited | 02307706 | | --- | --- | | Baxter Holding Company Limited | 09805128 | | Cabot Portfolio Nominees Limited | 03636010 | | CGA Financial & Investment Services Limited | 02666180 | | Dartington Portfolio Nominees Limited | 01489542 | | Future Proof Limited | 07606319 | | JEWM Ltd | 09229694 | | Lewington Wealth Management Limited | 04290504 | | Linden House Financial Services Limited | 02990295 | | M.H.S. (Holdings) Limited | 00559995 | | Perennial Financial Management Limited | 04609753 | | Reflect Financial Limited | 04373946 | | Richard Barnes Wealth Management Limited | 06320112 | | Rowan Dartington Holdings Limited | 07470226 | | SJP Legacy Holdings Ltd | SC492906 | | St. James's Place (PCP) Limited | 02706684 | | St. James's Place Acquisition Services Limited | 07730835 | | St. James's Place Corporate Secretary Limited | 09131866 | | St. James's Place DFM Holdings Limited | 09687687 | | St. James's Place International Distribution Limited | 08798683 | | St. James's Place Nominees Limited | 08764214 | | Stafford House Investments Limited | 03866935 | | Technical Connection Limited | 03178474 | | Thompson Private Clients Limited | 11258200 | | Tring Financial Management Limited | 05487108 | | Virtue Money Limited | SC346827 | ## 7. Directors' emoluments The Directors' responsibilities relate primarily to the trading companies of the Group and accordingly their costs are charged to those companies and none are met by the Parent Company. Disclosure of the Directors' emoluments is made within the Directors' Remuneration Report. ## 8. Company information In the opinion of the Directors there is not considered to be any ultimate controlling party. Copies of the Consolidated Financial Statements of St. James's Place plc may be obtained from the Company Secretary, St. James's Place plc, St. James's Place House, 1 Tettbury Road, Cirencester, Gloucestershire GL7 1PP, United Kingdom. Strategic Report Governance Financial Statements Other Information www.sjp.co.uk ### 262 ## Supplementary Information: ## Consolidated Financial Statements ## on a Cash result basis (unaudited) Consolidated Statement of Comprehensive Income on a Cash result basis (unaudited) 263 Consolidated Statement of Changes in Equity on a Cash result basis (unaudited) 264 Consolidated Statement of Financial Position on a Cash result basis (unaudited) 265 Notes to the Consolidated Financial Statements on a Cash result basis (unaudited) 266 St. James’s Place plc Annual Report and Accounts 2022 ### 263 ## Consolidated Statement of Comprehensive Income ## on a Cash result basis (unaudited) Strategic Report Governance Other Information | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 December | | | 31 December | | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Fee and commission income 1,854.2 2,771.4 Investment return 6 29.1 35.9 Net income 1,883.3 2,807.3 Expenses (1,898.9) (1,858.1) (Loss)/Profit before tax (15.6) 949.2 Tax attributable to policyholders’ returns 501.1 (488.6) Tax attributable to shareholders’ returns (75.4) (73.2) Total Cash result for the year 410.1 387.4 Pence Pence Cash result basic earnings per share III 75.6 72.0 Cash result diluted earnings per share III 74.9 70.9 The Note references above cross-refer to the Notes to the Consolidated Financial Statements under IFRS, except where denoted in Roman numerals. Financial Statements www.sjp.co.uk 264 Financial Statements ## Consolidated Statement of Changes in Equity on a Cash result basis (unaudited) | | Note | Equity attributable to owners of the Parent Company | | | | | | Non-controlling interests £'Million | Total equity £'Million | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share capital £'Million | Share premium £'Million | Shares in trust reserve £'Million | Misc. reserves £'Million | Retained earnings £'Million | Total £'Million | | | | At 1 January 2021 | | 80.6 | 185.3 | (14.8) | 2.5 | 965.9 | 1,219.5 | (0.9) | 1,218.6 | | Cash result for the year | | – | – | – | – | 386.5 | 386.5 | 0.9 | 387.4 | | Dividends | 20 | – | – | – | – | (329.9) | (329.9) | – | (329.9) | | Issue of share capital | | 0.1 | 10.2 | – | – | – | 10.3 | – | 10.3 | | Exercise of options | 20 | 0.4 | 18.3 | – | – | – | 18.7 | – | 18.7 | | Shares sold during the year | | – | – | 6.3 | – | (6.3) | – | – | – | | Change in deferred tax | | – | – | – | – | 0.5 | 0.5 | – | 0.5 | | Impact of policyholder tax asymmetry | | – | – | – | – | (52.9) | (52.9) | – | (52.9) | | Change in goodwill, intangibles and other non-cash movements | | – | – | – | – | (7.4) | (7.4) | – | (7.4) | | **At 31 December 2021** | | **81.1** | **213.8** | **(8.5)** | **2.5** | **956.4** | **1,245.3** | **–** | **1,245.3** | | Cash result for the year | | – | – | – | – | 409.7 | 409.7 | 0.4 | 410.1 | | Dividends | 20 | – | – | – | – | (303.6) | (303.6) | (0.3) | (303.9) | | Issue of share capital | | 0.1 | 5.6 | – | – | – | 5.7 | – | 5.7 | | Exercise of options | 20 | 0.4 | 8.4 | – | – | – | 8.8 | – | 8.8 | | Consideration paid for own shares | | – | – | (0.3) | – | – | (0.3) | – | (0.3) | | Shares sold during the year | | – | – | 4.7 | – | (4.7) | – | – | – | | Non-controlling interests arising on the part-disposal of subsidiaries | | – | – | – | – | 4.9 | 4.9 | 0.1 | 5.0 | | Change in deferred tax | | – | – | – | – | (30.5) | (30.5) | – | (30.5) | | Impact of policyholder tax asymmetry | | – | – | – | – | 50.6 | 50.6 | – | 50.6 | | Change in goodwill, intangibles and other non-cash movements | | – | – | – | – | (10.9) | (10.9) | – | (10.9) | | **At 31 December 2022** | | **81.6** | **227.8** | **(4.1)** | **2.5** | **1,071.9** | **1,379.7** | **0.2** | **1,379.9** | The Note references above cross-refer to the Notes to the Consolidated Financial Statements under IFRS. St. James's Place plc Annual Report and Accounts 2022 ### 265 ## Consolidated Statement of Financial Position ## on a Cash result basis (unaudited) Strategic Report Governance Other Information | | 31 December | | | 31 December | | | --- | --- | --- | --- | --- | --- | | | | | 2022 | | 2021 | | Note | | £’Million £’Million | | | | Assets Property and equipment 9 145.7 154.5 Deferred tax assets 2.5 5.0 Investment in associates 1.4 1.4 Other receivables 1,374.8 1,587.6 Income tax assets 35.0 – Fixed income securities 17 7.9 7.8 Investment in Collective Investment Schemes 17 1,271.7 1,605.3 Cash and cash equivalents 17 253.3 245.7 Total assets 3,092.3 3,607.3 Liabilities Borrowings 16 163.8 433.0 Deferred tax liabilities 165.1 624.4 Other provisions 15 46.0 44.1 Other payables 1,337.5 1,254.4 Income tax liabilities – 6.1 Total liabilities 1,712.4 2,362.0 Financial Statements Net assets 1,379.9 1,245.3 Shareholders’ equity Share capital 20 81.6 81.1 Share premium 227.8 213.8 Shares in trust reserve (4.1) (8.5) Miscellaneous reserves 2.5 2.5 Retained earnings 1,071.9 956.4 Shareholders’ equity 1,379.7 1,245.3 Non-controlling interests 0.2 – Total shareholders’ equity on a Cash result basis 1,379.9 1,245.3 Pence Pence Net assets per share 253.6 230.4 The Note references above cross-refer to the Notes to the Consolidated Financial Statements under IFRS. www.sjp.co.uk ### 266 Financial Statements ## Notes to the Consolidated Financial Statements ## on a Cash result basis (unaudited) ### I. Basis of preparation The Consolidated Financial Statements on a Cash result basis have been prepared by adjusting the Financial Statements prepared in accordance with International Financial Reporting Standards adopted by the UK for items which do not reflect the cash emerging from the business. The adjustments are as follows: 1. Unit liabilities and net assets held to cover unit liabilities, as set out in Note 11 to the Consolidated Financial Statements, are policyholder balances which are removed in the Statement of Financial Position on a Cash result basis. No adjustment for payments in or out is required in the Statement of Comprehensive Income as this business is subject to deposit accounting, which means that policyholder deposits and withdrawals are recognised in the Statement of Financial Position under IFRS, with only marginal cash flows attributable to shareholders recognised in the Statement of Comprehensive Income. However, adjustment is required for the investment return and the movement in investment contract liabilities, which are offsetting and are both zero-ised. 2. Deferred acquisition costs, the purchased value of in-force business and deferred income assets and liabilities are removed from the Statement of Financial Position on a Cash result basis, and the amortisation of these balances is removed from the Statement of Comprehensive Income on a Cash result basis. The assets, liabilities and amortisation are set out in Note 8 to the Consolidated Financial Statements. 3. Share-based payment expense is removed from the Statement of Comprehensive Income on a Cash result basis, and the equity and liability balances for equity-settled and cash-settled share-based payment schemes respectively are removed from the Statement of Financial Position on a Cash result basis. Share-based payment balances are set out in Note 21 to the Consolidated Financial Statements. 4. Non-unit-linked insurance contract liabilities and reinsurance assets, as set out in Note 14 to the Consolidated Financial Statements, are removed from the Statement of Financial Position on a Cash result basis. The movement in these balances is removed from the Statement of Comprehensive Income on a Cash result basis. 5. Goodwill, computer software intangible assets and some other assets and liabilities which are inadmissible under the Solvency II regime are removed from the Statement of Financial Position on a Cash result basis; however, the movements in these figures are included in the Statement of Comprehensive Income on a Cash result basis. 6. Deferred tax assets and liabilities are adjusted in the Statement of Financial Position on a Cash result basis to reflect the adjustments noted above and other discounting differences between tax charges and IFRS accounting. However, the impact of movements in deferred tax assets and liabilities are not included in the Statement of Comprehensive Income on a Cash result basis. St. James’s Place plc Annual Report and Accounts 2022 ### 267 Strategic Report Governance Other Information ### II. Reconciliation of the IFRS Balance Sheet to the Cash Balance Sheet The Solvency II Net Assets (or Cash) Balance Sheet is based on the IFRS Consolidated Statement of Financial Position, with adjustments made to accounting assets and liabilities to reflect the Solvency II regulations and the provision for insurance liabilities set to be equal to the associated unit liabilities. The reconciliation of the IFRS Consolidated Statement of Financial Position and Solvency II Net Assets Balance Sheet as at 31 December 2022 is set out in Section 2.2 of the financial review. The reconciliation as at 31 December 2021 is set out below. Solvency II | | | | IFRS | | Net Assets | | --- | --- | --- | --- | --- | --- | | | Balance Sheet Adjustment 1 Adjustment 2 | | | Balance Sheet | | | 31 December 2021 | | £’Million £’Million £’Million £’Million | | | | Assets Goodwill 29.6 – (29.6) – Deferred acquisition costs 379.6 – (379.6) – Purchased value of in-force business 14.4 – (14.4) – Computer software 27.0 – (27.0) – Property and equipment 154.5 – – 154.5 Deferred tax assets 20.6 – (15.6) 5.0 Investment in associates 1.4 – – 1.4 Reinsurance assets 82.4 – (82.4) – Other receivables 2,923.0 (1,332.4) (3.0) 1,587.6 Financial Statements Investment property 1,568.5 (1,568.5) – – Equities 106,782.3 (106,782.3) – – Fixed income securities 29,305.9 (29,298.1) – 7.8 Investment in Collective Investment Schemes 5,513.2 (3,907.9) – 1,605.3 Derivative financial instruments 1,094.6 (1,094.6) – – Cash and cash equivalents 7,832.9 (7,587.2) – 245.7 Total assets 155,729.9 (151,571.0) (551.6) 3,607.3 Liabilities Borrowings 433.0 – – 433.0 Deferred tax liabilities 649.8 – (25.4) 624.4 Insurance contract liabilities 572.3 (487.8) (84.5) – Deferred income 562.6 – (562.6) – Other provisions 44.1 – – 44.1 Other payables 2,604.5 (1,344.9) (5.2) 1,254.4 Investment contract benefits 110,349.8 (110,349.8) – – Derivative financial instruments 1,019.5 (1,019.5) – – Net asset value attributable to unit holders 38,369.0 (38,369.0) – – Income tax liabilities 6.1 – – 6.1 Total liabilities 154,610.7 (151,571.0) (677.7) 2,362.0 Net assets 1,119.2 – 126.1 1,245.3 Adjustment 1 nets out the policyholder interest in unit-linked assets and liabilities. Adjustment 2 comprises adjustments to the IFRS Statement of Financial Position in line with Solvency II requirements, including removal of DAC, DIR, PVIF and their associated deferred tax balances, as well as goodwill and other intangibles. www.sjp.co.uk ### 268 Financial Statements ## Notes to the Consolidated Financial Statements ## on a Cash result basis (unaudited) continued ### III. Cash result earnings per share | Year ended | | Year ended | | | --- | --- | --- | --- | | 31 December | | 31 December | | | | 2022 | | 2021 | £’Million £’Million Cash result earnings Cash result (for both basic and diluted EPS) 410.1 387.4 Million Million Weighted average number of shares Weighted average number of ordinary shares in issue (for basic EPS) 542.7 537.7 Adjustments for outstanding share options 5.1 8.5 Weighted average number of ordinary shares (for diluted EPS) 547.8 546.2 Pence Pence Cash result earnings per share (EPS) Cash result basic earnings per share 75.6 72.0 Cash result diluted earnings per share 74.9 70.9 St. James’s Place plc Annual Report and Accounts 2022 ### 269 ## Other ## Information Shareholder information 270 Financial StatementsGovernanceStrategic Report How to contact us and advisers 271 Glossary of alternative performance measures 272 Glossary of terms 275 Other Information 270 Other Information ## Shareholder information ### We listen and respond The St. James's Place business has a broad range of stakeholders, and our duties to them are reflected in our strategy which has a fundamental and clear focus on each stakeholder, including our employees, the Partnership, our clients, shareholders, third-party suppliers, regulators and wider society. This section provides information of particular interest to shareholders, such as the financial calendar, information about our locations and how stakeholders can contact us, and two glossaries which provide further information on our alternative performance measures and an explanation of key terms to assist stakeholders in understanding the Annual Report and Accounts. ### Analysis of shareholder holdings | Analysis by number of shares | Holders | Percentage | Shares held | Percentage | | --- | --- | --- | --- | --- | | 1–999 | 2,059 | 45.53% | 731,928 | 0.13% | | 1,000–9,999 | 1,646 | 36.40% | 4,969,926 | 0.91% | | 10,000–99,999 | 492 | 10.88% | 16,792,207 | 3.09% | | 100,000 and above | 325 | 7.19% | 521,741,696 | 95.87% | | | **4,522** | **100.00%** | **544,235,757** | **100.00%** | ### 2023 financial calendar | Announcement of first-quarter new business | 27 April 2023 | | --- | --- | | Ex-dividend date for 2022 final dividend | 4 May 2023 | | Record date for 2022 final dividend | 5 May 2023 | | Annual General Meeting | 18 May 2023 | | Payment date for 2022 final dividend | 31 May 2023 | | Announcement of Interim Results and second-quarter new business | 27 July 2023 | | Ex-dividend date for 2023 interim dividend | 24 August 2023 | | Record date for 2023 interim dividend | 25 August 2023 | | Payment date for 2023 interim dividend | 22 September 2023 | | Announcement of third-quarter new business | 19 October 2023 | The above dates are subject to change and further information on the 2023 financial calendar can be found on the Company's website, at www.sjp.co.uk/shareholders/financial-calendar. ### Dividend Reinvestment Plan If you would prefer to receive new shares instead of cash dividends, please complete a Dividend Reinvestment Plan (DRIP) form, which is available from our Registrars, Computershare Investor Services PLC. Their contact details are overleaf. ### Dividend mandate Shareholders can arrange to have their dividends paid directly into their bank or building society account by completing a bank mandate form. The advantages to using this service are: the payment is more secure than sending a cheque through the post; it avoids the inconvenience of paying in a cheque; and it reduces the risk of lost, stolen or out-of-date cheques. A mandate form can be obtained from Computershare or you will find one on the reverse of your last dividend confirmation. ### Share dealing A telephone share dealing service has been established with the Registrars, Computershare Investor Services PLC, which provides shareholders with a simple way of buying or selling St. James's Place plc shares on the London Stock Exchange. If you are interested in this service, telephone +44 (0370) 702 0197. An internet share dealing service is also available. Further information about share dealing services can be obtained by logging on to: www-uk.computershare.com/Investor/#ShareDealingInfo. ### Electronic communications If you would like to have access to shareholder communications such as the Annual Report and the Notice of General Meeting through the internet rather than receiving them by post, please register at www.investorcentre.co.uk/ecomms. St. James's Place plc Annual Report and Accounts 2022 ### 271 ## How to contact us and advisers Strategic Report Governance Financial Statements | How to contact us | Advisers | | --- | --- | | Registered office | Registrar and transfer office | | St. James’s Place House | Computershare Investor Services PLC | | 1 Tetbury Road | The Pavilions | | Cirencester | Bridgwater Road | | Gloucestershire | Bristol | | GL7 1FP | BS99 6ZZ | | Tel: 01285 640302 | Email: webqueries@computershare.co.uk | | www.sjp.co.uk | Tel: 0370 702 0197 | www.investorcentre.co.uk/contactus Chair Paul Manduca Independent auditors Email: chair@sjp.co.uk PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Chief Executive 2 Glass Wharf Andrew Croft Bristol Email: andrew.croft@sjp.co.uk BS2 0FR Chief Financial Officer Brokers Craig Gentle JPMorgan Cazenove Limited Email: craig.gentle@sjp.co.uk 25 Bank Street London Company Secretary E14 5JP Jonathan Dale Email: jonathan.dale@sjp.co.uk Bank of America Securities Incorporated 2 King Edward Street Customer service London Jared Whitehouse EC1A 1HQ Tel: 01285 717006 Other Information Email: jared.whitehouse@sjp.co.uk Analyst enquiries Hugh Taylor Tel: 020 7514 1963 Email: hugh.taylor@sjp.co.uk Media enquiries Jamie Dunkley Tel: 020 7514 1963 Email: jamie.dunkley@sjp.co.uk Brunswick Group Eilis Murphy/Charles Pretzlik Tel: 020 7404 5959 Email: sjp@brunswickgroup.com www.sjp.co.uk ### 272 Other Information ## Glossary of alternative performance measures Within the Annual Report and Accounts various alternative performance measures (APMs) are disclosed. An APM is a measure of financial performance, financial position or cash flows which is not defined by the relevant financial reporting framework, which for the Group is International Financial Reporting Standards as adopted by the UK (adopted IFRSs). APMs are used to provide greater insight into the performance of the Group and the way it is managed by the Directors. The table below defines each APM, explains why it is used and, if applicable, details where the APM has been reconciled to IFRS: Financial-position-related APMs Reconciliation | APM Definition Why is this measure used? | | | to the Financial Statements | | --- | --- | --- | --- | | Solvency II net | Based on IFRS Net Assets, but with the | Our ability to satisfy our liabilities to clients, | Refer to page 80. | | assets | following adjustments: | and consequently our solvency, is central to | | our business. By removing the liabilities which 1. Reflection of the recognition requirements are fully matched by assets, this presentation of the Solvency II regulations for assets and allows the reader to focus on the business liabilities. In particular this removes deferred operation. It also provides a simpler acquisition costs (DAC), deferred income comparison with other wealth management (DIR), purchased value of in-force (PVIF) companies. and their associated deferred tax balances, other intangibles and some other small items which are treated as inadmissible from a regulatory perspective; and 2. Adjustment to remove the matching client assets and the liabilities as these do not represent shareholder assets. No adjustment is made to deferred tax, except for that arising on DAC, DIR and PVIF, as this is treated as an allowable asset in the Solvency II regulation. Total embedded A discounted cash flow valuation Life business and wealth management Not applicable. value methodology, assessing the long-term business differ from most other businesses, economic value of the business. in that the expected shareholder income from the sale of a product emerges over | Our embedded value is determined in line | a long period in the future. We therefore | | --- | --- | | with the EEV principles originally set out | supplement the IFRS and Cash results by | | by the Chief Financial Officers (CFO) Forum | providing additional disclosure on an | | in 2004, and amended for subsequent | embedded value basis, which brings into | | changes to the principles, including | account the net present value of expected | | those published in April 2016, following | future cash flows, as we believe that a | | the implementation of Solvency II. | measure of the total economic value of the | Group is useful to investors. EEV net asset EEV net asset value per share is calculated Total embedded value provides a measure Not applicable. value (NAV) per as the EEV net assets divided by the of total economic value of the Group, and year-end number of ordinary shares. assessing the EEV NAV per share allows share analysis of the overall value of the Group by share. IFRS NAV per IFRS net asset value per share is calculated Total IFRS net assets provides a measure of Not applicable. share as the IFRS net assets divided by the value of the Group, and assessing the IFRS year-end number of ordinary shares. NAV per share allows analysis of the overall value of the Group by share. St. James’s Place plc Annual Report and Accounts 2022 ### 273 Strategic Report Governance Financial Statements Financial-performance-related APMs Reconciliation | APM Definition Why is this measure used? | | | to the Financial Statements | | --- | --- | --- | --- | | Cash result, and | The Cash result is defined as the movement | IFRS income statement methodology | Refer to section 2.1 | | Underlying cash | between the opening and closing Solvency | recognises non-cash items such as deferred | and 2.2 of the | | | II net assets adjusted as follows: | tax and equity-settled share options. | financial review and | result By contrast, dividends can only be paid to also see Note 3 to 1. The movement in deferred tax is removed shareholders from appropriately fungible the Consolidated to reflect just the cash realisation from the assets. The Board therefore uses the Cash Financial Statements. deferred tax position; results to monitor the level of cash generated 2. The movements in goodwill and other by the business. intangibles are excluded; and While the Cash result gives an absolute 3. Other changes in equity, such as measure of the cash generated in the year, dividends paid in the year and equity- the Underlying cash result is particularly settled share option costs, are excluded. useful for monitoring the expected long-term rate of cash emergence, which supports The Underlying cash result reflects the dividends and sustainable dividend growth. regular emergence of cash from the business, excluding any items of a one-off nature and temporary timing differences. The Cash result reflects all other cash items, including items of a one-off nature and temporary timing differences. Neither the Cash result nor the Underlying cash result should be confused with the IFRS Consolidated Statement of Cash Flows which is prepared in accordance with IAS 7. Underlying cash These EPS measures are calculated as As Underlying cash is the best reflection of the Not applicable. basic and diluted Underlying cash divided by the number of cash generated by the business, Underlying shares used in the calculation of IFRS basic cash EPS measures allow analysis of the earnings per and diluted EPS. shareholder cash generated by the business share (EPS) by share. | EEV profit | Derived as the movement in the total EEV | Both the IFRS and Cash results reflect only the | See Note 3 to the | | --- | --- | --- | --- | | | during the year. | cash flows in the year. However our business | Consolidated | | | | is long-term, and activity in the year can | Financial Statements. | generate business with a long-term value. We therefore believe it is helpful to understand the full economic impact of activity in the Other Information year, which is the aim of the EEV methodology. | EEV operating | A discounted cash flow valuation | Both the IFRS and Cash results reflect only the | See Note 3 to the | | --- | --- | --- | --- | | profit | methodology, assessing the long-term | cash flows in the year. However, our business | Consolidated | | | economic value of the business. | is long-term, and activity in the year can | Financial Statements. | generate business with a long-term value. Our embedded value is determined in We therefore believe it is helpful to understand line with the EEV principles originally set the full economic impact of activity in the out by the Chief Financial Officers (CFO) year, which is the aim of the EEV methodology. Forum in 2004, and amended for | subsequent changes to the principles, | Within the EEV, many of the future cash flows | | --- | --- | | including those published in April 2016, | derive from fund charges, which change | | following the implementation of Solvency II. | with movements in stock markets. Since | the impact of these changes is typically The EEV operating profit reflects the total unrelated to the performance of the business, EEV result with an adjustment to strip out we believe that the EEV operating profit the impact of stock market and other (reflecting the EEV profit, adjusted to reflect economic effects during the year. only the expected investment performance and no change in economic basis) provides Within EEV operating profit is new business the most useful measure of embedded value contribution, which is the change in performance in the year. embedded value arising from writing new business during the year. EEV operating These EPS measures are calculated as EEV As EEV operating profit is the best reflection Not applicable. profit basic and operating profit after tax divided by the of the EEV generated by the business, EEV number of shares used in the calculation operating profit EPS measures allow analysis diluted earnings of IFRS basic and diluted EPS. of the long-term value generated by the per share (EPS) business by share. www.sjp.co.uk ### 274 Other Information ## Glossary of alternative performance measures continued Financial-performance-related APMs continued Reconciliation APM Definition Why is this measure used? to the Financial Statements Policyholder and Shareholder tax is estimated by making an The UK tax regime facilitates the collection Disclosed as shareholder tax assessment of the effective rate of tax that of tax from life insurance policyholders by separate line items is applicable to the shareholders on the making an equivalent charge within the in the Statement profits attributable to the shareholders. corporate tax of the Company. The total tax of Comprehensive This is calculated by applying the charge for the insurance companies therefore Income. appropriate effective corporate comprises both this element and an element tax rates to the shareholder profits. more closely related to normal corporation tax. The remainder of the tax charge represents Life insurance business impacted by this tax tax on policyholders’ investment returns. typically includes policy charges which align with the tax liability, to mitigate the impact This calculation method is consistent with on the corporate entity. As a result, when UK legislation relating to the calculation policyholder tax increases, the charges of the tax on shareholders’ profits. also increase. Since these offsetting items can be large, and typically do not perform in line with the business, it is beneficial to be able to identify the two elements separately. We therefore refer to that part of the overall tax charge which is deemed attributable to policyholders, as policyholder tax, and the rest as shareholder tax. Profit before A profit measure which reflects the IFRS The IFRS methodology requires that Disclosed as a shareholder tax result adjusted for policyholder tax, but the tax recognised in the Financial Statements separate line item before deduction of shareholder tax. should include the tax incurred on behalf in the Statement Within the Consolidated Statement of of policyholders in our UK life assurance of Comprehensive Comprehensive Income the full title company. Since the policyholder tax charge Income. of this measure is ‘Profit before tax is unrelated to the performance of the attributable to shareholders’ returns’. business, we believe it is also useful to separately identify the profit before shareholder tax, which reflects the IFRS profit before tax, adjusted only for tax paid on behalf of policyholders. | Underlying profit | A profit measure which reflects the IFRS | The IFRS methodology promotes recognition | Refer to Section 2.1 of | | --- | --- | --- | --- | | | result adjusted to remove the DAC, DIR | of profits in line with the provision of services | the financial review | | | and PVIF adjustments. | and so, for long-term business, some of the | | initial cash flows are spread over the life of the contract through the use of intangible assets and liabilities (DAC and DIR). Due to the Retail Distribution Review (RDR) regulation change in 2013, there was a step-change in the progression of these items in our accounts, which resulted in significant accounting presentation changes despite the fundamentals of our vertically-integrated business remaining unchanged. We therefore believe it is useful to consider the IFRS result having removed the impact of movements in these intangibles, as it better reflects the underlying performance of the business. Controllable The total of expenses which reflects We are focused on managing long-term Full detail of the expenses establishment, development, and growth in controllable expenses. breakdown of our Academy. expenses is provided in Section 2.2 of the financial review St. James’s Place plc Annual Report and Accounts 2022 ### 275 ## Glossary of terms Strategic Report Governance Financial Statements Adviser or financial adviser Discretionary Fund Management (DFM) An individual who is authorised by an appropriate regulatory A generic term for a form of investment management authority to provide financial advice. In the UK our advisers in which buy and sell decisions are made (or assisted) are authorised by the FCA. by a portfolio manager for a client’s account. Within St. James’s Place, the services provided by Rowan Dartington (including investment management, advisory Administration platform, also Bluedoor stockbroking and wealth planning) are collectively referred A client-centric administration system, which has been to as Discretionary Fund Management, distinguishing them developed in conjunction with our third-party outsourced from the services provided by our Partners and from our administration provider, SS&C Technologies, Inc. (SS&C). Investment Management Approach (IMA). The system is owned by SS&C. European Embedded Value (EEV) Chief Operating Decision-Maker (CODM) EEV reflects the fact that the expected shareholder income The Executive Committee of the Board (Executive Board), from the sale of wealth management products emerges which is responsible for allocating resources and assessing over a long period of time by bringing into account the the performance of the operating segments. net present value of the expected future cash flows. EEV is calculated in accordance with the EEV principles originally Client numbers issued in May 2004 by the Chief Financial Officers Forum (CFO Forum), supplemented in both October 2005 and, The number of individuals who have received advice from following the introduction of Solvency II, in April 2016. a St. James’s Place Partner and own a St. James’s Place wrapper. Executive Board (ExBo) Client retention The Executive Board comprises the Executive Directors of the Board and other members of senior management. It is via Client retention is assessed by calculating the proportion the Executive Board that operational matters are delegated of clients at 1 January in the year who remain as a client to management. The Executive Board is responsible for throughout the year and are still a client on 31 December communicating and implementing the Group’s business of the same year. plan objectives, ensuring that the necessary resources are in place in order to achieve those objectives, and managing Company the day-to-day operational activities of the Group. The Company refers to St. James’s Place plc, which is also referred to as ‘St. James’s Place’ and ‘SJP’ throughout the Financial Conduct Authority (FCA) Annual Report and Accounts. The FCA is a company limited by guarantee and is independent of the Bank of England. It is a UK government Controllable expenses regulator and is responsible for the conduct of business The total of expenses which reflects establishment, regulation of all firms (including those firms subject to Other Information development, and our Academy. prudential regulation by the Prudential Regulation Authority (PRA)) and the prudential regulation of all firms not regulated by the PRA. The FCA has three statutory objectives: securing Deferred acquisition costs (DAC) an appropriate degree of protection for consumers, An intangible asset required to be established through the protecting and enhancing the integrity of the UK financial application of IFRS to our long-term business. The value of system, and promoting effective competition in the interests the asset is equal to the amount of all costs which accrue of consumers. in line with new business volumes. The asset is amortised over the expected lifetime of the business. Financial Services Compensation Scheme (FSCS) The FSCS is the UK’s statutory compensation scheme for Deferred income (DIR) customers of authorised financial services firms. This means Deferred income, which arises from the requirement in IFRS that the FSCS can pay compensation if a firm is unable, or that initial charges on long-term financial instruments should is likely to be unable, to pay claims against it. The FSCS is only be recognised over the lifetime of the business. The initial an independent body, set up under the Financial Services amount of the balance is equal to the charge taken. and Markets Act 2000, and funded by a levy on ‘authorised financial services firms’. The scheme covers deposits, insurance policies, insurance brokering, investments, mortgages and mortgage arrangement. www.sjp.co.uk ### 276 Other Information ## Glossary of terms continued Funds under management (FUM) Maturities Represents all assets actively managed or administered by Those sums paid out where a plan has reached the or on behalf of the Group, including all life insurance and unit intended, pre-selected, maturity event (e.g. retirement). trust assets, but not assets managed by third parties where we have only introduced or advised on the business. Assets Net inflows managed by Rowan Dartington count as FUM from the date Net inflows are gross inflows less the amount of FUM withdrawn of acquisition. by clients during the same period. The net inflows are the growth in FUM not attributable to investment performance. Gestation FUM This represents FUM on which no annual product Paraplanner management charges are taken. Most of our investment Staff member in a Partner practice who supports the and pension business enters a six-year gestation period advisers in that practice. following initial investment. FUM which is not gestation FUM is known as mature FUM, which is defined later in this section. Policyholder and shareholder tax Gross inflows The UK tax regime facilitates the collection of tax from life insurance policyholders by making an equivalent charge Total new funds under management accepted in the period. within the corporate tax of the Company. This part of the overall tax charge, which is attributable to policyholders, is Group called policyholder tax. The rest of the Company’s tax liability is The Group refers to the Company together with its subsidiaries attributable to shareholders, so is known as shareholder tax. as listed in Note 23 to the Consolidated Financial Statements. Prudential Regulation Authority (PRA) International Financial Reporting Standards The PRA is a part of the Bank of England and is responsible (IFRS) for the prudential regulation of deposit-taking institutions, These are accounting regulations issued by the International insurers and major investment firms. The PRA has two Accounting Standards Board (IASB) designed to ensure statutory objectives: to promote the safety and soundness comparable preparation and disclosure of statements of of these firms and, specifically for insurers, to contribute financial position. The Group Financial Statements have to the securing of an appropriate degree of protection been prepared in accordance with International Financial for policyholders. Reporting Standards as adopted by the UK (adopted IFRSs). Purchased value of in-force (PVIF) Investment business An intangible asset established on takeover or acquisition, This refers to onshore and offshore investment bond reflecting the present value of the expected emergence business written by the life insurance entities in the Group. of profits from a portfolio of long-term business. The asset is amortised in line with the emergence of profits. Investment Management Approach (IMA) Registered Individual The IMA is how St. James’s Place manages clients’ investments. It is managed by the St. James’s Place An individual who is registered by the FCA, particularly Investment Committee, which in turn is supported by an individual who is registered to provide financial advice. respected independent investment research consultancies, See also Adviser and St. James’s Place Partner. including Redington and Rocaton. The Investment Committee is responsible for identifying fund managers for our funds, Regular income withdrawals selecting from fund management firms all around the world. Those amounts, pre-selected by clients, which are paid It is also responsible for monitoring the performance of our out by way of periodic income. fund managers, and, if circumstances should change and it should become necessary, for changing the fund manager as well. Responsible investment (RI) Principles and practices that consider broader sustainability Mature FUM themes and specific environmental, social and corporate governance factors within the investment process. This represents FUM on which annual product management charges are taken. ISA and unit trust business flows into mature FUM from initial investment, but most of our Retirement Account (RA) investment and pension business only becomes mature A St. James’s Place pension product which incorporates FUM after the six-year gestation period, during which both pre-retirement pension saving and post-retirement time it is known as gestation FUM. benefit receipts in the same investment product. St. James’s Place plc Annual Report and Accounts 2022 Rowan Dartington (RD) St. James’s Place Partnership A wealth management business providing investment The collective name for all of our advisers, who management, advisory stockbroking and wealth are Appointed Representatives of St. James’s Place. planning services acquired by St. James’s Place in 2016. St. James’s Place UK plc (SJPUK) Solvency II A life insurance entity in the Group which is incorporated Insurance regulations designed to harmonise EU insurance in England and Wales. regulation which became effective on 1 January 2016. The key concerns of the regulation are to ensure robust St. James’s Place Unit Trust Group Limited risk management in insurance companies and to use that (SJPUTG) understanding of risk to help determine the right amount An entity in the Group which is responsible for unit trust of capital for UK and European insurance companies to management, and which is incorporated in England hold to ensure their ongoing viability in all but the most and Wales. severe stressed scenarios. Following the UK’s withdrawal from the EU these regulations have been adopted by the UK. St. James’s Place Wealth Management plc SS&C Technologies, Inc. (SS&C) (SJPWM) A provider of investor and policyholder, administration and The UK distribution entity within the Group, which is technology services. SS&C is our third-party outsourced responsible for the St. James’s Place Partnership and the provider, responsible for the administration of our UK life advice it provides to clients. It is incorporated in England insurance company SJPUK, our Irish life insurance company and Wales. SJPI, our unit trust manager SJPUTG, and our investment administration company SJPIA. State Street A global financial services holding company offering St. James’s Place Charitable Foundation custodian services, investment management services, The independent grant-making charity established at and investment research and trading services. State the same time as the Company in 1992. More information Street is responsible for the custody of the majority of about the Charitable Foundation can be found on its the St. James’s Place assets, and also provides other website www.sjpfoundation.co.uk. investment management services. St. James’s Place International plc (SJPI) Surrenders and part-surrenders A life insurance entity in the Group which is incorporated Those amounts of money which clients have chosen to in the Republic of Ireland. withdraw from their plan, which were not pre-selected regular income withdrawals or maturities. St. James’s Place Investment Administration Vertically integrated Limited (SJPIA) When we describe St. James’s Place as being vertically An entity in the Group which is responsible for unit trust integrated, we are referring to the fact that its distribution administration and ISA management, which is incorporated capability (the Partnership) and the manufacturers of in England and Wales. its investment products are both part of the Group. St. James’s Place Partner A member of the St. James’s Place Partnership. Specifically, the individual or business that is registered, on the relevant regulatory register, as an Appointed Representative of St. James’s Place Wealth Management plc, St. James’s Place (Hong Kong) Limited, St. James’s Place Wealth Management (Shanghai) Limited or St. James’s Place (Singapore) Private Limited. www.sjp.co.uk St. James’s Place plc ### sjp.co.uk