Half-year Report

St. James's Place PLC

27 July 2023

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PRESS RELEASE AND HALF-YEAR REPORT AND ACCOUNTS

27 July 2023

ANNOUNCEMENT OF HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023

RECORD FUNDS UNDER MANAGEMENT AND STRONG FINANCIAL RESULTS

St. James's Place plc (SJP) today issues its interim results for the six months ended 30 June 2023:

New investment and funds under management

· Gross inflows of £8.0 billion (2022: £9.1 billion)

· Continued strong retention of client funds at 95.6%¹

· Net inflows of £3.4 billion (2022: £5.5 billion), representing 4.6% of opening FUM (annualised)

· Group funds under management of £157.5 billion (31 December 2022: £148.4 billion)

Financial highlights and dividend

· Underlying cash result £207.1 million (2022: £198.8 million)²

· IFRS profit after tax £161.7 million (2022: £208.2 million)³

· Interim dividend of 15.83 pence per share (2022: 15.59 pence), representing 30% of prior full year dividend

Other highlights

· We are now represented by 4,766 qualified advisers across the Partnership, an increase of 73 year-to-date

· 169 advisers graduated from our Academy programmes; 346 now enrolled

· EEV net asset value per share £16.28 (31 December 2022: £16.66)²

Consumer Duty

· Significant programme of work undertaken ahead of new regulatory regime

· Implemented a number of changes to further good outcomes for clients, including a decision to reward clients with long-term investments through the introduction of an annual product management cap on bond and pension investments after they have been invested for ten years

¹ Throughout this press release our retention rate is calculated as annualised surrenders and part-surrenders, divided by average funds under management. It excludes regular income withdrawals and maturities.

² The Underlying cash result and EEV net asset value per share are alternative performance measures (APMs). The glossary of alternative performance measures on page 114 defines these APMs and explains why they are useful. The Underlying cash result is reconciled to International Financial Reporting Standards (IFRS) on pages 19 and 20.

³ Restated to reflect the adoption of IFRS 17. See details of restatement on pages 51 to 69.

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Andrew Croft, Chief Executive Officer, commented:

"I am pleased to report a robust business performance in the first half of 2023, highlighting once more the fundamental resilience of our business model and the strength of relationships our advisers enjoy with their clients.

This has been a challenging period for many UK savers and investors who have had to contend with high and persistent inflation, rising borrowing costs, a mini banking crisis in the US and attendant stock market volatility, and continued macro-economic and geo-political uncertainty. Despite this, we attracted £8.0 billion of new client investments during the first half of 2023.

We are also pleased at the continued strong retention of client funds under management, with annualised retention of 95.6% in the first half of the year. Given the scale of inflationary pressures facing consumers in the UK it is, however, little surprise that we have seen a return to more normal investment withdrawal rates across our pensions and bonds business, together with an increase in surrender rates across smaller unit trusts and ISA portfolios.

As a result, we achieved net inflows of £3.4 billion. A strong outcome given the market environment and one that supported funds under management increasing 6% over the six months to a record £157.5 billion.

This operating performance has been mirrored by a strong financial outturn for the period. Despite the headwinds of a challenging new business environment, the impact of inflationary pressures on our cost base, and a marked increase in the rate of UK corporation tax, we have delivered an underlying post-tax cash result of £207.1 million, up 4% versus the prior year.

Beyond our operating and financial performance, it has been a period of intense activity regarding progress against our six business priorities, as well as in our preparation for the FCA's new Consumer Duty regime. As a business focused on driving good client outcomes, we have welcomed the opportunity to further strengthen our commitment to clients and enhance the value we deliver to them.

As we look ahead, there continue to be challenges for UK consumers, but as a long-term business our focus remains on ensuring we are well positioned to support our advisers build great relationships and deliver trusted and valued face-to-face advice over time. This commitment underpins our 2025 plan and will enable SJP to capitalise on the scale of long-term market opportunity ahead."

The details of the announcement are attached.

Enquiries:

Hugh Taylor, Director - Investor Relations	Tel: 07818 075143
Jamie Dunkley, External Communications Director	Tel: 07779 999651
Brunswick Group:	Tel: 020 7404 5959
Eilis Murphy Charles Pretzlik	Email: sjp@brunswickgroup.com

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2023 Half-Year Results Presentation

Date: 27 July 2023

Time: 08:30 BST

Duration: 2 hours

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CONTENTS
	Page(s)
New Business Inflows and Funds Under Management	4
Interim Management Statement	5 - 44
Condensed Consolidated Half-Year Financial Statements prepared under International Financial Reporting Standards (IFRS) as adopted by the United Kingdom (UK)	45 - 105
Supplementary Information: Consolidated Half-Year Financial Statement on a Cash Result Basis	106 - 112
Other Information	113 - 117

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New Business Inflows and Funds Under Management

The following table shows how FUM evolved during the six months to 30 June 2023 and 30 June 2022, and the year to 31 December 2022. Investment return is presented net of all charges.

	Six months ended 30 June 2023				30 June 2022	31 December 2022
	Investment	Pension	UT/ISA and DFM	Total	30 June 2022	31 December 2022
	£'Billion	£'Billion	£'Billion	£'Billion	£'Billion	£'Billion
Opening FUM	33.29	73.86	41.22	148.37	153.99	153.99
Gross inflows	1.10	4.89	2.05	8.04	9.11	17.03
Net investment return	1.08	3.10	1.53	5.71	(17.27)	(15.40)
Regular income withdrawals and maturities	(0.21)	(1.06)	-	(1.27)	(1.01)	(2.01)
Surrenders and part-surrenders	(0.90)	(0.92)	(1.51)	(3.33)	(2.56)	(5.24)
Closing FUM	34.36	79.87	43.29	157.52	142.26	148.37
Net inflows / (outflows)	(0.01)	2.91	0.54	3.44	5.54	9.78
Implied surrender rate as a percentage of average FUM	5.3%	2.4%	7.1%	4.4%	3.5%	3.5%

Included in the table above is:

· Rowan Dartington Group FUM of £3.33 billion at 30 June 2023 (30 June 2022: £3.23 billion, 31 December 2022: £3.29 billion), gross inflows of £0.20 billion for the period (six months to 30 June 2022: £0.25 billion, year to 31 December 2022: £0.44 billion) and outflows of £0.09 billion for the period (six months to 30 June 2022: £0.06 billion, year to 31 December 2022: £0.14 billion); and

· SJP Asia FUM of £1.62 billion at 30 June 2023 (30 June 2022: £1.51 billion, 31 December 2022: £1.52 billion), gross inflows of £0.12 billion for the period (six months to 30 June 2022: £0.17 billion, year to 31 December 2022: £0.28 billion) and outflows of £0.06 billion for the period (six months to 30 June 2022: £0.04 billion, year to 31 December 2022: £0.10 billion).

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Interim Management Statement

Chief Executive's Report

Introduction

I am pleased to report a period of robust business performance, highlighting once more the fundamental resilience of our business model and the strength of relationships our advisers enjoy with their clients.

This has been delivered amidst a challenging period for many UK savers and investors who have had to contend with high and persistent inflation, rising borrowing costs, a mini banking crisis in the US and attendant stock market volatility, as well as continued macro-economic and geo-political uncertainty. Despite this, many stock markets have proven reasonably resilient and consumer and business confidence have been on an improving trend after reaching a low ebb in late 2022.

Operating and financial performance

During the first half of 2023 we attracted £8.0 billion of new client investments. The environment for new business has clearly been challenging in recent months but activity has remained high as our advisers continued to focus their attention on supporting clients with timely, personal advice to help them manage near-term challenges whilst maintaining a long-term mindset. This has resulted in stable gross inflows across much of our core business, but it is evident that there has been some softening in the pace of more discretionary one-off investments, particularly into our unit trust and ISA wrappers. Given rising deposit rates on cash savings, we have also seen a considerable increase in client investment into our third-party cash management platform.

We are also pleased at the continued strong retention of client funds under management, with annualised retention of 95.6% in the first half of the year. It is, however, little surprise that we have seen a return to more normal investment withdrawal rates across our pensions and bonds business, together with an increase in surrender rates across smaller unit trust and ISA portfolios as some clients access their investments to smooth the impact of the inflationary pressures they might be facing.

As a result, we achieved net inflows of £3.4 billion or 4.6% of opening funds under management on an annualised basis. A resilient outcome given the market environment.

With investment performance having been positive overall during the half, funds under management closed at a record £157.5 billion.

The IFRS profit after tax of £161.7 million was down 22% versus the prior year, due to tax asymmetry.

Dividend

In line with our guidance that interim dividends will be set at 30% of the prior full year payout, the Board has declared an interim dividend for 2023 of 15.83 pence per share.

Strategic progress

In the first six months of the year, we have continued to make good progress against the business priorities that underpin the strategic ambitions and objectives that we have set as part of our 2025 business plan and ambitions, which we remain committed to. Some highlights during the first half include:

- Building community: we attracted a net 73 new advisers to the Partnership. We now have 4,766 advisers around the UK and Asia supporting and advising more than 941,000 clients so they can have confidence in their futures. Our Academy continues to go from strength to strength, delivering more than 169 new advisers to the Partnership during the period and underpinning our confidence in continued net adviser growth in the years ahead. During the first half we also built on our established presence in attractive markets in Asia with the opening of a new office in Dubai. While it is early days, we are confident that our business model and proposition, together with learnings from our experience in other regional wealth hubs, will drive long-term success for our business in the region.

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- Being easier to do business with: we continue to develop tools around our Salesforce systems, providing additional capabilities for the benefit of our advisers and the broader SJP community. One example of this is the launch of Advice Assistant, a tool that utilises Salesforce and other data to simplify and automate elements of the advice process for new ISA business, freeing time for advisers and their support staff.

- Delivering value to advisers and clients through our investment proposition: we've announced we're making changes to several of our funds, including broadening the geographic remit of our government bond proposition beyond UK gilts, appointing Dalton Investments to co-manage the Japan Fund, and appointing Fulcrum Asset Management to the roster of fund managers on our Global Absolute Return Fund.

- Building and protecting our brand and reputation: we've reflected on our Client Wealth Account survey results from early in 2023, which highlight that while scores remain very strong, with advocacy and value for money scores improving, overall client satisfaction levels have seen a small decline since 2022, a feature that we note is consistent with broader industry trends and reflecting the more difficult economic environment. As always, we are taking the opportunity to explore what more we can do to drive great experiences and outcomes for clients.

- Our culture and being a leading responsible business: we continue to embed our responsible business strategy across SJP, ensuring shared understanding within our community of our goals and ambitions to drive positive change. This complements our traditional strength in community and charitable giving where our support for the St. James's Place Charitable Foundation continues with £5.1 million raised in the first half alone.

- Continued financial strength: we continue to demonstrate financial strength despite the challenging operating environment, and this is covered in detail in the Chief Financial Officer's Report on page 8.

Consumer Duty

We have been working hard to prepare ahead of the FCA's new Consumer Duty regulation that comes into effect at the end of July 2023. This regulation sets higher and clearer standards of consumer protection across financial services and requires firms to act to deliver good outcomes for customers. We have engaged proactively with this important regulatory initiative.

While we consistently aim to achieve good outcomes for our clients, Consumer Duty has given us the opportunity to strengthen this commitment to clients even further. We've looked at every part of our business through the lens of clients - the people who trust us to help create the future they want for them and for their families - and we've examined how we provide evidence that the processes and frameworks we have in place deliver good client outcomes.

There are three core commitments we have that underpin 'good client outcomes' at SJP:

1. We deliver fair value

2. We support each client to make effective, timely and informed decisions throughout their journey with us

3. We help clients to achieve their financial objectives

Having considered the principles and the processes we have in place, we have made a number of changes in how we and our advisers operate in order to ensure we continue to deliver and evidence good client outcomes. In addition, reflecting on the scale and maturity of the business today, and to further increase the competitiveness of our bonds and pensions business through the life-cycle, we are capping annual product management charges on client bond and pensions contributions at the point each contribution has been invested for ten years. This cap, which is set at 85 basis points, represents support for clients who have invested over the long-term and we estimate there are around 65,000 clients who will immediately benefit from this positive action, a figure that will grow over time.

This change takes effect from August onwards and the impact will be to lower the margin range on net income from funds under management by some four basis points going forward.

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Now that Consumer Duty is coming into effect, we are treating the completion of the specific work that was required, as an opportunity to continue to evaluate our business and enhance long-term and sustainable value for clients, the Partnership, shareholders and all other stakeholders.

Summary and outlook

While the trading environment has been challenging, we can be pleased with the resilience of our new business performance and the strength of our financial results in the first half of 2023. Our business model is inherently robust, but this good outcome is testament to the contribution of all in the SJP community who work hard to support clients and each other.

As we look ahead, there continues to be near-term challenges for UK consumers, but as a long-term business our focus remains on ensuring we are well positioned to support our advisers build great relationships and deliver trusted and valued face-to-face advice over time. It is this commitment that underpins our 2025 ambitions and will enable SJP to capitalise on the scale of longer-term market opportunity ahead.

Andrew Croft, Chief Executive

26 July 2023

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Chief Financial Officer's Report

We are pleased to report a robust set of financial results, despite the challenging operating environment in the first half of 2023.

The resilience of the business model is demonstrated with the continued scale of net inflows which will drive long-term profit growth into the future. During the period, our advisers attracted £8.0 billion (six months to 30 June 2022: £9.1 billion, year to 31 December 2022: £17.0 billion) of new client investments and while withdrawal rates have returned to more normal levels as expected, overall client retention rates of 95.6% (six months to 30 June 2022: 96.5%, year to 31 December 2022: 96.5%) remain high and above the targets set out in our 2025 business plan. Together, these have contributed to net inflows of £3.4 billion (six months to 30 June 2022: £5.5 billion, year to 31 December 2022: £9.8 billion), equivalent to an annualised 4.6% of opening funds under management (FUM); a strong result given the operating environment.

Ongoing net inflows combined with positive investment market returns during the period has resulted in FUM closing at £157.5 billion (30 June 2022: £142.3 billion, 31 December 2022: £148.4 billion).

Our financial results are presented in more detail on pages 13 to 40 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

On 1 January 2023 the Group adopted IFRS 17 'Insurance Contracts', with comparatives restated from 1 January 2022. The adoption of IFRS 17 resulted in an increase to IFRS profit after tax of £2.6 million for the six months ended 30 June 2022 and a £1.8 million increase for the year ended 31 December 2022. The movement occurred due to the revised pattern of profit recognition under IFRS 17, which replaces implicit prudent margins in the measurement of insurance contract liabilities under IFRS 4 with an explicit allowance for risk and a Contractual Service Margin (CSM) which recognises profit more evenly over the coverage period.

IFRS profit before tax is heavily distorted by the inclusion of policyholder tax and the associated charges, which have resulted in a profit of £385.0 million (six months to 30 June 2022: negative £295.5 million, year to 31 December 2022: positive £2.8 million).

To address the challenge of policyholder tax being included in the IFRS results, we focus on IFRS profit before shareholder tax as our pre-tax measure. On this basis the result was £215.7 million for the year (six months to 30 June 2022: £259.5 million, year to 31 December 2022: £503.9 million), down 17% year on year. This decrease is driven by the impact of policyholder tax asymmetry which adversely impacts the IFRS result in periods of stronger markets or higher interest rates, contributing a negative £17.5 million in the six months to June 2023, compared to a positive £39.4m in the six months to June 2022, a delta of £56.9m. Further detail on this asymmetry is included in the Financial Review on page 19. Excluding the short-term impact of the policyholder tax asymmetry, IFRS profit before shareholder tax has increased by 6%, with similar drivers to those described for the Cash result below.

IFRS profit after tax was £161.7 million in 2023 (six months to 30 June 2022: £208.2 million, year to 31 December 2022: £407.2 million), down 22%, additionally impacted by an increase in the rate of corporation tax.

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, with prior period comparisons impacted by a change in the rate of corporation tax on 1 April 2023.

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The Cash result of £202.4 million for the first half of 2023 (six months to 30 June 2022: £194.1 million, year to 31 December 2022: £410.1 million) and the Underlying cash result of £207.1 million (six months to 30 June 2022: £198.8 million, year to 31 December 2022: £410.1 million) are each up 4%. Excluding the impact of an increased rate of corporation tax, the Underlying cash result has increased by 10%. These strong half-year results have been driven by average mature FUM being higher during 2023 than it was in 2022, delivery of controllable expenses consistent 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 21 to 33.

During the period, the net income from funds under management was £299.6 million (six months to 30 June 2022: £300.2 million, year to 31 December 2022: £607.7 million), representing a margin within our range of 0.59% to 0.61% (2022: 0.63% to 0.65%) on average mature FUM, excluding Discretionary Fund Management (DFM) and Asia FUM, in line with prior guidance and reflecting the increased rate of corporation tax in 2023.

As noted in the Chief Executive's Report, a decision has been taken to cap annual management charges on client bond and pension investments with a duration longer than 10 years. This change takes effect from August 2023 and the impact will be to lower our margin range to 0.55% to 0.57%. This will amount to a post-tax reduction in net income from funds under management of c.£12m for the second half of 2023.

This 0.04% reduction in the range will replicate into future periods but will be compounded in 2024 with a further 0.01% reduction as a result of a higher effective rate of tax with 25% applying for the whole year.

It is mature FUM that 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 30 June 2023, the balance of gestation FUM stood at £47.2 billion (31 December 2022: £45.5 billion). Once this current stock of gestation FUM has all matured, it will (assuming no market movements or withdrawals) contribute in excess of a further £368 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 2023 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.

Controllable expenses are a key metric for the business and despite the persistence of high inflation we have contained the annual growth to 8% in the first half of 2023, equivalent to a 2% increase on a post-tax basis, reflecting the impact of the increased rate of corporation tax. We therefore remain on track with our guidance of limiting growth in full year controllable expenses to 8% pre-tax and remain committed to returning towards our medium-term target of 5%, as and when inflation moderates towards more normal levels.

Growth in income, coupled with this delivery of controllable expenses in line with our guidance, has been the primary driver of a record half-year Underlying cash result for the six months to 30 June 2023 of £207.1 million (six months to 30 June 2022: £198.8 million, year to 31 December 2022: £410.1 million).

Recognised below the Underlying cash result is the variance, which is a timing effect included in the Half-Year results that arises due to there being fewer days of annual management charge (AMC) in the first half of the year, which unwinds by the end of the year.

The Cash result for the period was therefore £202.4 million (six months to 30 June 2022: £194.1 million, year to 31 December 2022: £410.1 million).

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EEV

The EEV operating profit before exceptional item for the period is £740.1 million (six months to 30 June 2022: £914.2 million profit, year to 31 December 2022: £1,589.7 million profit). Adjusting for the persistency assumption change in 2022, the result for the period is higher by 8% due to the increase in the opening risk discount rate to which it is sensitive, partially offset by a reduced new business contribution in line with gross fund flows.

The EEV operating loss after exceptional item for the period is £119.1 million (six months to 30 June 2022: £914.2 million profit, year to 31 December 2022: £1,589.7 million profit), reflecting the exceptional item of £859.2m from introducing a charge cap on longer duration client bond and pension investments, as described in the Chief Executive's Report.

The EEV profit before tax for the period has benefited from a positive investment return variance of £157.6 million (six months to 30 June 2022: negative £1,346.2 million, year to 31 December 2022: negative £1,314.0 million). The positive return reflects increased market values across our FUM that exceeded our long-term assumptions, and this compares to a significant negative impact from market returns in the comparative period.

The EEV profit after tax of £55.7 million (six months to 30 June 2022: negative £208.2 million, year to 31 December 2022: positive £371.4 million) reflects profit emergence as above.

The EEV net asset value per share was £16.28 at 30 June 2023 (30 June 2022: £15.74, 31 December 2022: £16.66).

Financial position

Our IFRS Statement of Financial Position, presented on page 48, 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 £1,527.2 million (30 June 2022: £1,652.8 million, 31 December 2022: £1,532.9 million), of which £1,250.5 million (30 June 2022: £1,370.5 million, 31 December 2022: £1,271.7 million), is invested in AAA-rated money market funds. This deep liquidity represents 41% of total assets on the Solvency II Net Assets balance sheet (30 June 2022: 53%, 31 December 2022: 50%). Further information about liquidity is set out on page 31.

Analysis of the key movements in the Solvency II Net Assets balance sheet during the year is set out on pages 28 to 33.

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 30 June 2023 we held surplus assets over the MSB of £824.2 million (30 June 2022: £714.4 million, 31 December 2022: £847.2 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 110% 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 30 June 2023, the solvency ratio for our Life businesses was 131%, which continues to be impacted by the positive effect of the policyholder tax asymmetry which benefits our own funds and hence solvency ratio in the same way as it benefits our IFRS result. This also takes into consideration the small impact of the charge cap explained within the Chief Executive's Report.

Excluding this temporary effect which will unwind as markets improve, the solvency ratio for our Life businesses was 121%. The temporary effect of the equity dampener seen in previous periods has unwound due to the increase in equity markets during the six months to 30 June 2023.

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	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Underlying solvency ratio for our Life businesses	121%	126%	120%
Impact of policyholder tax asymmetry	10%	10%	8%
Effect of the equity dampener	0%	3%	2%
Solvency ratio for our Life businesses	131%	139%	130%

Taking into account entities in the rest of the Group, the Group solvency ratio at 30 June 2023 was 151% (30 June 2022: 155%, 31 December 2022: 155%), with this result also reflecting the positive impact of policyholder tax asymmetry and equity dampener effects noted above.

Dividends

As set out in our 2025 business plan, our dividend guidance includes making an interim payment set at 30% of the prior year total dividend. The Board is therefore declaring an interim dividend of 15.83 pence per share, equal to 30% of the prior year dividend per share of 52.78 pence.

Craig Gentle, Chief Financial Officer

26 July 2023

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Summary financial information

	Page reference		Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹

FUM-based metrics
Gross inflows (£'Billion)		15	8.0	9.1	17.0
Net inflows (£'Billion)		15	3.4	5.5	9.8
Total FUM (£'Billion)		15	157.5	142.3	148.4
Total FUM in gestation (£'Billion)		16	47.2	44.5	45.5

IFRS-based metrics
IFRS profit after tax (£'Million)¹		19	161.7	208.2	407.2
IFRS profit before shareholder tax (£'Million)¹		19	215.7	259.5	503.9
Underlying profit before shareholder tax (£'Million)		20	215.8	265.5	516.9
IFRS basic earnings per share (EPS) (Pence)¹			29.6	38.4	75.0
IFRS diluted EPS (Pence)¹			29.5	38.1	74.3
IFRS net asset value per share (Pence)¹			227.1	210.9	233.7
Dividend per share (Pence)			15.83	15.59	52.78

Cash result-based metrics
Controllable expenses (£'Million)		23	134.0	131.4	277.9
Underlying cash result (£'Million)		22	207.1	198.8	410.1
Cash result (£'Million)		22	202.4	194.1	410.1
Underlying cash result basic EPS (Pence)			37.9	36.7	75.6
Underlying cash result diluted EPS (Pence)			37.7	36.4	74.9

EEV-based metrics
EEV operating (loss)/profit after exceptional item before tax (£'Million)		34	(119.1)	914.2	1,589.7
EEV operating (loss)/profit after exceptional item after tax basic EPS (Pence)			(16.9)	126.3	218.8
EEV operating (loss)/profit after exceptional item after tax diluted EPS (Pence)			(16.9)	125.3	216.8
EEV net asset value per share (£)			16.28	15.74	16.66

Solvency-based metrics
Solvency II net assets (£'Million)		39	1,351.3	1,247.3	1,379.9
Management solvency buffer (£'Million)		39	527.1	532.9	532.7
Solvency II free assets (£'Million)		40	1,760.0	1,790.2	1,921.4
Solvency ratio (Percentage)		40	151%	155%	155%

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

The Cash result should not be confused with the IFRS Consolidated Statement of Cash Flows, which is prepared in accordance with IAS 7.

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Financial Review

This financial review provides analysis of the Group's financial position and performance.

The Review is split into the following sections:

SECTION 1: FUNDS UNDER MANAGEMENT (FUM)

1.1 FUM analysis

1.2 Gestation

As set out below, FUM is a key driver of ongoing profitability on all measures, and so information on growth in FUM is provided in Section 1.

Find out more on pages 15 to 17.

SECTION 2: PERFORMANCE MEASUREMENT

2.1 International Financial Reporting Standards (IFRS)

2.2 Cash result

2.3 European Embedded Value (EEV)

Section 2 analyses the performance of the business using three different bases: IFRS, the Cash result, and EEV.

Find out more on pages 18 to 38.

SECTION 3: SOLVENCY

Section 3 addresses solvency, which is an important area given the multiple regulated activities carried out within the Group.

Find out more on pages 39 to 40.

Our financial business model

Our financial business model is straightforward. We generate revenue by attracting clients through the value of our proposition, who trust us with their investments and then stay with us. This grows our funds under management (FUM), on which we receive:

· advice charges for the provision of valuable, face-to-face advice; and

· product charges for our manufactured investment, pension and ISA/unit trust products.

Further information on our charges can be found on our website: www.sjp.co.uk/charges. A breakdown of fee and commission income, our primary source of revenue under IFRS, is set out in Note 4 on page 73.

The primary source of the Group's profit is the income we receive from annual product management charges on FUM. As a result, growth in FUM is a strong positive indicator of future growth in profits. However, most of our investment and pension products are structured so that annual product management charges are not taken for the first six years after the business is written, so the ongoing benefit of these gross 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 management charges is known as 'mature' FUM. More information about our FUM and the fees we earn on it can be found in Sections 1 and 2 of the Financial Review on pages 15 and 18.

Initial and ongoing advice charges, and initial product charges levied when a client first invests into one of our products, are not major drivers of the Group's profitability, because:

· most advice charges received are offset by corresponding remuneration for Partners, so an increase in these revenue streams will correspond with an increase in the associated expense and vice versa; and

· under IFRS, initial product charges are spread over the expected life of the investment through deferred income (DIR - see page 19 for further detail). The contribution to the IFRS result from spreading these historic charges can be seen in Note 4 as amortisation of DIR. Initial product charges contribute immediately to our Cash result through margin arising on new business.

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Our income is used to meet overheads, pay ongoing product expenses and invest in the business. Controllable expenses, being the costs of running the Group's infrastructure, the Academy and development expenses, are carefully managed. Other ongoing expenses, including payments to Partners, increase with business levels and are generally aligned with product charges.

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Section 1: 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 the six months to 30 June 2023 and 30 June 2022, and the year to 31 December 2022. Investment return is presented net of all charges.

	Six months ended 30 June 2023				30 June 2022	31 December 2022
	Investment	Pension	UT/ISA and DFM	Total	30 June 2022	31 December 2022
	£'Billion	£'Billion	£'Billion	£'Billion	£'Billion	£'Billion
Opening FUM	33.29	73.86	41.22	148.37	153.99	153.99
Gross inflows	1.10	4.89	2.05	8.04	9.11	17.03
Net investment return	1.08	3.10	1.53	5.71	(17.27)	(15.40)
Regular income withdrawals and maturities	(0.21)	(1.06)	-	(1.27)	(1.01)	(2.01)
Surrenders and part-surrenders	(0.90)	(0.92)	(1.51)	(3.33)	(2.56)	(5.24)
Closing FUM	34.36	79.87	43.29	157.52	142.26	148.37
Net inflows / (outflows)	(0.01)	2.91	0.54	3.44	5.54	9.78
Implied surrender rate as a percentage of average FUM	5.3%	2.4%	7.1%	4.4%	3.5%	3.5%

Included in the table above is:

The following table shows the significant net inflows and the progression of FUM over recent periods.

Period	Opening FUM	Net Inflows	Investment Return	Closing FUM
Period	£'Billion	£'Billion	£'Billion	£'Billion
Six months to 30 June 2023	148.4	3.4	5.7	157.5
Year to 31 December 2022	154.0	9.8	(15.4)	148.4
Year to 31 December 2021	129.3	11.0	13.7	154.0
Year to 31 December 2020	117.0	8.2	4.1	129.3
Year to 31 December 2019	95.6	9.0	12.4	117.0
Year to 31 December 2018	90.7	10.3	(5.4)	95.6

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The table below provides a geographical and investment-type analysis of FUM at the end of each period.

	30 June 2023		30 June 2022		31 December 2022
	£'Billion	Percentage of total	£'Billion	Percentage of total	£'Billion	Percentage of total
North American equities	52.2	33%	46.0	33%	49.1	33%
Fixed income securities	24.4	16%	21.0	15%	23.1	16%
European equities	22.0	14%	17.4	12%	19.3	13%
Asia and Pacific equities	19.6	12%	18.8	13%	17.8	12%
UK equities	16.0	10%	16.0	11%	16.0	11%
Alternative investments	11.9	8%	11.9	8%	12.4	8%
Cash	6.1	4%	5.6	4%	5.7	4%
Other	3.3	2%	2.9	2%	2.8	2%
Property	2.0	1%	2.7	2%	2.2	1%
Total	157.5	100%	142.3	100%	148.4	100%

1.2 Gestation

As explained in our financial business model on page 13, 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 in the first half of 2023, after initial charges, moved into gestation FUM (six months to 30 June 2022: 54%, year to 31 December 2022: 54%).

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 30 June 2023, as well 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.

	Mature FUM contributing to the Cash result	Gestation FUM that will contribute to the Cash result in the future	Total FUM
Position as at	£'Billion	£'Billion	£'Billion
30 June 2023	110.3	47.2	157.5
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

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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 including the charge cap, and so how the gestation balance of £47.2 billion at 30 June 2023 may start to contribute to the Cash result, 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.

	Gestation FUM future accumulated contribution to the Cash result
Year	£'Million
2023	26.3
2024	85.7
2025	147.8
2026	211.0
2027	277.0
2028	341.6
2029	368.8

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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 £157.4 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 30 June 2023.

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 114 to 117, 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)

On 1 January 2023 the Group adopted IFRS 17 'Insurance Contracts', with comparatives restated from 1 January 2022. The adoption of IFRS 17 resulted in an increased IFRS profit after tax of £2.6 million for the six months ended 30 June 2022 and £1.8 million increase for the year ended 31 December 2022. For further explanation, refer to Note 2c page 51.

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 the six months to 30 June 2023, we deducted £169.3 million from clients due to investment market gains, which flowed through our IFRS profit before tax as income, whereas in the six months to 30 June 2022 we were required to refund £555.0 million from clients due to investment market falls, which flowed through as an expense. See Note 4 Fee and commission income for further information. This leads to substantial distortion within our IFRS profit before tax: for the six months to 30 June 2023, it was £385.0 million profit, compared to a loss of £295.5 million for the six months ended 30 June 2022.

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.

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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 46.

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
IFRS profit before tax	385.0	(295.5)	2.8
Policyholder tax	(169.3)	555.0	501.1
IFRS profit before shareholder tax	215.7	259.5	503.9
Shareholder tax	(54.0)	(51.3)	(96.7)
IFRS profit after tax	161.7	208.2	407.2

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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 decreases of over 15% 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, with 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 as the impact of policyholder tax asymmetry.

Under normal conditions this asymmetry is small, but market volatility and interest rate movements can result in significant impacts. Market gains combined with higher interest rates in the six months to 30 June 2023 have resulted in a negative impact of £17.5 million, whereas market falls in the six months to 30 June 2022 led to a positive £39.4 million movement in policyholder tax asymmetry. This leads to a £56.9 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.

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 6 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.

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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:

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
IFRS profit before shareholder tax	215.7	259.5	503.9
Remove the impact of movements in DAC/DIR/PVIF	0.1	6.0	13.0
Underlying profit before shareholder tax	215.8	265.5	516.9

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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 and DIR on new business for the period set out below cannot be agreed to those set out in Note 7, which is presented before both policyholder tax and shareholder tax.

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Amortisation of DAC	(36.1)	(39.8)	(79.6)
DAC on new business for the period	20.9	22.7	37.3
Net impact of DAC	(15.2)	(17.1)	(42.3)
Amortisation of DIR	74.6	83.1	166.2
DIR on new business for the period	(57.9)	(70.4)	(133.7)
Net impact of DIR	16.7	12.7	32.5
Amortisation of PVIF	(1.6)	(1.6)	(3.2)
Movement in the period	(0.1)	(6.0)	(13.0)

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Net impact of DAC

The scale of the £15.2 million negative overall impact of DAC on the IFRS result (six months to 30 June 2022: negative £17.1 million, year to 31 December 2022: negative £42.3 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 the first half of 2023 is lower than it was in 2022. Income released from the deferred income liability has remained broadly static. Together, these effects mean that DIR has had a positive £16.7 million impact on the IFRS result in the six months to 30 June 2023 (six months to 30 June 2022: £12.7 million positive, year to 31 December 2022: £32.5 million positive).

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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 114 to 117. 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:

	Six months ended 30 June 2023		Six months ended 30 June 2022¹		Year ended 31 December 2022¹
	Before Shareholder tax	After tax	Before Shareholder tax	After tax	Before Shareholder tax	After tax
	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
Underlying profit	215.8	161.4	265.5	211.9	516.9	416.5
Equity-settled share-based payments	9.9	9.9	11.2	11.2	20.5	20.5
Impact of deferred tax	-	12.1	-	18.1	-	30.5
Impact of policyholder tax asymmetry	17.5	17.5	(39.4)	(39.4)	(50.6)	(50.6)
Other	5.0	1.5	(5.2)	(7.7)	(1.3)	(6.8)
Cash result	248.2	202.4	232.1	194.1	485.5	410.1

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Equity-settled share-based payments have reduced in the six months to 30 June 2023 compared to the same period in 2022, reflecting a lower average share price, partially offset by an increase in the number of shares and share options granted during the year.

The impact of deferred tax is the recognition in the Cash result of the benefit from realising tax relief on various items including capital losses, share options, capital allowances 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 6.

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 dependent on market conditions such as were experienced in 2022. For further explanation, refer to page 19.

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.

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Consolidated cash result (presented post-tax)

	Note	Six months ended 30 June 2023			Six months ended 30 June 2022	Year ended 30 December 2022
		In-force	New business	Total	Total	Total
		£'Million	£'Million	£'Million	£'Million	£'Million
Net annual management fee	1	482.4	15.3	497.7	511.6	1,020.6
Reduction in fees in gestation period	1	(198.1)	-	(198.1)	(211.4)	(412.9)
Net income from FUM	1	284.3	15.3	299.6	300.2	607.7
Margin arising from new business	2	-	53.0	53.0	67.4	122.4
Controllable expenses	3	(9.5)	(124.5)	(134.0)	(131.4)	(277.9)
Asia - net investment	4	-	(10.8)	(10.8)	(4.2)	(11.3)
DFM - net investment	4	-	(2.6)	(2.6)	(5.4)	(10.9)
Regulatory fees and FSCS levy	5	(1.7)	(14.8)	(16.5)	(32.9)	(40.0)
Shareholder interest	6	27.5	-	27.5	4.1	15.9
Tax relief from capital losses	7	2.1	-	2.1	13.9	20.7
Miscellaneous	8	(11.2)	-	(11.2)	(12.9)	(16.5)
Underlying cash result		291.5	(84.4)	207.1	198.8	410.1
Variance	9	(4.7)	-	(4.7)	(4.7)	-
Cash result		286.8	(84.4)	202.4	194.1	410.1

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 13 however, our investment and pension business product structure means that these products do not contribute to the 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 the six months to 30 June 2023, our net income from FUM is within our range of 0.59% - 0.61%, which has reduced to reflect the increase in the main rate of corporation tax from 19% to 25% from 1 April 2023.

As noted in the Chief Executive's Report, a decision has been taken to cap annual management charges on client bond and pension investments with a duration longer than 10 years. This change takes effect from August 2023 and the impact will be to lower our margin range to 0.55% - 0.57%. This will amount to a post-tax reduction in net income from funds under management of c.£12m for the second half of 2023.

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.

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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 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.

The margin arising from new business is a net of tax metric has also been impacted in the first half of 2023 by an increase in the rate of corporation tax.

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

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
Establishment expenses	95.1	95.9	198.9
Development expenses	33.0	29.7	67.4
Academy	5.9	5.8	11.6
Controllable expenses	134.0	131.4	277.9

Alongside our 2022 results, we set out an expectation that the full year growth in controllable expenses would be contained to 8% on a pre-tax basis, balancing disciplined expense management with the need to invest in the business for the future, despite the high inflation environment. This is equivalent to a 2% increase on a post-tax basis as presented in the Cash result, reflecting an increase in the rate of corporation tax. We are pleased to have delivered a half-year outturn in line with this guidance for the full year, with these costs increasing by 2% to £134.0 million and we remain committed to returning towards our medium-term target of 5%, as and when inflation moderates towards more normal levels.

Establishment expenses in the six months to 30 June 2023 were broadly flat year on year on net of tax basis at £95.1 million (six months to 30 June 2022: £95.9 million, year to 31 December 2022: £198.9 million) as inflation driven increases were offset by an increased level of tax relief. These costs predominantly relate to people, property and technology and hence are relatively fixed in nature.

Development expenses were £33.0 million (six months to 30 June 2022: £29.7 million, year to 31 December 2022: £67.4 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.

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.

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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 26 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. The increased investment in Asia includes the cost of restructuring during the year. While both Asia and Rowan Dartington have been impacted by the challenging market conditions in 2023, they both remain well positioned well for the years ahead.

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:

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
FSCS levy	10.2	27.1	27.3
Regulatory fees	6.3	5.8	12.7
Regulatory fees and FSCS levy	16.5	32.9	40.0

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. The FSCS levy has fallen substantially in 2023, reflecting the short-term utilisation of scheme surpluses that had built up in prior years. The levy is anticipated to increase again from 2024.

6. Shareholder interest

This is the income accruing on shareholder 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 period of £2.1 million tax value (six months to 30 June 2022: £13.9 million, year to 31 December 2022: £20.7 million), reflects the utilisation in full of the remaining stock of capital losses. Due to the exhaustion of the balance, this will not feature in future years.

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. Variance

The variance recognised at the half-year reflects an allowance for fewer days of AMC income in the first half compared to the second half. It will reverse in the second half of the year and will not feature in the full year Cash result.

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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 46, 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.

Expenses presented on the face of the Cash result before and after tax are set out below:

	Six months ended 30 June 2023			Six months ended 30 June 2022			Year ended 31 December 2022
	Before tax	Tax rate	After tax	Before tax	Tax rate	After tax	Before tax	Tax rate	After tax
	£'Million	Percentage	£'Million	£'Million	Percentage	£'Million	£'Million	Percentage	£'Million
Controllable expenses
Establishment expenses	124.3	23.5%	95.1	118.4	19.0%	95.9	245.5	19.0%	198.9
Development expenses	43.2	23.5%	33.0	36.7	19.0%	29.7	83.2	19.0%	67.4
Academy	7.7	23.5%	5.9	7.1	19.0%	5.8	14.3	19.0%	11.6
Total controllable expenses	175.2		134.0	162.2		131.4	343.0		277.9
Other costs presented separately on the face of the Cash result
Regulatory fees and FSCS levy	21.6	23.5%	16.5	40.7	19.0%	32.9	49.4	19.0%	40.0
Total expenses presented separately on the face of the Cash result	196.8		150.5	202.9		164.3	392.4		317.9

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The total expenses presented separately on the face of the Cash result before tax then reconciles to IFRS expenses as set out below:

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Total expenses presented separately on the face of the Cash result before tax	196.8	202.9	392.4
Expenses which vary with business volumes
Other performance-related costs	76.3	77.6	160.4
Payments to Partners	511.9	516.0	1,011.8
Investment expenses	48.2	37.5	85.7
Third-party administration	79.1	62.8	135.0
Other	44.7	26.1	57.0
Expenses relating to investment in specific areas of the business
Asia expenses	13.9	7.9	20.9
DFM expenses	18.0	17.0	35.7
Total expenses included in the Cash result	988.9	947.8	1,898.9
Reconciling items to IFRS expenses
Amortisation of DAC and PVIF, net of additions	16.9	18.7	45.5
Equity-settled share-based payments expenses	9.9	11.2	20.5
Insurance contract expenses presented elsewhere	(2.1)	(3.6)	(4.5)
Other	1.3	(2.3)	1.3
Total IFRS Group expenses before tax	1,014.9	971.8	1,961.7

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Expenses which vary with business volumes

Other performance-related costs, for both Partners and employees, vary with the level of new business and the financial 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. The increased investment in Asia includes the cost of restructuring during the year.

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.

Reconciling items to IFRS expenses

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.

Expenses associated with insurance contract expenses are included in the Cash result but are shown within the Insurance service expense rather than the Expenses line under IFRS 17.

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Derivation of the Cash result

The Cash result is derived from the IFRS Condensed 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 30 June 2023.

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		IFRS Balance Sheet	Adjustment 1	Adjustment 2	Solvency II Net Assets Balance Sheet	Solvency II Net Assets Balance Sheet
		IFRS Balance Sheet	Adjustment 1	Adjustment 2	Solvency II Net Assets Balance Sheet	30 June 2022¹	31 December 2022¹
30 June 2023	Note	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
Assets
Goodwill		33.6	-	(33.6)	-	-	-
Deferred acquisition costs		321.4	-	(321.4)	-	-	-
Purchased value of in-force business		9.6	-	(9.6)	-	-	-
Computer software		32.7	-	(32.7)	-	-	-
Property and equipment	1	156.8	-	-	156.8	148.0	145.7
Deferred tax assets	2	6.4	-	(4.2)	2.2	3.0	2.5
Investment in associates		4.7	-	-	4.7	1.4	1.4
Reinsurance assets¹		55.3	-	(48.3)	7.0	11.6	5.6
Other receivables^1,2	3	3,177.0	(1,109.8)	(3.1)	2,064.1	1,253.6	1,369.2
Income tax assets	7	-	-	-	-	65.8	35.0
Investment property		1,191.9	(1,191.9)	-	-	-	-
Equities		110,771.4	(110,771.4)	-	-	-	-
Fixed income securities	4	27,886.4	(27,878.4)	-	8.0	7.8	7.9
Investment in Collective Investment Schemes	4	7,174.1	(5,923.6)	-	1,250.5	1,370.5	1,271.7
Derivative financial instruments		4,149.6	(4,149.6)	-	-	-	-
Cash and cash equivalents	4	6,684.0	(6,415.3)	-	268.7	274.5	253.3
Total assets		161,654.9	(157,440.0)	(452.9)	3,762.0	3,136.2	3,092.3
Liabilities
Borrowings	5	189.2	-	-	189.2	371.8	163.8
Deferred tax liabilities	2	219.5	-	9.4	228.9	78.4	165.1
Insurance contract liabilities¹		475.3	(417.8)	(37.4)	20.1	20.4	17.9
Deferred income		513.6	-	(513.6)	-	-	-
Other provisions	6	55.5	-	-	55.5	44.4	46.0
Other payables^1,2	1, 3	2,670.2	(763.2)	(16.6)	1,890.4	1,373.9	1,319.6
Investment contract benefits		113,924.8	(113,924.8)	-	-	-	-
Derivative financial instruments		3,490.4	(3,490.4)	-	-	-	-
Net asset value attributable to unit holders		38,843.8	(38,843.8)	-	-	-	-
Income tax liabilities	7	26.6	-	-	26.6	-	-
Total liabilities		160,408.9	(157,440.0)	(558.2)	2,410.7	1,888.9	1,712.4
Net assets		1,246.0	-	105.3	1,351.3	1,247.3	1,379.9

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

Adjustment 1 strips out the policyholder interest in unit-linked assets and liabilities, to present solely shareholder-impacting balances.

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.

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Notes to the Solvency II Net Assets Balance Sheet

1. Property and equipment, and other payables

£124.5 million (30 June 2022: £115.2 million, 31 December 2022: £114.4 million) of the property and equipment balance represents the right to use leased assets. It has increased year-on-year as a result of taking on a lease for the new London Paddington office, partially offset as the leased assets are depreciated. Lease liabilities of £127.0 million are recognised within the other payables line (30 June 2022: £120.0 million, 31 December 2022: £116.6 million).

Note 10 Other payables to the IFRS Financial Statements provide further detail on lease liabilities.

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 6 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 9 Other receivables and Note 10 Other payables within the IFRS Financial Statements.

Other receivables on the Solvency II Net Assets Balance Sheet have increased from £1,369.2 million at 31 December 2022 to £2,064.1 million at 30 June 2023, principally reflecting an increase in short-term outstanding market trade settlements in the life unit-linked funds and consolidated unit trusts. Further information is set out below and in Note 9 Other receivables.

In order to maintain consistency with the balance sheet presentation under IFRS 17, outstanding reinsurance receipts and insurance claims within the Solvency II Net Assets Balance sheet have been reclassified from Other receivables and Other payables to Reinsurance assets and Insurance claims respectively.

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 have capitalised Bluedoor development costs as a prepayment asset on the IFRS Statement of Financial Position. The asset, which stood at £277.1 million at 30 June 2023 (30 June 2022: £283.9 million, 31 December 2022: £278.3 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 30 June 2023 is 10.5 years.

During 2022 a project to migrate our offshore business onto Bluedoor commenced, which to date has added £17.9 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.

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The movement schedule below demonstrates how the operational readiness prepayment has developed since
1 January 2022.

	£'Million
Cost
At 1 January 2022	413.5
Additions during the period	-
At 30 June 2022	413.5
Additions during the period	6.7
At 31 December 2022	420.2
Additions during the period	11.2
At 30 June 2023	431.4
Accumulated amortisation
At 1 January 2022	(117.2)
Amortisation during the period	(12.4)
At 30 June 2022	(129.6)
Amortisation during the period	(12.3)
At 31 December 2022	(141.9)
Amortisation during the period	(12.4)
At 30 June 2023	(154.3)
Net book value
At 30 June 2022	283.9
At 31 December 2022	278.3
At 30 June 2023	277.1

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.

Business loans to Partners

Facilitating business loans to Partners is a keyway 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.

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	30 June 2023	30 June 2022	31 December 2022
Aggregate LTV across the total Partner lending book	30%	32%	32%
Proportion of the book where LTV is over 75%	7%	10%	10%
Net exposure to loans where LTV is over 100% (£'Million)	6.8	5.5	6.3

If FUM were to decrease by 10%, the net exposure to loans where LTV is over 100% at 30 June 2023 would increase to £8.8 million (30 June 2022: increase to £9.1 million, 31 December 2022: increase to £9.3 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 period we have continued to facilitate business loans to Partners. Following the sale, in the second half of 2022, of a portfolio of securitised business loans to Partners, this balance was negligible at 31 December 2022. Since then, we have continued to make use of the securitisation vehicle to support further business loans to Partners.

Further information is provided in Note 9 Other receivables.

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Total business loans to Partners	400.2	514.5	315.6
Split by funding type:
Business loans to Partners directly funded by the Group	362.2	291.2	315.6
Securitised business loans to Partners	38.0	223.3	-

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:

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Fixed interest securities	8.0	7.8	7.9
Investment in Collective Investment Schemes (AAA-rated money market funds)	1,250.5	1,370.5	1,271.7
Cash and cash equivalents	268.7	274.5	253.3
Total liquid assets	1,527.2	1,652.8	1,532.9

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.

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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. For accounting purposes, we are obliged to disclose on our Consolidated Statement of Financial Position the value of loan notes relating to the securitisation. However, as the securitisation loan notes are secured only on the securitised portfolio of business loans to Partners, they are non-recourse to the Group's other assets. This means that the senior tranche of non-recourse securitisation loan notes, whilst included within borrowings, are very different from the Group's senior unsecured corporate borrowings, which are used to manage working capital and fund investment in the business.

Following the sale in the second half of 2022 of a portfolio of business loans to Partners backing these loan notes, this balance was repaid in full and so was negligible at 31 December 2022. Since then, we have continued to make use of the securitisation vehicle to support further business loans to Partners and this has increased the reported level of borrowings by £25.3 million at 30 June 2023.

Senior unsecured corporate borrowings of £163.9 million at 30 June 2023 is materially unchanged from 31 December 2022. Further information is provided in Note 12 Borrowings and financial commitments within the IFRS Financial Statements.

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Corporate borrowings: bank loans	-	38.6	-
Corporate borrowings: loan notes	163.9	163.8	163.8
Senior unsecured corporate borrowings	163.9	202.4	163.8
Senior tranche of non-recourse securitisation loan notes	25.3	169.4	-
Total borrowings	189.2	371.8	163.8

During the year our revolving credit facility, one of our primary senior unsecured corporate borrowings facilities, was renewed. The undrawn credit available under this facility is £345 million at 30 June 2023, which is repayable at maturity in 2028.

6. Other Provisions

Further information on other provisions, including how the balance has moved period-on-period, is set out in Note 11 Other provisions and contingent liabilities.

7. Income tax liabilities

The Group has an income tax liability of £26.6 million at 30 June 2023 compared to an asset of £35.0 million at 31 December 2022. This is due to a current tax charge of £160.7 million, offset by tax paid of £99.1 million in the period. Further detail is provided in Note 6 Income and deferred taxes.

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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.

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
Opening Solvency II net assets	1,379.9	1,245.3	1,245.3
Dividend paid	(203.3)	(218.9)	(303.9)
Issue of share capital and exercise of options	6.4	12.8	14.5
Consideration paid for own shares	(0.5)	(0.3)	(0.3)
Change in deferred tax	(12.1)	(18.1)	(30.5)
Impact of policyholder tax asymmetry	(17.5)	39.4	50.6
Change in goodwill, intangibles and other non-cash movements	(4.0)	(12.0)	(10.9)
Non-controlling interests arising on the part-disposal of subsidiaries	-	5.0	5.0
Cash result	202.4	194.1	410.1
Closing Solvency II net assets	1,351.3	1,247.3	1,379.9

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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.

		Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	Note	£'Million	£'Million	£'Million
Funds management business	1	818.7	985.9	1,725.8
Distribution business	2	(34.1)	(33.5)	(58.8)
Other		(44.5)	(38.2)	(77.3)
EEV operating profit before exceptional item		740.1	914.2	1,589.7
Exceptional item: Charge cap	3	(859.2)	-	-
EEV operating (loss)/profit after exceptional item		(119.1)	914.2	1,589.7
Investment return variance	4	157.6	(1,346.2)	(1,314.0)
Economic assumption changes	5	37.8	166.9	235.1
EEV profit before tax		76.3	(265.1)	510.8
Tax		(20.6)	56.9	(139.4)
EEV profit after tax		55.7	(208.2)	371.4

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 before exceptional item

The funds management business operating profit has reduced to £818.7 million (six months to 30 June 2022: £985.9 million, year to 31 December 2022: £1,725.8 million) and a full analysis of the result is shown below:

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
New business contribution	463.7	525.6	977.2
Profit from existing business
- unwind of the discount rate	346.8	216.2	440.7
- experience variance	(3.8)	9.9	89.0
- operating assumption change	-	230.6	210.1
Investment income	12.0	3.6	8.8
Funds management EEV operating profit before exceptional item	818.7	985.9	1,725.8

-35-

The new business contribution for the period at £463.7 million (six months to 30 June 2022: £525.6 million, year to 31 December 2022: £977.2 million) was 12% lower than the prior year, primarily reflecting the reduction in new business volumes.

The unwind of the discount rate for the period was higher at £346.8 million (six months to 30 June 2022: £216.2 million, year to 31 December 2022: £440.7 million), reflecting the increase in the opening risk discount rate to 7.0% (2022: 4.2%).

The experience variance during the period was negative £3.8 million (six months to 30 June 2022: £9.9 million positive, year to 31 December 2022: £89.0 million positive). This reflects positive retention experience offset by increased development expenses.

The impact of operating assumption changes in the year was £nil (six months to 30 June 2022: positive £230.6 million, year to 31 December 2022: positive £210.1 million). The impact in the prior year reflects a small improvement to the persistency assumptions for unit trust and ISA business.

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 reported loss has benefited from a reduction in the FSCS levy expense for our distribution business to £10.8 million (six months to 30 June 2022: £23.8 million, year to 31 December 2022: £23.8 million), offsetting a reduction in the gross margin reflecting lower new business volumes.

3. Exceptional item: Charge cap

The exceptional charge reflects the introduction of the charge cap on client bond and pension investments with a duration longer than 10 years as described in the Chief Executive's Report.

4. 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 in a large positive or negative variance. The typical investment return on our funds during the year was 6% after charges, compared to the assumed investment return of 5.0%. This resulted in an investment return variance of £157.6 million (six months to 30 June 2022: negative £1,346.2 million, year to 31 December 2022: negative £1,314.0 million).

5. Economic assumption changes

The positive variance of £37.8 million arising in the year (six months to 30 June 2022: positive £166.9 million, year to 31 December 2022: positive £235.1 million) reflects the positive effect from an increase in the risk-free rate.

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.

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The table below presents the margin before tax from our manufactured business:

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
Investment
New business contribution (£'Million)	67.4	72.5	148.2
Gross inflows (£'Billion)	1.10	1.20	2.31
Margin (%)	6.1	6.0	6.4
Pension
New business contribution (£'Million)	256.6	256.7	495.3
Gross inflows (£'Billion)	4.89	5.10	9.90
Margin (%)	5.2	5.0	5.0
Unit trust and DFM
New business contribution (£'Million)	139.7	196.4	333.7
Gross inflows (£'Billion)	2.05	2.81	4.82
Margin (%)	6.8	7.0	6.9
Total business
New business contribution (£'Million)	463.7	525.6	977.2
Gross inflows (£'Billion)	8.04	9.11	17.03
Margin (%)	5.8	5.8	5.7
Post-tax margin (%)	4.3	4.4	4.3

The overall margin for the period was 5.8% (six months to 30 June 2022: 5.8%, year to 31 December 2022: 5.7%), calculated prior to the exceptional charge change. The overall margin is expected to reduce to 5.4% taking into account the impact of the exceptional charge change.

Economic assumptions

The principal economic assumptions used within the cash flows are set out below:

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
Risk-free rate	4.5%	2.4%	3.9%
Inflation rate	3.6%	3.7%	3.6%
Risk discount rate	7.6%	5.5%	7.0%
Future investment returns:
- Gilts	4.5%	2.4%	3.9%
- Equities	7.5%	5.4%	6.9%
- Unit-linked funds	6.8%	4.7%	6.2%
Expense inflation	3.9%	4.1%	3.9%

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.

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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.

	Note	Change in new business contribution		Change in European Embedded Value
		Pre-tax	Post-tax	Post-tax
		£'Million	£'Million	£'Million
Value at 30 June 2023		463.7	350.2	8,932.8
100bp reduction in risk-free rates, with corresponding change
in fixed interest asset values	1	(3.9)	(3.0)	(58.9)
10% increase in withdrawal rates	2	(34.3)	(25.7)	(417.4)
10% reduction in market value of equity assets	3	-	-	(844.6)
10% increase in expenses	4	(5.7)	(4.3)	(68.1)
100bps increase in assumed inflation	5	(5.5)	(4.2)	(60.5)

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.

	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	62.8	47.2	697.2

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.

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Analysis of the EEV result

The table below provides a summarised breakdown of the embedded value position at the reporting dates.

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Value of in-force business	7,581.5	7,311.6	7,684.8
Solvency II net assets	1,351.3	1,247.3	1,379.9
Total embedded value	8,932.8	8,558.9	9,064.7

	30 June 2023	30 June 2022	31 December 2022
	£	£	£
Net asset value per share	16.28	15.74	16.66

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 £290 million to our embedded value at 30 June 2023 (six months to 30 June 2022: approximately £340 million, year to 31 December 2022: approximately £340 million).

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Section 3: Solvency

St. James's Place has a business model and risk appetite that results 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 it remains at £355.0 million for 30 June 2023 (30 June 2022: £355.0 million, 31 December 2022: £355.0 million).

The Group's overall Solvency II net assets position, MSB, and management solvency ratios are as follows:

30 June 2023	Life	Other regulated	Other	Total	30 June 2022 Total	31 December 2022 Total
30 June 2023	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
Solvency II net assets	515.7	324.7	510.9	1,351.3	1,247.3	1,379.9
MSB	355.0	172.1	-	527.1	532.9	532.7
Management solvency ratio	145%	189%

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.

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An analysis of the Solvency II position for our Group, split by regulated and non-regulated entities at the period-end, is presented in the table below:

30 June 2023	Life	Other regulated	Other	Total	30 June 2022 Total	31 December 2022 Total
30 June 2023	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
Solvency II net assets	515.7	324.7	510.9	1,351.3	1,247.3	1,379.9
Value of in-force (VIF)	5,289.9	-	-	5,289.9	5,240.4	5,580.4
Risk margin	(1,419.5)	-	-	(1,419.5)	(1,450.9)	(1,516.4)
Own funds (A)	4,386.1	324.7	510.9	5,221.7	5,036.8	5,443.9
Solvency capital requirement (B)	(3,346.5)	(115.2)		(3,461.7)	(3,246.6)	(3,522.5)
Solvency II free assets	1,039.6	209.5	510.9	1,760.0	1,790.2	1,921.4
Solvency ratio (A/B)	131%	282%		151%	155%	155%

The solvency ratio after payment of the proposed Group interim dividend is 148% at 30 June 2023 (30 June 2022: 152%, 31 December 2022: 149%).

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 is 131% at 30 June 2023 (30 June 2022: 139%, 31 December 2022: 130%). This also takes into consideration the small impact of the charge cap explained within the Chief Executive's Report.

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Risk and Risk Management

The Group's approach to risk management continues to provide assurance of SJP's financial and operational resilience.

The Risk and Risk Management section on pages 90 to 99 of the 2022 Annual Report and Accounts provides a comprehensive review of the principal risks facing the business, and the Group's approach to managing these risks. The section below highlights the key developments in the risk environment since the year-end Annual Report and Accounts.

Risk environment

Persistent high inflation continues to be the defining feature of the macro-economic environment, well beyond the Bank of England's 2% target and whilst this has reduced during the half-year, this has not been as significant as forecast. In the UK, the Bank of England has been increasing the Bank Rate more sharply in recent months in a bid to dampen this more persistent inflation. Inflationary pressure is not unique to the UK though, with central banks across the world continuing to tighten monetary policy with various degrees of strength. The key potential risks for SJP arise through:

· increases in expenses;

· reductions in asset prices;

· changes in new business levels due to factors such as shifting consumer confidence, market sentiment, reduced investable income and/or attraction of lower risk savings accounts;

· increased financial pressure on Partner businesses, which are exposed to their own expense increases, including interest rate risk on borrowing, and pressure on revenue; and

· changes in withdrawals rates to maintain living standards.

We expect and have shown in the stress and scenario testing carried out as part of our Own Risk and Solvency Assessment (ORSA) and Group dividend assessments, that the Group continues to remain resilient (from a solvency perspective) to macroeconomic shocks (including inflation, interest rate shifts and increased withdrawals) as well as more extreme and prolonged events.

Regulatory change is a constant, and amongst the significant regulatory change agenda for 2023, the FCA has set out the new Consumer Duty regulation. This will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers. We have engaged proactively with this important regulatory initiative. Whilst we believe that we consistently aim to achieve good outcomes for our clients, we have reconsidered all our client focused activities and challenged where there may be features that could inadvertently lead to, or insufficiently mitigate, risk of harm to clients. This includes gathering further evidence from our clients on their understanding of our key literature and making changes to enhance the evidence we record to monitor and assess the value delivered to clients. For example, this has led to changes which will give more consistent, centralised evidence of the activities of the Partnership with clients and reduce the risk of clients not receiving an ongoing advice service of value to them. We have seen increased complaints from a small minority of clients via a claims management company in relation to historic ongoing servicing. This further emphasises the importance of maintaining consistently high standards of evidence of servicing in line with the expectations of Consumer Duty, as well as the importance of our continued investment in the Salesforce CRM platform. Clear evidence of the Group's commitment to improving outcomes can particularly be seen through the decision to cap annual management charges on client bond and pension investments with a duration longer than 10 years. This is a financially material change which benefits longstanding clients. Beyond this there are numerous other changes which whilst less-material to the financial results, improve the Group's ability to consistently deliver good client outcomes.

Consumer Duty is an ongoing regulatory requirement and as such we should expect there to be further changes identified over time resulting from this enhanced standard of care, which will further reduce the risk of harm to clients. The subjective nature of the Consumer Duty regulation also presents a challenge to all firms as the expectation of leading practice will only become clearer over time. As such, there is an increased likelihood of the inherent risk to all financial services firms of redress and/or financial penalty where these standards are not met. Whilst Consumer Duty is intended to apply post the end of July 2023, this material change in emphasis could also lead to clients challenging historic practices.

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The Board has been and continues to be actively involved in defining responses to macroeconomic trends, regulatory change, emerging risks and threats as they arise. Timely and targeted risk-based information has been provided to the Board to continue to support decision making and help in the understanding of key issues to ensure risks are mitigated and opportunities are identified. The risk activity undertaken in the past 12 months demonstrates that SJP continues to remain resilient to the potential threats it faces.

Principal risks and uncertainties

A summary of the principal risks and uncertainties which could impact the Group for the remainder of the current financial year have been provided in the table below.

	Risk description	Business priority	Key risks	Example controls/mitigations
Client proposition	Our product proposition fails to meet the needs, objectives and expectations of our clients. This includes poor relative investment performance and poor product design.	Delivering value to advisers and clients through our investment proposition Our culture and being a leading responsible business	• Investments provide poor returns relative to their benchmarks and/or do not deliver expected client outcomes • Range of solutions does not align with the product and service requirements of our current and potential future clients • Failure to meet client expectations of a sustainable business, not least in respect of climate change and responsible investing	• Monitoring of asset allocations across portfolios to consider whether they are performing as expected in working towards long-term objectives • Monitoring funds against their objectives mindful of an appropriate level of investment risk • Ongoing assessment of value delivered by funds and portfolios versus their objectives • Where necessary, managers are changed in the most effective way possible • Continuous development of the range of services offered to clients • Engagement with fund managers around principles of responsible investment
Conduct	We fail to provide quality, suitable advice or service to clients.	Building and protecting our brand and reputation	• Advisers deliver poor-quality or unsuitable advice • Failure to evidence the provision of good-quality service and advice	• Licensing programme which supports the quality of advice and service from advisers • Technical support helplines for advisers • Timely and clear responses to client complaints • Centralised advice standards and required documentation • Robust oversight process of the advice provided to clients delivered by business assurance, compliance assurance, field risk and advice guidance teams
Financial	We fail to effectively manage the business's finances.	Continued financial strength	• Failure to meet client liabilities • Investment/market risk • Credit risk • Liquidity risk • Insurance risk • Expense risk	• Policyholder liabilities are fully matched • Excess assets generally invested in high-quality, high-liquidity cash and cash equivalents • Direct lending to the Partnership is secured • Reinsurance of insurance risks • 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

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	Risk description	Business priority	Key risks	Example controls/mitigations
Partner proposition	Our proposition solution fails to meet the needs, objectives and expectations of our current and potential future advisers.	Building community Being easier to do business with	• Failure to attract new members of the Partnership • Failure to retain advisers • Failure to increase adviser productivity • Available technology falls short of client and adviser expectations and fails to support growth objectives • The Academy does not adequately support growth of the Partnership	• Focus on providing a market-leading Partner proposition • Adequately skilled and resourced population of supporting field managers • Reliable systems and administration support • Expanding the Academy capacity and supporting recruits through the Academy and beyond • Market leading support to Partners' businesses
People	We are unable to attract, retain and organise the right people to run the business.	Building community Our culture and being a leading responsible business	• Failure to attract and retain personnel with key skills • Poor employee engagement • Failure to create an inclusive and diverse business • Poor employee wellbeing • Our culture of supporting social value is eroded	• Measures to maintain a stable population of employees, including competitive total reward packages • Monitoring of employee engagement and satisfaction • Employee wellbeing is supported through various initiatives, benefits and services • Corporate incentives to encourage social value engagement, including matching of employee charitable giving to the Charitable Foundation • Whistleblowing hotline
Regulatory	We fail to meet current, changing or new regulatory and legislative expectations.	Building and protecting our brand and reputation Our culture and being a leading responsible business	• Failure to comply with existing regulations • Failure to comply with changing regulation or respond to changes in regulatory expectations • Inadequate internal controls	• Compliance function provides expert guidance and carries out extensive assurance work • Strict controls are maintained in highly regulated areas • Maintenance of appropriate solvency capital buffers, and continuous monitoring of solvency experience • Clear accountabilities and understanding of responsibilities across the business • Fostering of positive regulatory relationships
Security and resilience	We fail to adequately secure our physical assets, systems and/or sensitive information, or to deliver critical business services to our clients.	Building and protecting our brand and reputation	• Internal or external fraud • Core system failure • Corporate, Partnership or third-party information security and cyber risks • Disruption in key business services to our clients	• Business continuity planning for SJP and its key suppliers • Focus on building operational resilience • Mandatory 'Cyber Essentials Plus' accreditation for Partner practices or use of an SJP 'Device as a Service' solution • 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, competition and brand	Challenge from competitors and impact of reputational damage.	Building and protecting our brand and reputation Our culture and being a leading responsible business	• Increased competitive pressure from traditional and disruptive (non-traditional) competitors • Cost and charges pressure • Negative media coverage • Failure to meet our commitments to net zero	• Clear demonstration of value delivered to clients through advice, service and products • Investment in improving positive brand recognition • Ongoing development of client and Partner propositions • 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

Risk

description

Business priority

Key risks

Example controls/mitigations

Partner proposition

Our proposition solution fails to meet the needs, objectives and expectations of our current and potential future advisers.

Building community

Being easier to do business with

• Failure to attract new members of the Partnership

• Failure to retain advisers

• Failure to increase adviser productivity

• Available technology falls short of client and adviser expectations and fails to support growth objectives

• The Academy does not adequately support growth of the Partnership

• Focus on providing a market-leading Partner proposition

• Adequately skilled and resourced population of supporting field managers

• Reliable systems and administration support

• Expanding the Academy capacity and supporting recruits through the Academy and beyond

• Market leading support to Partners' businesses

People

We are unable to attract, retain and organise the right people to run the business.

Building community

Our culture and being a leading responsible business

• Failure to attract and retain personnel with key skills

• Poor employee engagement

• Failure to create an inclusive and diverse business

• Poor employee wellbeing

• Our culture of supporting social value is eroded

• Measures to maintain a stable population of employees, including competitive total reward packages

• Monitoring of employee engagement and satisfaction

• Employee wellbeing is supported through various initiatives, benefits and services

• Corporate incentives to encourage social value engagement, including matching of employee charitable giving to the Charitable Foundation

• Whistleblowing hotline

Regulatory

We fail to meet current, changing or new regulatory and legislative expectations.

Building and protecting our brand and reputation

Our culture and being a leading responsible business

• Failure to comply with existing regulations

• Failure to comply with changing regulation or respond to changes in regulatory expectations

• Inadequate internal controls

• Compliance function provides expert guidance and carries out extensive assurance work

• Strict controls are maintained in highly regulated areas

• Maintenance of appropriate solvency capital buffers, and continuous monitoring of solvency experience

• Clear accountabilities and understanding of responsibilities across the business

• Fostering of positive regulatory relationships

Security and resilience

We fail to adequately secure our physical assets, systems and/or sensitive information, or to deliver critical business services to our clients.

Building and protecting our brand and reputation

• Internal or external fraud

• Core system failure

• Corporate, Partnership or third-party information security and cyber risks

• Disruption in key business services to our clients

• Business continuity planning for SJP and its key suppliers

• Focus on building operational resilience

• Mandatory 'Cyber Essentials Plus' accreditation for Partner practices or use of an SJP 'Device as a Service' solution

• 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, competition and brand

Challenge from competitors and impact of reputational damage.

Building and protecting our brand and reputation

Our culture and being a leading responsible business

• Increased competitive pressure from traditional and disruptive (non-traditional) competitors

• Cost and charges pressure

• Negative media coverage

• Failure to meet our commitments to net zero

• Clear demonstration of value delivered to clients through advice, service and products

• Investment in improving positive brand recognition

• Ongoing development of client and Partner propositions

• 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

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	Risk description	Business priority	Key risks	Example controls/mitigations
Third parties	Third-party outsourcers' activities impacts our performance and risk management.	Being easier to do business with Building and protecting our brand and reputation Our culture and being a leading responsible business	• Operational failures by material outsourcers • Failure of critical service; significant areas include: o investment administration o fund management o custody o policy administration o cloud services	• Oversight regime in place to identify prudent steps to reduce risk of operational failures by material third-party providers • Ongoing monitoring, including assessment of operational resilience • Due diligence on key suppliers • Oversight of service levels of our third-party administration provider

Risk

description

Business priority

Key risks

Example controls/mitigations

Third parties

Third-party outsourcers' activities impacts our performance and risk management.

Being easier to do business with

Building and protecting our brand and reputation

Our culture and being a leading responsible business

• Operational failures by material outsourcers

• Failure of critical service; significant areas include:

o investment administration

o fund management

o custody

o policy administration

o cloud services

• Oversight regime in place to identify prudent steps to reduce risk of operational failures by material third-party providers

• Ongoing monitoring, including assessment of operational resilience

• Due diligence on key suppliers

• Oversight of service levels of our third-party administration provider

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Condensed Consolidated Half-Year Financial Statements prepared under International Financial Reporting Standards (IFRS) as adopted by the United Kingdom (UK)

-46-

Condensed Consolidated Statement of Comprehensive Income

	Note	Six months ended 30 June 2023	Six months ended 30 June 2022^1,2	Year ended 31 December 2022^1,2
	Note	£'Million	£'Million	£'Million
Fee and commission income	4	1,351.7	687.6	1,929.6
Expenses		(1,014.9)	(971.8)	(1,961.7)

Investment return	5	6,647.3	(16,989.4)	(13,730.3)
Movement in investment contract benefits		(6,595.8)	16,974.8	13,759.4

Insurance revenue	2	12.6	13.8	26.5
Insurance service expenses	2	(12.3)	(9.4)	(13.5)
Net reinsurance expense	2	(3.3)	(2.4)	(9.6)
Net insurance finance (expense)/income	2	(0.3)	1.3	2.4
		(3.3)	3.3	5.8

Profit/(loss) before tax	3	385.0	(295.5)	2.8
Tax attributable to policyholders' returns	6	(169.3)	555.0	501.1
Profit before tax attributable to shareholders' returns		215.7	259.5	503.9
Total tax (charge)/credit	6	(223.3)	503.7	404.4
Less: tax attributable to policyholders' returns	6	169.3	(555.0)	(501.1)
Tax attributable to shareholders' returns	6	(54.0)	(51.3)	(96.7)
Profit and total comprehensive income for the year		161.7	208.2	407.2
Profit attributable to non-controlling interests		0.1	-	0.4
Profit attributable to equity shareholders		161.6	208.2	406.8
Profit and total comprehensive income for the year		161.7	208.2	407.2

		Pence	Pence	Pence
Basic earnings per share	15	29.6	38.4	75.0
Diluted earnings per share	15	29.5	38.1	74.3

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Fee and commission income and Movement in investment contract benefits. See Note 2c.

The results relate to continuing operations.

The Notes and information on pages 50 to 102 form part of these Condensed Consolidated Financial Statements.

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Condensed Consolidated Statement of Changes in Equity

		Equity attributable to owners of the Parent Company
		Share capital	Share premium	Shares in trust reserve	Misc. reserves	Retained earnings	Total	Non-controlling interests	Total equity
	Note	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
At 1 January 2022		81.1	213.8	(8.5)	2.5	830.3	1,119.2	-	1,119.2
Impact of the adoption of IFRS 17¹		-	-	-	-	9.6	9.6	-	9.6
At 1 January 2022 (restated)		81.1	213.8	(8.5)	2.5	839.9	1,128.8	-	1,128.8
Profit and total comprehensive income for the period¹		-	-	-	-	208.2	208.2	-	208.2
Dividends	15	-	-	-	-	(218.9)	(218.9)	-	(218.9)
Issue of share capital	15	0.1	5.6	-	-	-	5.7	-	5.7
Exercise of options	15	0.4	6.7	-	-	-	7.1	-	7.1
Consideration paid for own shares		-	-	(0.3)	-	-	(0.3)	-	(0.3)
Shares sold during the period		-	-	4.7	-	(4.7)	-	-	-
Retained earnings credit in respect of share option charges		-	-	-	-	11.2	11.2	-	11.2
Non-controlling interests arising on the part-disposal of subsidiaries		-	-	-	-	4.9	4.9	0.1	5.0
At 30 June 2022¹		81.6	226.1	(4.1)	2.5	840.6	1,146.7	0.1	1,146.8
At 1 January 2023¹		81.6	227.8	(4.1)	2.5	963.8	1,271.6	0.2	1,271.8
Profit and total comprehensive income for the period		-	-	-	-	161.6	161.6	0.1	161.7
Dividends	15	-	-	-	-	(203.1)	(203.1)	(0.2)	(203.3)
Exercise of options	15	0.7	5.7	-	-	-	6.4	-	6.4
Consideration paid for own shares		-	-	(0.5)	-	-	(0.5)	-	(0.5)
Shares sold during the period		-	-	3.8	-	(3.8)	-	-	-
Retained earnings credit in respect of share option charges		-	-	-	-	9.9	9.9	-	9.9
At 30 June 2023		82.3	233.5	(0.8)	2.5	928.4	1,245.9	0.1	1,246.0

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Miscellaneous reserves represent other non-distributable reserves.

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Condensed Consolidated Statement of Financial Position

	Note	30 June 2023	30 June 2022^1,2	Year ended 31 December 2022¹
	Note	£'Million	£'Million	£'Million
Assets
Goodwill	7	33.6	33.2	33.6
Deferred acquisition costs	7	321.4	362.0	336.6
Intangible assets
- Purchased value of in-force business	7	9.6	12.8	11.2
- Computer software	7	32.7	31.7	33.3
Property and equipment		156.8	148.0	145.7
Deferred tax assets	6	6.4	12.4	12.5
Investment in associates		4.7	1.4	1.4
Reinsurance assets		55.3	70.0	54.6
Other receivables	9	3,177.0	3,458.2	2,977.2
Income tax assets		-	65.8	35.0
Investments
- Investment property	8	1,191.9	1,647.6	1,294.5
- Equities	8	110,771.4	97,583.2	103,536.0
- Fixed income securities	8	27,886.4	27,222.1	27,552.7
- Investment in Collective Investment Schemes	8	7,174.1	5,175.2	5,735.4
- Derivative financial instruments	8	4,149.6	1,861.9	3,493.0
Cash and cash equivalents		6,684.0	7,483.5	6,432.8
Total assets		161,654.9	145,169.0	151,685.5
Liabilities
Borrowings	12	189.2	371.8	163.8
Deferred tax liabilities	6	219.5	105.8	162.9
Insurance contract liabilities		475.3	506.0	470.5
Deferred income	7	513.6	550.0	530.4
Other provisions	11	55.5	44.4	46.0
Other payables	10	2,670.2	2,778.3	2,180.7
Investment contract benefits		113,924.8	102,396.5	106,964.7
Derivative financial instruments	8	3,490.4	2,397.6	3,266.3
Net asset value attributable to unit holders	8	38,843.8	34,871.8	36,628.4
Income tax liabilities		26.6	-	-
Total liabilities		160,408.9	144,022.2	150,413.7
Net assets		1,246.0	1,146.8	1,271.8
Shareholders' equity
Share capital	15	82.3	81.6	81.6
Share premium		233.5	226.1	227.8
Shares in trust reserve		(0.8)	(4.1)	(4.1)
Miscellaneous reserves		2.5	2.5	2.5
Retained earnings		928.4	840.6	963.8
Equity attributable to owners of the Parent Company		1,245.9	1,146.7	1,271.6
Non-controlling interests		0.1	0.1	0.2
Total equity		1,246.0	1,146.8	1,271.8

		Pence	Pence	Pence
Net assets per share		227.1	210.9	233.7

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

-49-

Condensed Consolidated Statement of Cash Flows

	Note	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	Note	£'Million	£'Million	£'Million
Cash flows from operating activities
Cash generated/(used in) from operations	14	504.2	42.7	(975.1)
Interest received		48.1	18.3	61.8
Interest paid		(7.0)	(6.0)	(12.4)
Income taxes paid	6	(99.1)	(109.3)	(121.1)
Contingent consideration paid		-	(0.8)	(6.3)
Net cash inflow/(outflow) from operating activities		446.2	(55.1)	(1,053.1)
Cash flows from investing activities
Payments for property and equipment		(4.5)	(1.9)	(4.0)
Payment of software development costs	7	(6.7)	(9.1)	(16.1)
Payments for acquisition of subsidiaries and other business combinations, net of cash acquired		-	(8.0)	(13.9)
Payments for associates		(3.3)	-	-
Proceeds from sale of shares in subsidiaries and other business combinations, net of cash disposed		-	4.0	4.0
Proceeds from sale of financial assets held at amortised cost		-	-	262.5
Net cash (outflow)/inflow from investing activities		(14.5)	(15.0)	232.5
Cash flows from financing activities
Proceeds from the issue of share capital and exercise of options		6.4	7.1	8.8
Consideration paid for own shares		(0.5)	(0.3)	(0.3)
Proceeds from borrowings		58.1	72.4	204.0
Repayment of borrowings		(33.0)	(132.8)	(475.3)
Principal elements of lease payments		(7.9)	(7.3)	(13.8)
Dividends paid to Company's shareholders	15	(203.1)	(218.9)	(303.6)
Dividends paid to non-controlling interests in subsidiaries		(0.2)	-	(0.3)
Net cash (outflow) from financing activities		(180.2)	(279.8)	(580.5)
Net increase/(decrease) in cash and cash equivalents		251.5	(349.9)	(1,401.1)
Cash and cash equivalents at beginning of period		6,432.8	7,832.9	7,832.9
Effects of exchange rate changes on cash and cash equivalents		(0.3)	0.5	1.0
Cash and cash equivalents at end of period		6,684.0	7,483.5	6,432.8

-50-

Notes to the Financial Statements

1. Basis of preparation

This condensed set of Consolidated Half-Year Financial Statements for the six months ended 30 June 2023, which comprise the Half-Year Financial Statements of St. James's Place plc (the Company) and its subsidiaries (together referred to as the 'Group'), has been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with IAS 34 'Interim Financial Reporting', an International Financial Reporting Standard (IFRS) as adopted by the United Kingdom (UK). The Condensed Consolidated Half-Year Financial Statements should be read in conjunction with the Annual Financial Statements for the year ended 31 December 2022, which have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive's Report and the Chief Financial Officer's Report on pages 5 to 11. The financial performance and financial position of the Group are described in the Financial Review.

The stress and scenario testing carried out as part of our Own Risk and Solvency Assessment (ORSA) and Group dividend assessment demonstrates that the Group continues to remain resilient to macro-economic shocks (including inflation and interest rate shifts) as well as more extreme events.

The Board remains confident in the Group's ability to withstand the impact of high and persistent inflation, the key risks this presents to the Group are set out in the Risk and Risk Management section on pages 41 to 44.

The Group has undertaken a going concern assessment reviewing its current and projected financial performance and position including, profitability, liquidity and solvency. In addition, the Board has also considered the impact of the constantly changing regulatory environment. Having assessed performance together with the principal risks, the Directors believe it remains appropriate to adopt the going concern basis of accounting in preparing the Financial Statements.

The Group Financial Statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group').

2. Significant accounting policies

(a) Statement of compliance

These Condensed Consolidated Half-Year Financial Statements were prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the UK.

The following new and amended IFRS standards, effective for periods beginning 1 January 2023, have been applied:

· IFRS 17 Insurance Contracts;

· 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 - Definition of Accounting Estimates; and

· Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction.

· Amendments to IAS 12 Income Taxes - International Tax Reform - Pillar Two Model Rules.

In preparing these Condensed Consolidated Half-Year Financial Statements, except for the adoption of IFRS 17, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the Consolidated Financial Statements for the year ended 31 December 2022. See Note 2(c) for further information.

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2. Significant accounting policies (continued)

(b) New and amended accounting standards not yet effective

As at 30 June 2023 there were no new and amended accounting standards not yet effective which are relevant to the Group.

Adjustment 1 - Adoption of IFRS 17 Insurance Contracts

On 1 January 2023 the Group adopted IFRS 17 'Insurance Contracts' and, as required by the standard, applied the requirements retrospectively with comparatives restated from 1 January 2022.

The adoption of IFRS 17 resulted in an increase of £2.6 million for the six months ended 30 June 2022 and £1.8 million increase for the year ended 31 December 2022 to the IFRS profit after tax. The movement occurred due to the revised pattern of profit recognition under IFRS 17, which replaces margins in the measurement of insurance contract liabilities under IFRS 4 with an explicit allowance for risk and a Contractual Service Margin (CSM) which defers the recognition of profit over the coverage period.

There is no impact on the Group's 2022 APMs except for "Underlying profit" which is affected to the same extent that IFRS 17 impacts IFRS profit after tax.

IFRS 17 incorporates revised principles for the recognition, measurement, presentation and disclosure of insurance contracts. The presentation of insurance revenue and insurance service expenses in the Statement of Comprehensive Income is based upon the concept of insurance services provided during the period.

IFRS 17 transition approach

The fair value approach (FVA) has been applied to all insurance and reinsurance 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).

Under the FVA, the Contractual Service Margin (CSM) recognised at transition is determined as the difference between the fair value of contracts at the transition date and the fulfilment cashflows at the transition date. The fair value on transition has been derived in accordance with IFRS 13 Fair Value Measurement and represents the price a market participant would require to assume the liabilities in an orderly transaction. Under the fair value approach, the simplification permitting contracts in different annual cohorts to be placed into a single group of contracts has been adopted. The Group closed to new insurance business, as defined under IFRS 17, in 2011.

On transition to IFRS 17 a deferred tax liability has been established representing the tax in relation to the movement in equity on transition to IFRS 17. The deferred tax liability will fully unwind over 10 years from the transition date.

-52-

2. Significant accounting policies (continued)

Accounting policies

Following the adoption of IFRS 17 on 1 January 2023, the accounting policies for 'Insurance and reinsurance premiums' and 'Insurance claims and reinsurance recoveries', as outlined in the Annual Report and Accounts 2022, became redundant. In addition, a new policy 'Net insurance service result' was added and the policies for 'Reinsurance assets' and 'Insurance contract liabilities' were amended. The new and amended policies have been set out below.

Insurance revenue

Insurance revenue represents the expected income from the provision of insurance services. The income is recognised during the relevant coverage period in which the services will be provided.

Insurance service expenses

Insurance service expenses comprise insurance claims and other insurance service expenses. The expense is recognised during the relevant coverage period in which the services will be provided, excluding any investment components.

Net reinsurance income/(expense)

Net reinsurance income/(expense) reflects the insurance revenue and expenses arising from reinsurance contracts. Reinsurance income and expense is recognised during the relevant coverage period in which the services will be provided.

Net insurance finance income/(expense)

Net insurance finance income/(expense) represents the change in the value of insurance contracts and the associated backing assets due to financial risk and the effect of the time value of money. All insurance finance income and expense is included in the Statement of Comprehensive Income on an accruals basis.

Reinsurance assets

Reinsurance assets represent amounts recoverable from reinsurers in respect of non-unit-linked insurance contract liabilities, net of any future reinsurance premiums. See Insurance contract liabilities for further information.

Insurance contract liabilities

Insurance contract liabilities are determined by applying the default General Measurement Model (GMM) to non-unit-linked insurance business and reassurance ceded, and the Variable Fee Approach (VFA) to unit-linked insurance business measured under IFRS 17.

Under the General Measurement Model (applicable to non-unit-linked insurance business and reassurance ceded), groups of contracts are recognised and measured as:

· the Fulfilment Cashflows, comprising 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 (RA); and

· the Contractual Service Margin (CSM), comprising the unearned profit within a group of contracts that will be recognised as the Group provides insurance services in the future.

The estimate of future cashflows represents the best estimate of the cost to fulfil cashflows within the contract boundary, incorporating current non-financial assumptions.

The RA represents the compensation that an entity requires for bearing the uncertainty about the amount and timing of cashflows that arise from non-financial risk as the entity fulfils insurance contracts. It is calculated using a cost of capital approach, leveraging the Solvency II view of non-financial risk.

The CSM is determined at contract outset or IFRS 17 transition and subsequently remeasured for non-financial changes in the Fulfilment Cashflows and the accretion of interest using a discount rate locked-in at transition. It is amortised over the period of the contract in line with coverage units based upon the sum assured, which reflect the quantity of insurance services provided. If a group of contracts is expected to be onerous (i.e. loss-making) over the remaining coverage period, a loss is recognised immediately.

-53-

2. Significant accounting policies (continued)

Under the Variable Fee Approach (applicable to unit-linked insurance business), the GMM is supplemented by an adaptation for contracts with direct participation features. The Fulfilment Cashflows for unit-linked insurance business reflect an obligation to pay policyholders an amount equal to the fair value of underlying assets, less the variable fee for future service. The RA reflects the compensation for non-financial risk in relation to this variable fee only. The CSM is subsequently remeasured for changes in the variable fee only, arising from both financial and non-financial risks.

Critical accounting estimates and judgements in applying policies

Estimates

Critical accounting estimates are those which give rise to a significant risk of material adjustment to the balances recognised in the Financial Statements within the next 12 months. Following the adoption of IFRS 17, on 1 January 2023, the Group has applied the following critical accounting estimate in 'determining the value of insurance contract liabilities' as disclosed in the Annual Report and Accounts 2022.

Determining the value of insurance contract liabilities and reinsurance assets

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. For this reason we consider that this is a critical estimate only in relation to the gross asset and liability positions in the Statement of Financial Position.

The assumptions used in the calculation of insurance contract liabilities and reinsurance assets that have an effect on the financial statements of the Group are:

· the assumed rate of investment return, which is based on current risk-free swap rates;

· the mortality and morbidity rates, which are based on the results of an investigation of experience during the year;

· the level of expenses, which for the year under review is based on actual expenses in 2022 and expected rates in 2023 and over the long-term;

· the lapse assumption, which is set based on an investigation of experience during the year; and

· the risk adjustment is determined using a cost of capital approach with a 3% charge.

Judgements

Following the adoption of IFRS 17, on 1 January 2023, the Group has applied the following judgement:

Determining the value of insurance contract liabilities and reinsurance assets on transition to IFRS 17

The fair value on transition has been derived in accordance with IFRS 13 Fair Value Measurement and represents the price a market participant would require to assume the liabilities in an orderly transaction. Fair value has been determined based on the Solvency II best estimate liability, together with an additional margin for risk calculated using a cost of capital approach. The Solvency II best estimate liability utilises economic assumptions based on relevant market information, together with non-economic assumptions including lapse rates, expenses and mortality rates.

-54-

2. Significant accounting policies (continued)

Other disclosures relevant to the Initial application of IFRS 17 considered material to the Group:

The IFRS 17 insurance and reinsurance disclosure notes have been prepared on a total basis given that the movement during all periods for the relevant categories of insurance business, being participating and non-participating, are individually immaterial.

Insurance Revenue

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
Amounts relating to changes in liabilities for remaining coverage
- Expected incurred claims and other insurance service expenses	11.9	12.8	24.5
- Change in risk adjustment for non-financial risk for risk expired	0.2	0.3	0.7
- CSM recognised for services provided	0.5	0.7	1.3
Total insurance revenue	12.6	13.8	26.5

-55-

2. Significant accounting policies (continued)

Reinsurance assets

	Remaining coverage component	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million
Balance at 1 January 2023	49.0	5.6	54.6

Net reinsurance expense	(3.3)	-	(3.3)
Finance income from reinsurance contracts recognised in profit or loss	1.3	-	1.3
Total changes in the statement of comprehensive income	(2.0)	-	(2.0)

Premiums paid	10.7	-	10.7
Amounts received from reinsurers relating to incurred claims	(9.4)	1.4	(8.0)
Total cash flows	1.3	1.4	2.7

Balance at 30 June 2023	48.3	7.0	55.3

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2023	35.7	5.1	8.2	5.6	54.6

Net reinsurance expense	(2.8)	(0.2)	(0.3)	-	(3.3)
Finance income from insurance contracts recognised in profit or loss	1.1	0.2	-	-	1.3
Total changes in the statement of comprehensive income	(1.7)	-	(0.3)	-	(2.0)

Premiums paid	10.7	-	-	-	10.7
Amounts received from reinsurers relating to incurred claims	(9.4)	-	-	1.4	(8.0)
Total cash flows	1.3	-	-	1.4	2.7

Balance at 30 June 2023	35.3	5.1	7.9	7.0	55.3

-56-

2. Significant accounting policies (continued)

Reinsurance assets (continued)

	Remaining coverage component	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million
Balance at 1 January 2022	64.9	9.9	74.8

Net reinsurance expense	(2.4)	-	(2.4)
Finance expenses from reinsurance contracts recognised in profit or loss	(9.1)	-	(9.1)
Total changes in the statement of comprehensive income	(11.5)	-	(11.5)

Premiums paid	12.3	-	12.3
Amounts received from reinsurers relating to incurred claims	(7.3)	1.7	(5.6)
Total cash flows	5.0	1.7	6.7

Balance at 30 June 2022	58.4	11.6	70.0

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	47.9	8.5	8.5	9.9	74.8

Net reinsurance expense	(2.6)	(0.4)	0.6	-	(2.4)
Finance expenses from insurance contracts recognised in profit or loss	(7.3)	(1.8)	-	-	(9.1)
Total changes in the statement of comprehensive income	(9.9)	(2.2)	0.6	-	(11.5)

Premiums paid	12.3	-	-	-	12.3
Amounts received from reinsurers relating to incurred claims	(7.3)	-	-	1.7	(5.6)
Total cash flows	5.0	-	-	1.7	6.7

Balance at 30 June 2022	43.0	6.3	9.1	11.6	70.0

-57-

2. Significant accounting policies (continued)

Reinsurance assets (continued)

	Remaining coverage component	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million
Balance at 1 January 2022	64.9	9.9	74.8

Net reinsurance expense	(9.6)	-	(9.6)
Finance expenses from reinsurance contracts recognised in profit or loss	(14.9)	-	(14.9)
Total changes in the statement of comprehensive income	(24.5)	-	(24.5)

Premiums paid	24.0	-	24.0
Amounts received from reinsurers relating to incurred claims	(15.4)	(4.3)	(19.7)
Total cash flows	8.6	(4.3)	4.3

Balance at 31 December 2022	49.0	5.6	54.6

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Recoverable for claims reinsured	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	47.9	8.5	8.5	9.9	74.8

Net reinsurance expense	(8.6)	(0.7)	(0.3)	-	(9.6)
Finance expenses from insurance contracts recognised in profit or loss	(12.2)	(2.7)	-	-	(14.9)
Total changes in the statement of comprehensive income	(20.8)	(3.4)	(0.3)	-	(24.5)

Premiums paid	24.0	-	-	-	24.0
Amounts received from reinsurers relating to incurred claims	(15.4)	-	-	(4.3)	(19.7)
Total cash flows	8.6	-	-	(4.3)	4.3

Balance at 31 December 2022	35.7	5.1	8.2	5.6	54.6

-58-

2. Significant accounting policies (continued)

All reinsurance contracts are measured under the fair value approach.

Reinsurance assets - Contractual service margin

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Less than 1 year	0.7	0.9	0.7
In 2 to 5 years	1.4	1.9	1.6
>5 years	5.8	6.3	5.9
Total CSM for reinsurance contracts	7.9	9.1	8.2

The analysis above shows the expected recognition of the CSM remaining at the end of the reporting period.

-59-

2. Significant accounting policies (continued)

Insurance contract liabilities

	Liability for remaining coverage
	Excluding loss component	Loss component	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2023	452.6	-	17.9	470.5

Insurance revenue	(12.6)	-	-	(12.6)
Insurance service expenses	12.3	-	-	12.3
Finance expense from insurance contracts recognised in profit or loss	1.6	-	-	1.6
Total changes in the statement of comprehensive income	1.3	-	-	1.3

Investment components excluded from insurance revenue and insurance service expenses	(14.4)	-	-	(14.4)

Premiums received	(14.8)	-	-	(14.8)
Claims and other insurance service expenses paid	30.5	-	2.2	32.7
Total cash flows	15.7	-	2.2	17.9

Balance at 30 June 2023	455.2	-	20.1	475.3

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2023	439.0	5.8	7.8	17.9	470.5

Insurance service result	(0.4)	(0.1)	0.2	-	(0.3)
Finance expense from insurance contracts recognised in profit or loss	1.5	0.1	-	-	1.6
Total changes in the statement of comprehensive income	1.1	-	0.2	-	1.3

Investment components excluded from insurance revenue and insurance service expenses	(14.4)	-	-	-	(14.4)

Premiums received	(14.8)	-	-	-	(14.8)
Claims and other insurance service expenses paid	30.5	-	-	2.2	32.7
Total cash flows	15.7	-	-	2.2	17.9

Balance at 30 June 2023	441.4	5.8	8.0	20.1	475.3

-60-

2. Significant accounting policies (continued)

Insurance contract liabilities (continued)

	Liability for remaining coverage
	Excluding loss component	Loss component	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	543.4	-	25.2	568.6

Insurance revenue	(13.8)	-	-	(13.8)
Insurance service expenses	9.4	-	-	9.4
Finance income from insurance contracts recognised in profit or loss	(10.4)	-	-	(10.4)
Total changes in the statement of comprehensive income	(14.8)	-	-	(14.8)

Investment components excluded from insurance revenue and insurance service expenses	(56.6)	-	-	(56.6)

Premiums received	(17.1)	-	-	(17.1)
Claims and other insurance service expenses paid	30.7	-	(4.8)	25.9
Total cash flows	13.6	-	(4.8)	8.8

Balance at 30 June 2022	485.6	-	20.4	506.0

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	520.8	9.3	13.3	25.2	568.6

Insurance service result	(0.3)	(0.4)	(3.7)	-	(4.4)
Finance income from insurance contracts recognised in profit or loss	(8.7)	(1.7)	-	-	(10.4)
Total changes in the statement of comprehensive income	(9.0)	(2.1)	(3.7)	-	(14.8)

Investment components excluded from insurance revenue and insurance service expenses	(56.6)	-	-	-	(56.6)

Premiums received	(17.1)	-	-	-	(17.1)
Claims and other insurance service expenses paid	30.7	-	-	(4.8)	25.9
Total cash flows	13.6	-	-	(4.8)	8.8

Balance at 30 June 2022	468.8	7.2	9.6	20.4	506.0

-61-

2. Significant accounting policies (continued)

Insurance contract liabilities (continued)

	Liability for remaining coverage
	Excluding loss component	Loss component	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	543.4	-	25.2	568.6

Insurance revenue	(26.5)	-	-	(26.5)
Insurance service expenses	13.5	-	-	13.5
Finance income from insurance contracts recognised in profit or loss	(17.3)	-	-	(17.3)
Total changes in the statement of comprehensive income	(30.3)	-	-	(30.3)

Investment components excluded from insurance revenue and insurance service expenses	(76.2)	-	-	(76.2)

Premiums received	(34.0)	-	-	(34.0)
Claims and other insurance service expenses paid	49.7	-	(7.3)	42.4
Total cash flows	15.7	-	(7.3)	8.4

Balance at 31 December 2022	452.6	-	17.9	470.5

	Estimates of present value of future cash flows	Risk adjustment for non-financial risk	CSM	Liability for claims incurred	Total
	£'Million	£'Million	£'Million	£'Million	£'Million
Balance at 1 January 2022	520.8	9.3	13.3	25.2	568.6

Insurance service result	(6.6)	(0.9)	(5.5)	-	(13.0)
Finance income from insurance contracts recognised in profit or loss	(14.7)	(2.6)	-	-	(17.3)
Total changes in the statement of comprehensive income	(21.3)	(3.5)	(5.5)	-	(30.3)

Investment components excluded from insurance revenue and insurance service expenses	(76.2)	-	-	-	(76.2)

Premiums received	(34.0)	-	-	-	(34.0)
Claims and other insurance service expenses paid	49.7	-	-	(7.3)	42.4
Total cash flows	15.7	-	-	(7.3)	8.4

Balance at 31 December 2022	439.0	5.8	7.8	17.9	470.5

-62-

2. Significant accounting policies (continued)

Insurance contract liabilities - Contractual service margin

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Less than 1 year	0.8	1.0	0.8
In 2 to 5 years	1.7	2.1	1.7
>5 years	5.5	6.5	5.3
Total CSM for insurance contracts	8.0	9.6	7.8

The analysis above shows the expected recognition of the CSM remaining at the end of the reporting period.

-63-

2. Significant accounting policies (continued)

Assumptions used in the calculation of Insurance contract liabilities and reinsurance assets

The principal assumptions used in the calculation of insurance liabilities and reinsurance assets are:

Assumption

Description

Interest rate

The valuation interest rate is calculated by reference to the long-term risk-free swap rate at the balance sheet date. The implied 5-year rate is 5.0% at 30 June 2023 (30 June 2022: 2.5%, 31 December 2022: 4.1%).

Mortality

Mortality is based on Group experience and is set at 65% of the TM/F92 tables with an additional loading for smokers.

Morbidity -
Critical Illness

Morbidity is based on Group experience. There has been no change during the period. Sample annual rates per £ for a male non-smoker are:

Age	Rate
25	0.063%
35	0.111%
45	0.266%

Morbidity - Permanent Health Insurance

Morbidity is based on Group experience. There has been no change during the period. Sample annual rates per £ income benefit for a male non-smoker are:

Age	Rate
25	0.228%
35	0.603%
45	1.308%

Expenses

Contract liabilities are calculated allowing for the actual costs of administration of the business.

Product	Annual cost
Product	30 June 2023	30 June 2022	31 December 2022
Onshore protection business	£33.73	£31.27	£33.73
Offshore protection business	£66.36	£62.40	£66.36

Persistency

Allowance is made for a best estimate level of lapses within the calculation of the liabilities. There has been no change in rates during the period. Sample annual lapse rates are:

	Lapse
	All durations
Onshore protection business	9%
Offshore whole of life	8%
Offshore critical illness	13%

Risk adjustment

The risk adjustment is determined using a cost of capital approach with a 3% charge. There has been no change during the period.

-64-

2. Significant accounting policies (continued)

Adjustment 2 - Consolidated Statement of Comprehensive Income

IFRS 17 provides greater clarity on the split of profit between insurance and investment contracts; during the implementation, a review of revenue identified that some items within the Consolidated statement of comprehensive income were misclassified and required restatement. The restatement totalled £27.6 million for the six months ended 30 June 2022 and £24.6 million for the year ended 31 December 2022, decreasing Fee and commission income and increasing Movement in investment contract benefits, by the same amount, resulting in a net nil impact on the profit for the period.

Adjustment 3 - Consolidated Statement of Financial Position

During 2022 it was identified that the over-the-counter (OTC) derivative contracts held allow for the relevant other receivables and other payables balances to be offset and presented net, consistent with the contractual settlement basis. As at 31 December 2022 the relevant balances were appropriately presented net however a restatement of the six months ended 30 June 2022 is required where the relevant balances had been presented gross. The restatement totalled £3,044.1 million, decreasing Other receivables and Other payables, by the same amount, resulting in a net nil impact on net assets for the period.

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2. Significant accounting policies (continued)

Restatement for the six months ended 30 June 2022

Impact on Consolidated Statement of Comprehensive Income

		Increase/(decrease)
	Six months ended 30 June 2022	Adj 1	Adj 2	Restated Six months ended 30 June 2022
	£'Million	£'Million	£'Million	£'Million
Insurance premium income	15.7	(15.7)	-	-
Less premiums ceded to reinsurers	(10.8)	10.8	-	-
Net insurance premium income	4.9	(4.9)	-	-
Fee and commission income	715.2	-	(27.6)	687.6
Investment return	(17,023.1)	33.7	-	(16,989.4)
Net (expense)/income	(16,303.0)	28.8	(27.6)	(16,301.8)
Policy claims and benefits
- Gross amount	(25.0)	25.0	-	-
- Reinsurers' share	9.3	(9.3)	-	-
Net policyholder claims and benefits incurred	(15.7)	15.7	-	-
Change in insurance contract liabilities
- Gross amount	56.2	(56.2)	-	-
- Reinsurers' share	(7.7)	7.7	-	-
Net change in insurance contract liabilities	48.5	(48.5)	-	-
Movement in investment contract benefits	16,947.2	-	27.6	16,974.8
Expenses	(975.4)	3.6	-	(971.8)
Insurance revenue	-	13.8	-	13.8
Insurance service expenses	-	(9.4)	-	(9.4)
Net reinsurance expense	-	(2.4)	-	(2.4)
Net insurance finance income	-	1.3	-	1.3
Loss before tax	(298.4)	2.9	-	(295.5)
Tax attributable to policyholders' returns	555.0	-	-	555.0
Profit before tax attributable to shareholders' returns	256.6	2.9	-	259.5
Total tax expense	504.0	(0.3)	-	503.7
Less: tax attributable to policyholders' returns	(555.0)	-	-	(555.0)
Tax attributable to shareholders' returns	(51.0)	(0.3)	-	(51.3)
Profit and total comprehensive income for the year	205.6	2.6	-	208.2
Profit attributable to non-controlling interests	-	-	-	-
Profit attributable to equity shareholders	205.6	2.6	-	208.2
Profit and total comprehensive income for the year	205.6	2.6	-	208.2

	Pence			Pence
Basic earnings per share	38.0			38.4
Diluted earnings per share	37.6			38.1

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2. Significant accounting policies (continued)

Impact on Consolidated Statement of Changes in Equity

Increase/(decrease)	Equity attributable to owners of the Parent Company
	Retained earnings	Total	Total equity
	£'Million	£'Million	£'Million
At 1 January 2022	9.6	9.6	9.6
Profit and total comprehensive income for the period	2.6	2.6	2.6
At 30 June 2022	12.2	12.2	12.2

Impact on Consolidated Statement of Financial Position

		Increase/(decrease)
	30 June 2022	Adj 1	Adj 3	Restated 30 June 2022
	£'Million	£'Million	£'Million	£'Million
Assets
Deferred acquisition costs	362.6	(0.6)	-	362.0
Deferred tax assets	13.8	(1.4)	-	12.4
Reinsurance assets	74.7	(4.7)	-	70.0
Other receivables	6,513.9	(11.6)	(3,044.1)	3,458.2
Total assets	148,231.4	(18.3)	(3,044.1)	145,169.0
Liabilities
Insurance contract liabilities	516.1	(10.1)	-	506.0
Other payables	5,842.8	(20.4)	(3,044.1)	2,778.3
Total liabilities	147,096.8	(30.5)	(3,044.1)	144,022.2
Net assets	1,134.6	12.2	-	1,146.8

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2. Significant accounting policies (continued)

Restatement for the year ended 31 December 2022

Impact on Consolidated Statement of Comprehensive Income

		Increase/(decrease)
	Year ended 31 December 2022	Adj 1	Adj 2	Restated Year ended 31 December 2022
	£'Million	£'Million	£'Million	£'Million
Insurance premium income	33.7	(33.7)	-	-
Less premiums ceded to reinsurers	(23.3)	23.3	-	-
Net insurance premium income	10.4	(10.4)	-	-
Fee and commission income	1,954.2	-	(24.6)	1,929.6
Investment return	(13,771.9)	41.6	-	(13,730.3)
Net (expense)/income	(11,807.3)	31.2	(24.6)	(11,800.7)
Policy claims and benefits
- Gross amount	(48.0)	48.0	-	-
- Reinsurers' share	14.6	(14.6)	-	-
Net policyholder claims and benefits incurred	(33.4)	33.4	-	-
Change in insurance contract liabilities
- Gross amount	88.8	(88.8)	-	-
- Reinsurers' share	(16.0)	16.0	-	-
Net change in insurance contract liabilities	72.8	(72.8)	-	-
Movement in investment contract benefits	13,734.8	-	24.6	13,759.4
Expenses	(1,966.2)	4.5	-	(1,961.7)
Insurance revenue	-	26.5	-	26.5
Insurance service expenses	-	(13.5)	-	(13.5)
Net reinsurance expense	-	(9.6)	-	(9.6)
Net insurance finance income	-	2.4	-	2.4
Profit before tax	0.7	2.1	-	2.8
Tax attributable to policyholders' returns	501.1	-	-	501.1
Profit before tax attributable to shareholders' returns	501.8	2.1	-	503.9
Total tax credit	404.7	(0.3)	-	404.4
Less: tax attributable to policyholders' returns	(501.1)	-	-	(501.1)
Tax attributable to shareholders' returns	(96.4)	(0.3)	-	(96.7)
Profit and total comprehensive income for the year	405.4	1.8	-	407.2
Profit attributable to non-controlling interests	0.4	-	-	0.4
Profit attributable to equity shareholders	405.0	1.8	-	406.8
Profit and total comprehensive income for the year	405.4	1.8	-	407.2

	Pence			Pence
Basic earnings per share	74.6			75.0
Diluted earnings per share	73.9			74.3

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2. Significant accounting policies (continued)

Impact on Consolidated Statement of Changes in Equity

Increase/(decrease)	Equity attributable to owners of the Parent Company
	Retained earnings	Total	Total equity
	£'Million	£'Million	£'Million
At 1 January 2022	9.6	9.6	9.6
Profit and total comprehensive income for the year	1.8	1.8	1.8
At 31 December 2022	11.4	11.4	11.4

Impact on Consolidated Statement of Financial Position

		Increase/ (decrease)
	31 December 2022	Adj 1	Restated 31 December 2022
	£'Million	£'Million	£'Million
Assets
Deferred acquisition costs	337.3	(0.7)	336.6
Deferred tax assets	13.9	(1.4)	12.5
Reinsurance assets	66.4	(11.8)	54.6
Other receivables	2,982.8	(5.6)	2,977.2
Total assets	151,705.0	(19.5)	151,685.5
Liabilities
Insurance contract liabilities	483.5	(13.0)	470.5
Other payables	2,198.6	(17.9)	2,180.7
Total liabilities	150,444.6	(30.9)	150,413.7
Net assets	1,260.4	11.4	1,271.8

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2. Significant accounting policies (continued)

Restatement of 1 January 2022

Impact on Consolidated Statement of Financial Position

Increase/(decrease)	Restated 1 January 2022
Increase/(decrease)	£'Million
Assets
Deferred acquisition costs	(0.7)
Deferred tax assets	(1.1)
Reinsurance assets	(7.6)
Other receivables	(9.9)
Total assets	(19.3)
Liabilities
Insurance contract liabilities	(3.7)
Other payables	(25.2)
Total liabilities	(28.9)
Net assets	9.6

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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 - 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.

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.

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Underlying cash result after tax	207.1	198.8	410.1
Equity-settled share-based payments	(9.9)	(11.2)	(20.5)
Deferred tax impacts	(12.1)	(18.1)	(30.5)
Impact in the period of DAC/DIR/PVIF	0.3	(3.8)	(9.3)
Impact of policyholder tax asymmetry (see Note 4) 2	(17.5)	39.4	50.6
Other¹	(6.2)	3.1	6.8
IFRS profit after tax	161.7	208.2	407.2
Shareholder tax¹	54.0	51.3	96.7
Profit before tax attributable to shareholders' returns	215.7	259.5	503.9
Tax attributable to policyholder returns	169.3	(555.0)	(501.1)
IFRS profit/(loss) before tax	385.0	(295.5)	2.8

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Further information on policyholder tax asymmetry can also be found in Section 2.1 of the Financial Review.

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3. Segment reporting (continued)

EEV operating loss after exceptional item before tax

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.

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
EEV operating (loss)/profit after exceptional item before tax	(119.1)	914.2	1,589.7
Investment return variance	157.6	(1,346.2)	(1,314.0)
Economic assumption changes	37.8	166.9	235.1
EEV profit/(loss) before tax	76.3	(265.1)	510.8
Adjustments to IFRS basis:
Deduct: amortisation of purchased value of in-force business	(1.6)	(1.6)	(3.2)
Movement of balance sheet life value of in-force business (net of tax)¹	251.6	422.1	105.6
Movement of balance sheet unit trust and DFM value of in-force business (net of tax)	(23.4)	(4.0)	(94.9)
Tax on movement in value of in-force business	(87.2)	108.1	(14.4)
Profit before tax attributable to shareholders' returns	215.7	259.5	503.9
Tax attributable to policyholder returns	169.3	(555.0)	(501.1)
IFRS profit/(loss) before tax	385.0	(295.5)	2.8

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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.

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3. Segment reporting (continued)

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.

	30 June 2023	30 June 2022¹	31 December 2022¹
	£'Million	£'Million	£'Million
Investment	34,360.0	32,750.0	33,290.0
Pension	79,870.0	69,580.0	73,860.0
UT/ISA and DFM	43,290.0	39,930.0	41,220.0
Total FUM	157,520.0	142,260.0	148,370.0
Exclude client and third-party holdings in non-consolidated unit trusts and DFM	(4,367.4)	(4,594.2)	(4,407.3)
Other²	4,287.4	3,843.6	4,153.6
Gross assets held to cover unit liabilities	157,440.0	141,509.4	148,116.3
IFRS intangible assets (see page 28 adjustment 2)¹	452.9	523.4	476.9
Shareholder gross assets	3,762.0	3,136.2	3,092.3
Total assets	161,654.9	145,169.0	151,685.5

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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.

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4. Fee and commission income

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Advice charges (post-RDR)	493.7	517.3	987.6
Third-party fee and commission income	65.9	64.4	131.9
Wealth management fees¹	518.7	503.3	1,014.4
Investment management fees	36.9	25.5	60.8
Fund tax deductions/(refunds)	169.3	(555.0)	(501.1)
Policyholder tax asymmetry	(17.5)	39.4	50.6
Discretionary fund management fees	12.0	11.7	23.4
Fee and commission income before DIR amortisation	1,279.0	606.6	1,767.6
Amortisation of DIR	72.7	81.0	162.0
Total fee and commission income	1,351.7	687.6	1,929.6

¹ Restated to reclassify balances between Wealth management fees and Movement in investment contract benefits. See note 2c.

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.

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 deductions/(refunds) 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 impact the level of asymmetry experienced in a year and may be significant where there is market volatility. Market growth experienced, coupled to a lesser extent increases to interest rates in the first half of 2023 has resulted in a negative movement impacting both profit before shareholder tax and profit after tax. In contrast, at this point in 2022 we saw an unwind of prior year negative effects as a result of market falls, which resulted in a significant positive movement in that year.

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.

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5. Investment return

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

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Attributable to unit-linked investment contract benefits:
Rental income	35.4	35.1	70.1
Gain/(loss) on revaluation of investment properties	5.2	119.5	(244.5)
Net investment return on financial instruments classified as fair value through profit and loss¹	4,950.7	(11,632.6)	(9,416.3)
	4,991.3	(11,478.0)	(9,590.7)

Income attributable to third-party holdings in unit trusts	1,604.5	(5,496.8)	(4,168.7)

Investment return on net assets held to cover unit liabilities	6,595.8	(16,974.8)	(13,759.4)

Net investment return on financial instruments classified as fair value through profit and loss	27.5	(25.3)	(2.9)
Interest income on financial instruments held at amortised cost	24.0	10.7	32.0
Investment return on shareholder assets	51.5	(14.6)	29.1

Total investment return	6,647.3	(16,989.4)	(13,730.3)

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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 £781.8 million (six months ended 30 June 2022: £547.9 million, year ended 31 December 2022: £1,216.0 million).

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6. Income and deferred taxes

Tax for the year

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Current tax
UK corporation tax
- Current year charge	157.5	31.9	66.0
- Adjustment in respect of prior year	-	-	3.5
Overseas taxes
- Current year charge	3.2	5.5	10.2
- Adjustment in respect of prior year	-	-	-
	160.7	37.4	79.7
Deferred tax
Unrealised capital gains/(losses) in unit-linked funds	53.7	(552.7)	(504.0)
Unrelieved expenses
- Additional expenses ecognized in the year	-	(6.4)	(9.9)
- Utilisation in the year	5.6	5.7	11.4
Capital losses
- Revaluation in the year	-	-	4.0
- Utilisation in the year	2.1	13.9	25.2
- Adjustment in respect of prior year	-	-	(4.5)
DAC, DIR and PVIF	(3.9)	(5.0)	(8.5)
Share-based payments	3.6	5.1	3.3
Renewal income assets	(0.6)	(1.3)	(3.0)
Fixed asset timing differences	1.2	1.0	1.0
Other items¹	0.6	(1.6)	(1.2)
Overseas losses	(0.1)	0.2	0.1
Adjustment for change in tax rate	-	-	-
Adjustments in respect of prior periods	0.4	-	2.0
	62.6	(541.1)	(484.1)
Total tax charge/(credit) for the year¹	223.3	(503.7)	(404.4)
Attributable to:
- policyholders	169.3	(555.0)	(501.1)
- shareholders¹	54.0	51.3	96.7
	223.3	(503.7)	(404.4)

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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6. Income and deferred taxes (continued)

The prior year adjustment of £nil in current tax above represents £nil in respect of policyholder tax (six months ended 30 June 2022: £nil, year ended 31 December 2022: £7.3 million charge) and £nil in respect of shareholder tax (six months ended 30 June 2022: £nil, year ended 31 December 2022: £3.8 million credit). The prior year adjustment of £0.4 million in deferred tax above represents £nil in respect of policyholder tax (six months ended 30 June 2022: £nil, year ended 31 December 2022: £nil) and a charge of £0.4 million in respect of shareholder tax (six months ended 30 June 2022: £nil, year ended 31 December 2022: £2.5 million credit).

In arriving at the profit before tax attributable to shareholders' return, it is necessary to estimate the distribution of the total tax charge/(credit) 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/(credit) represents tax on policyholders' investment returns. This calculation method is consistent with the legislation relating to the calculation of tax on shareholder profits.

Reconciliation of tax charge to expected tax

	Six months ended 30 June 2023		Six months ended 30 June 2022¹		Year ended 31 December 2022¹
	£'Million		£'Million		£'Million
Profit/(loss) before tax¹	385.0		(295.5)		2.8
Tax attributable to policyholders' returns	(169.3)		555.0		501.1
Profit before tax attributable to shareholders' returns	215.7		259.5		503.9
Shareholder tax charge at corporate tax rate of 23.5% (2022: 19%)	50.7	23.5%	49.3	19.0%	95.7	19.0%
Adjustments:
Lower rates of corporation tax in overseas subsidiaries	(0.7)	(0.3%)	(0.6)	(0.2%)	(1.3)	(0.3%)
Expected shareholder tax	50.0	23.2%	48.7	18.8%	94.4	18.7%
Effects of:
Non-taxable income	(0.8)		(0.2)		(1.5)
Revaluation of historic capital losses in the Group	-		-		4.0
Adjustment for change in tax rates	_		-		-
Adjustment in respect of prior year
- Current tax	-		-		(3.8)
- Deferred tax	0.4		-		(2.5)
Differences in accounting and tax bases in relation to employee share schemes	(1.7)		2.2		2.5
Impact of difference in tax rates between current and deferred tax	-		(2.3)		(3.0)
Disallowable expenses	1.2		2.1		5.6
Provision for future liabilities	3.7		0.2		0.5
Tax losses not recognised	1.1		1.0		2.2
Other¹	0.1		(0.4)		(1.7)
	4.0	1.8%	2.6	1.0%	2.3	0.5%
Shareholder tax charge¹	54.0	25.0%	51.3	19.8%	96.7	19.2%
Policyholder tax charge/(credit)	169.3		(555.0)		(501.1)
Total tax charge/(credit) for the year¹	223.3		(503.7)		(404.4)

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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6. Income and deferred taxes (continued)

Tax calculated on profit before tax at 23.5% (2022: 19%) would amount to a charge of £90.5 million (six months to 30 June 2022: credit of £56.1 million, year to 31 December 2022: charge of £0.5 million). The difference of £132.8 million (six months to 30 June 2022: £447.6 million, year to 31 December 2022: £404.9 million) between this number and the total tax charge of £223.3 million (six months to 30 June 2022: £503.7 million credit, year to 31 December 2022: £404.4 million credit) is made up of the reconciling items above which total a charge of £3.3 million (six months to 30 June 2022: £2.0 million charge, year to 31 December 2022: £1.0 million charge) and the effect of the apportionment methodology on tax applicable to policyholder returns of £129.5 million (six months to 30 June 2022: £449.6 million credit, year to 31 December 2022: £405.9 million credit).

Tax paid in the year

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
Current tax charge for the year	160.7	37.4	79.7
(Payments to be made) / Refunds due to be received in future years in respect of current year	(3.8)	75.3	39.5
(Refunds received) / Payments made in current year in respect of prior years	(57.8)	-	1.6
Other	-	(3.4)	0.3
Tax paid	99.1	109.3	121.1
Tax paid can be analysed as:
- Taxes paid in UK	92.0	98.7	110.1
- Taxes paid in overseas jurisdictions	0.4	0.5	3.9
- Withholding taxes suffered on investment income received	6.7	10.1	7.1
Total	99.1	109.3	121.1

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6. Income and deferred taxes (continued)

Deferred tax balances

Deferred tax assets

	Deferred acquisition costs (DAC)	Deferred income (DIR)	Renewal income assets	Share-based payments	Fixed asset temporary differences	Other temporary differences	Total
	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
At 1 January 2022¹	(21.6)	37.8	(19.4)	16.2	7.8	(1.3)	19.5
Credit/(charge) to the Statement of Comprehensive Income
- Utilised and created in year¹	0.1	0.7	1.3	(5.1)	(1.0)	1.2	(2.8)
- Impact of tax rate change	-	-	-	-	-	-	-
Total credit/(charge)	0.1	0.7	1.3	(5.1)	(1.0)	1.2	(2.8)
Impact of acquisition	-	-	(4.2)	-	-	-	(4.2)
Reclassified to deferred tax liabilities	-	-	-	-	-	(0.1)	(0.1)
At 30 June 2022	(21.5)	38.5	(22.3)	11.1	6.8	(0.2)	12.4
Credit/(charge) to the Statement of Comprehensive Income
- Utilised and created in year¹	1.1	(0.8)	1.8	1.8	(2.9)	(0.3)	0.7
- Impact of tax rate change	-	-	-	-	-	-	-
Total credit/(charge)	1.1	(0.8)	1.8	1.8	(2.9)	(0.3)	0.7
Impact of acquisition	-	-	(0.2)	-	-	-	(0.2)
Reclassified to deferred tax liabilities	-	-	-	-	-	(0.4)	(0.4)
At 31 December 2022	(20.4)	37.7	(20.7)	12.9	3.9	(0.9)	12.5
Credit/(charge) to the Statement of Comprehensive Income
- Utilised and created in year	0.7	(1.2)	0.6	(3.6)	(1.6)	(0.9)	(6.0)
- Impact of tax rate change	-	-	-	-	-	_	-
Total credit/(charge)	0.7	(1.2)	0.6	(3.6)	(1.6)	(0.9)	(6.0)
Impact of acquisition	-	-	(0.1)	-	-	-	(0.1)
Reclassified to deferred tax liabilities	(0.5)	-	-	-	-	0.5	-
At 30 June 2023	(20.2)	36.5	(20.2)	9.3	2.3	(1.3)	6.4

Expected utilisation period
As at 30 June 2022	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
As at 30 June 2023	14 years	14 years	20 years	3 years	6 years

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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6. Income and deferred taxes (continued)

Deferred tax liabilities

	Unrelieved expenses on life insurance business	Deferred acquisition costs (DAC)	Capital losses (available for future relief)	Unrealised capital gains on life insurance assets backing unit liabilities (BLAGAB)	Purchased value of in-force business (PVIF)	Other temporary differences	Total
	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
At 1 January 2022	(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	(0.6)	(4.0)	13.9	(552.7)	(0.3)	(0.2)	(543.9)
- Impact of tax rate change	-	-	-	-	-	-	-
Total charge / (credit)	(0.6)	(4.0)	13.9	(552.7)	(0.3)	(0.2)	(543.9)
Reclassified from deferred tax assets	-	-	-	-	-	(0.1)	(0.1)
At 30 June 2022	(39.7)	24.0	(12.9)	131.4	3.1	(0.1)	105.8
Charge / (credit) to the Statement of Comprehensive Income
- Utilised and created in year	2.2	(3.8)	6.8	48.7	(0.3)	(0.1)	53.5
- Impact of tax rate change	-	-	4.0	-	-	-	4.0
Total charge/(credit)	2.2	(3.8)	10.8	48.7	(0.3)	(0.1)	57.5
Reclassified from deferred tax assets	-	-	-	-	-	(0.4)	(0.4)
At 31 December 2022	(37.5)	20.2	(2.1)	180.1	2.8	(0.6)	162.9
Charge/(credit) to the Statement of Comprehensive Income
- Utilised and created in year	5.6	(4.1)	2.1	53.7	(0.4)	(0.3)	56.6
- Impact of tax rate change	_	_	-	-	-	-	-
Total charge/(credit)	5.6	(4.1)	2.1	53.7	(0.4)	(0.3)	56.6
Reclassified from deferred tax assets	-	(0.5)	-	-	-	0.5	-
At 30 June 2023	(31.9)	15.6	-	233.8	2.4	(0.4)	219.5

Expected utilisation period
As at 30 June 2022	6 years	14 years	4.5 years	6 years	3.5 years
As at 31 December 2022	6 years	14 years	1 years	6 years	3 years
As at 30 June 2023	6 years	14 years	0 years	6 years	2.5 years

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 £16.2 million (30 June 2022: £13.0 million, 31 December 2022: £15.0 million) in respect of £95.5 million (30 June 2022: £76.2 million, 31 December 2022: £92.1 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.

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6. Income and deferred taxes (continued)

The main rate of corporation tax in the United Kingdom has increased from 19% to 25% with effect from 1 April 2023. A blended rate of 23.5% applies for the year ending 31 December 2023.

On 20 June 2023, Finance (No. 2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. This legislation will apply to St. James's Place as a large multinational. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. The Group has applied the exception under the IAS 12 amendment to recognising and disclosing information about deferred tax assets and liabilities related to top-up income taxes.

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7. Goodwill, intangible assets, deferred acquisition costs and deferred income

	Goodwill	Purchased value of in-force business	Computer software and other specific software developments	DAC¹	DIR
	£'Million	£'Million	£'Million	£'Million	£'Million
Cost
At 1 January 2022	31.1	73.4	55.3	1,143.5	(1,599.1)
Additions	3.6	-	9.1	22.8	(68.4)
Disposals	-	-	(0.5)	(63.6)	51.6
At 30 June 2022	34.7	73.4	63.9	1,102.7	(1,615.9)
Additions	1.9	-	7.0	14.4	(61.4)
Disposals	_	-	-	(66.5)	42.3
At 31 December 2022	36.6	73.4	70.9	1,050.6	(1,635.0)
Additions	-	-	6.7	20.9	(55.9)
Disposals	-	-	(15.4)	(69.4)	45.0
At 30 June 2023	36.6	73.4	62.2	1,002.1	(1,645.9)
Accumulated amortisation
At 1 January 2022	1.5	59.0	28.3	764.6	(1,036.5)
Charge for the period	-	1.6	4.4	39.7	(81.0)
Eliminated on disposal	-	-	(0.5)	(63.6)	51.6
At 30 June 2022	1.5	60.6	32.2	740.7	(1,065.9)
Charge for the period	1.5	1.6	5.4	39.8	(81.0)
Eliminated on disposal	-	-	-	(66.5)	42.3
At 31 December 2022	3.0	62.2	37.6	714.0	(1,104.6)
Charge for the period	-	1.6	7.3	36.1	(72.7)
Eliminated on disposal	-	-	(15.4)	(69.4)	45.0
At 30 June 2023	3.0	63.8	29.5	680.7	(1,132.3)

Carrying value
At 30 June 2022	33.2	12.8	31.7	362.0	(550.0)
At 31 December 2022	33.6	11.2	33.3	336.6	(530.4)
At 30 June 2023	33.6	9.6	32.7	321.4	(513.6)

Outstanding amortisation period
At 30 June 2022	n/a	3.5 years	5 years	14 years	6-14 years
At 31 December 2022	n/a	3 years	5 years	14 years	6-14 years
At 30 June 2023	n/a	2.5 years	5 years	14 years	6-14 years

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

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7. Goodwill, intangible assets, deferred acquisition costs and deferred income (continued)

Purchased value of in-force business/DAC/Computer software

Amortisation is charged to expenses in the IFRS Condensed Consolidated Statement of Comprehensive Income. Amortisation profiles are reassessed annually.

DIR

Amortisation is credited within fee and commission income in the IFRS Condensed Consolidated Statement of Comprehensive Income. Amortisation profiles are reassessed annually.

8. Investments

Net assets held to cover unit liabilities

Included within the IFRS Condensed Consolidated Statement of Financial Position are the following assets and liabilities comprising the net assets held to cover unit liabilities. The net assets held to cover unit liabilities are set out in adjustment 1 of the IFRS to Solvency II Net Assets Balance Sheet reconciliation on page 28.

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Assets
Investment property	1,191.9	1,647.6	1,294.5
Equities	110,771.4	97,583.2	103,536.0
Fixed income securities	27,878.4	27,214.3	27,544.8
Investment in Collective Investment Schemes	5,923.6	3,804.7	4,463.7
Cash and cash equivalents	6,415.3	7,209.0	6,179.5
Other receivables¹	1,109.8	2,188.7	1,604.8
Derivative financial instruments	4,149.6	1,861.9	3,493.0
Total assets	157,440.0	141,509.4	148,116.3
Liabilities
Other payables¹	763.2	1,404.4	842.0
Derivative financial instruments	3,490.4	2,397.6	3,266.3
Total liabilities	4,253.6	3,802.0	4,108.3
Net assets held to cover linked liabilities	153,186.4	137,707.4	144,008.0
Investment contract benefits	113,924.8	102,396.5	106,964.7
Net asset value attributable to unit holders	38,843.8	34,871.8	36,628.4
Unit-linked insurance contract liabilities	417.8	439.1	414.9
Net unit-linked liabilities	153,186.4	137,707.4	144,008.0

¹ Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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9. Other receivables

	30 June 2023	30 June 2022^1,2	31 December 2022¹
	£'Million	£'Million	£'Million
Receivables in relation to unit liabilities excluding policyholder interests	842.9	94.9	397.0
Other receivables in relation to life and unit trust business¹	203.7	79.9	75.8
Operational readiness prepayment	277.1	283.9	278.3
Advanced payments to Partners	99.0	78.8	83.8
Other prepayments and accrued income	97.5	82.7	84.3
Business loans to Partners	400.2	514.5	315.6
Renewal income assets	122.3	113.9	115.5
Miscellaneous	21.4	5.0	18.9
Total other receivables on the Solvency II Net Assets Balance Sheet	2,064.1	1,253.6	1,369.2
Policyholder interests in other receivables (see Note 8)²	1,109.8	2,188.7	1,604.8
Other	3.1	15.9	3.2
Total other receivables	3,177.0	3,458.2	2,977.2

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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.

Business loans to Partners

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Business loans to Partners directly funded by the Group	362.2	291.2	315.6
Securitised business loans to Partners	38.0	223.3	-
Total business loans to Partners	400.2	514.5	315.6

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.

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9. Other receivables (continued)

During the second of half of 2022, £262.5 million of business loans to Partners previously recognised in the Condensed 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 (totaling £276.3 million), selling 95% of the full individual loans within that portfolio (realising proceeds of £262.5 million) 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 for IFRS 9.

As a result, these business loans to Partners are no longer recognised on the Condensed 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 Condensed Consolidated Statement of Comprehensive Income.

The sale in the second half of 2022 included £222.8 million of securitised business loans to Partners, reducing the securitised loan balance to £nil. 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 12 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 12 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.

During 2023, the Group has securitised £38.0 million (30 June 2022: £223.3 million, 31 December 2022: £nil) of the business loans to Partners portfolio. As outlined above, the securitised loans remain ring-fenced from the other assets of the Group.

The securitised business loans to Partners remain recognised on the Condensed Consolidated Statement of Financial Position as the Group controls SJP Partner Loans No.1 Limited.

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 30 June 2023 was £3.7 million (30 June 2022: £3.8 million, 31 December 2022: £3.8 million).

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10. Other payables

	30 June 2023	30 June 2022^1,2	31 December 2022¹
	£'Million	£'Million	£'Million
Payables in relation to unit liabilities excluding policyholder interests	536.0	234.9	326.2
Other payables in relation to life and unit trust business¹	802.9	556.1	399.9
Accrual for ongoing advice fees	128.8	127.6	133.2
Other accruals	82.4	85.2	105.8
Contract payment	90.0	101.5	95.8
Lease liabilities: properties	127.0	120.0	116.6
Other payables in relation to Partner payments	72.4	69.6	74.8
Miscellaneous	50.9	79.0	67.3
Total other payables on the Solvency II Net Assets Balance Sheet	1,890.4	1,373.9	1,319.6
Policyholder interests in other payables (see Note 8)²	763.2	1,404.4	842.0
Other (see adjustment 2 on page 28)	16.6	-	19.1
Total other payables	2,670.2	2,778.3	2,180.7

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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 £90.0 million (30 June 2022: £101.5 million, 31 December 2022: £95.8 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.

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11. Other provisions and contingent liabilities

	Complaints provision	Lease provision	Clawback provision	Total provisions
	£'Million	£'Million	£'Million	£'Million
At 1 January 2022	30.9	10.0	3.2	44.1
Additional provisions	18.3	0.5	-	18.8
Utilised during the period	(7.8)	-	(0.2)	(8.0)
Release of provision	(10.5)	-	-	(10.5)
At 30 June 2022	30.9	10.5	3.0	44.4
Additional provisions	10.2	3.0	-	13.2
Utilised during the period	(6.2)	(0.1)	-	(6.3)
Release of provision	(5.2)	(0.1)	-	(5.3)
At 31 December 2022	29.7	13.3	3.0	46.0
Additional provisions	28.4	0.6	-	29.0
Utilised during the period	(7.3)	(0.6)	-	(7.9)
Release of provision	(11.4)	(0.2)	-	(11.6)
At 30 June 2023	39.4	13.1	3.0	55.5

Total provision for the cost of redress for complaints is based on estimates of the total number of complaints 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 of 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. For further information on complaints provision see page 41.

As more fully set out in the summary of principal risks and uncertainties on pages 42 to 44, the Group could in the course of its business be subject to legal proceedings and/or regulatory activity. Should such an event arise, the Board would consider their 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.

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 (30 June 2022: £nil, 31 December 2022: £nil).

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12. 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 9.

Senior unsecured corporate borrowings

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Corporate borrowings: bank loans	-	38.6	-
Corporate borrowings: loan notes	163.9	163.8	163.8
Senior unsecured corporate borrowings	163.9	202.4	163.8

The primary senior unsecured corporate borrowings are:

· a £345 million revolving credit facility, which is repayable at maturity in 2028 with a variable interest rate. At 30 June 2023 the undrawn credit available under this facility was £345 million (30 June 2022: £305 million, 31 December 2022: £345 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 30 June 2023, 30 June 2022 and 31 December 2022 the Group had sufficient headroom available under its covenants to fully draw the remaining commitment under its senior unsecured corporate borrowing facilities.

Total borrowings

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Senior unsecured corporate borrowings	163.9	202.4	163.8
Senior tranche of non-recourse securitisation loan note	25.3	169.4	-
Total borrowings	189.2	371.8	163.8

The senior tranche of non-recourse securitisation loan note balance is repayable over an estimated seven years, with a variable interest rate. It is held by a third-party investor 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. The holder of the senior securitisation loan note has no recourse to the assets held by any other entity within the Group. During 2022 the senior tranche of securitisation loan note was 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. For further information on business loans to Partners, including the sale of securitised business loans to Partners refer to Note 9.

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12. Borrowings and financial commitments (continued)

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.

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Junior tranche of non-recourse securitisation loan notes	14.8	63.6	2.1
Senior tranche of non-recourse securitisation loan notes	25.3	169.4	-
Total non-recourse securitisation loan notes	40.1	233.0	2.1
Backed by
Securitised business loans to Partners (see Note 9)	38.0	223.3	-
Other net assets of SJP Partner Loans No.1 Limited	2.1	9.7	2.1
Total net assets held by SJP Partner Loans No.1 Limited	40.1	233.0	2.1

The fair value of the outstanding borrowings is not materially different from amortised cost. Interest expense on borrowings is recognised within expenses in the IFRS Condensed 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
	30 June 2023	30 June 2022	31 December 2022	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
Bank of Scotland	22.6	46.2	28.7	35.0	70.0	70.0
Investec	26.9	30.8	28.8	50.0	50.0	50.0
Metro Bank	21.1	35.3	27.3	25.0	61.0	40.0
NatWest	35.7	40.3	37.9	75.0	75.0	75.0
Santander	166.9	156.2	167.7	169.9	169.9	179.0
Total loans	273.2	308.8	290.4	354.9	425.9	414.0

The fair value of these guarantees has been assessed as £nil (30 June 2022: £nil, 31 December 2022: £nil).

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13. Fair value measurement

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 from 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 tables present the Group's shareholder assets and liabilities measured at fair value:

Shareholder assets and liabilities

30 June 2023		Level 1	Level 2	Level 3	Total balance
30 June 2023		£'Million	£'Million	£'Million	£'Million
Financial assets
Fixed income securities		8.0	-	-	8.0
Investment in Collective Investment Schemes¹		1,250.5	-	-	1,250.5
Renewal income assets		-	-	122.3	122.3
Total financial assets		1,258.5	-	122.3	1,380.8
	Financial liabilities
Contingent consideration		-	-	8.4	8.4
Total financial liabilities		-	-	8.4	8.4

30 June 2022		Level 1	Level 2	Level 3	Total balance
30 June 2022		£'Million	£'Million	£'Million	£'Million
Financial assets
Fixed income securities		7.8	-	-	7.8
Investment in Collective Investment Schemes¹		1,370.5	-	-	1,370.5
Renewal income assets		-	-	113.9	113.9
Total financial assets		1,378.3	-	113.9	1,492.2
	Financial liabilities
	Contingent consideration	-	-	13.9	13.9
	Total financial liabilities	-	-	13.9	13.9

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13. Fair value measurement (continued)

31 December 2022		Level 1	Level 2	Level 3	Total balance
31 December 2022		£'Million	£'Million	£'Million	£'Million
Financial assets
Fixed income securities		7.9	-	-	7.9
Investment in Collective Investment Schemes¹		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

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 are valued using observable prices for identical current arm's length transactions.

The renewal income assets are classified as Level 3 and are valued using a discounted cash flow technique. 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 £10.5 million (30 June 2022: £9.5 million, 31 December 2022: £8.2 million) and a favourable change in valuation of £11.3 million (30 June 2022: £10.5 million, 31 December 2022: £10.4 million), respectively.

The contingent consideration liability is classified as Level 3 and is valued based on the terms set out in the sale and purchase agreement. Given the nature of the valuation basis the effect of applying reasonably possible alternative assumptions would result in an unfavourable change of £nil (30 June 2022: £nil, 31 December 2022: £nil) and a favourable change of £8.4 million (30 June 2022: £13.9 million, 31 December 2022: £10.4 million).

There were no transfers between Level 1 and Level 2 during the period, nor into or out of Level 3.

The following tables present the changes in Level 3 financial assets and liabilities at fair value through the profit and loss:

Financial assets

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Renewal income assets
Opening balance	115.5	102.5	102.5
Additions during the period	8.2	21.9	36.1
Disposals during the period	(0.8)	(4.6)	(7.8)
Unrealised losses recognised in the Statement of Comprehensive Income	(0.6)	(5.9)	(15.3)
Closing balance	122.3	113.9	115.5

Unrealised losses on renewal income assets are recognised within investment return in the IFRS Condensed Consolidated Statement of Comprehensive Income.

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13. Fair value measurement (continued)

Financial liabilities

	30 June 2023	30 June 2022	31 December 2022
	£'Million	£'Million	£'Million
Contingent consideration
Opening balance	8.3	8.3	8.3
Additions during the period	0.1	6.4	6.3
Payments made during the period	-	(0.8)	(6.3)
Closing balance	8.4	13.9	8.3

Unit liabilities and associated assets

30 June 2023	Level 1	Level 2	Level 3	Total balance
30 June 2023	£'Million	£'Million	£'Million	£'Million
Financial assets and investment properties
Investment property	-	-	1,191.9	1,191.9
Equities	109,188.9	-	1,582.5	110,771.4
Fixed income securities	7,204.1	20,355.9	318.4	27,878.4
Investment in Collective Investment Schemes	5,915.9	-	7.7	5,923.6
Derivative financial instruments	-	4,149.6	-	4,149.6
Cash and cash equivalents	6,415.3	-	-	6,415.3
Total financial assets and investment properties	128,724.2	24,505.5	3,100.5	156,330.2
Financial liabilities
Investment contract benefits	-	113,924.8	-	113,924.8
Derivative financial instruments	-	3,490.4	-	3,490.4
Net asset value attributable to unit holders	38,843.8	-	-	38,843.8
Total financial liabilities	38,843.8	117,415.2	-	156,259.0

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13. Fair value measurement (continued)

30 June 2022	Level 1	Level 2	Level 3	Total balance
30 June 2022	£'Million	£'Million	£'Million	£'Million
Financial assets and investment properties
Investment property	-	-	1,647.6	1,647.6
Equities	96,145.9	-	1,437.3	97,583.2
Fixed income securities	6,879.1	19,963.9	371.3	27,214.3
Investment in Collective Investment Schemes	3,801.2	-	3.5	3,804.7
Derivative financial instruments	-	1,861.9	-	1,861.9
Cash and cash equivalents	7,209.0	-	-	7,209.0
Total financial assets and investment properties	114,035.2	21,825.8	3,459.7	139,320.7
Financial liabilities
Investment contract benefits	-	102,396.5	-	102,396.5
Derivative financial instruments	-	2,397.6	-	2,397.6
Net asset value attributable to unit holders	34,871.8	-	-	34,871.8
Total financial liabilities	34,871.8	104,794.1	-	139,665.9

31 December 2022	Level 1	Level 2	Level 3	Total balance
31 December 2022	£'Million	£'Million	£'Million	£'Million
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	27,544.80
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

In respect of the derivative financial liabilities, £163.6 million of collateral has been posted at 30 June 2023, comprising cash and treasury bills (30 June 2022: £307.4 million, 31 December 2022: £103.1 million), 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.

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13. Fair value measurement (continued)

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 and investments in Collective Investment Schemes (CIS) 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 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, 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 options pricing models, which typically incorporate observable market data, principally interest rates, basis spreads, foreign exchange rates, equity prices and counterparty credit.

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, are used to determine fair value for the remaining financial instruments.

There were no transfers between Level 1 and Level 2 during the period.

Transfers into and out of Level 3 portfolios

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 equities and investments in CIS occur when asset valuations can no longer be obtained from an observable market price i.e. become illiquid, in liquidation, suspended etc. The converse is true if an observable market price becomes available.

During the period £nil of Russian equities (30 June 2022: £4.6 million, 31 December 2022: £4.8 million) were transferred from Level 1 to Level 3 portfolios as the valuation has been calculated using a mark down to the quoted price, with the mark down being a significant unobservable input.

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13. Fair value measurement (continued)

The following table presents the changes in Level 3 financial assets and liabilities at fair value through the profit and loss:

Six months ended 30 June 2023	Investment property	Fixed income securities	Equities	Investment in CIS
Six months ended 30 June 2023	£'Million	£'Million	£'Million	£'Million
Opening balance	1,294.5	366.4	1,592.0	3.9
Transfer into Level 3	-	-	-	3.9
Transfer out of Level 3	-	-	-	-
Additions during the period	4.8	11.5	146.6	-
Disposals during the period	(112.6)	(37.0)	(127.9)	(0.1)
Gains/(losses) recognised in the Statement of Comprehensive Income	5.2	(22.5)	(28.2)	-
Closing balance	1,191.9	318.4	1,582.5	7.7
Realised (losses)/gains	(22.0)	1.3	5.1	-
Unrealised gains/(losses)	27.2	(23.8)	(33.3)	-
Gains/(losses) recognised in the Statement of Comprehensive Income	5.2	(22.5)	(28.2)	-

Six months ended 30 June 2022	Investment property	Fixed income securities	Equities	Investment in CIS
Six months ended 30 June 2022	£'Million	£'Million	£'Million	£'Million
Opening balance	1,568.5	308.1	1,047.1	3.9
Transfer into Level 3	-	-	4.6	-
Transfer out of Level 3	-	-	-	(0.5)
Additions during the period	10.2	48.2	367.3	-
Disposals during the period	(50.6)	(11.0)	(70.4)	-
Gains recognised in the Statement of Comprehensive Income	119.5	26.0	88.7	0.1
Closing balance	1,647.6	371.3	1,437.3	3.5
Realised (losses)/gains	(34.3)	1.9	10.5	-
Unrealised gains	153.8	24.1	78.2	0.1
Gains recognised in the Statement of Comprehensive Income	119.5	26.0	88.7	0.1

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13. Fair value measurement (continued)

Year ended 31 December 2022	Investment property	Fixed income securities	Equities	Investment in CIS
Year ended 31 December 2022	£'Million	£'Million	£'Million	£'Million
Opening balance	1,568.5	308.1	1,047.1	3.9
Transfer into Level 3	-	6.0	4.8	0.7
Additions during the year	23.6	57.8	425.8	-
Disposals during the year	(53.1)	(29.7)	(77.1)	(0.8)
(Losses)/gains recognised in the Statement of Comprehensive Income	(244.5)	24.2	191.4	0.1
Closing balance	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 Statement of Comprehensive Income	(244.5)	24.2	191.4	0.1

Realised (losses)/gains and unrealised gains/(losses) for all Level 3 assets are recognised within investment return in the IFRS Condensed Consolidated Statement of Comprehensive Income.

Level 3 valuations

Investment property

At 30 June 2023 the Group held £1,191.9 million (30 June 2022: £1,647.6 million, 31 December 2022: £1,294.5 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 monthly by professional external valuers at the properties' respective fair values. The fair values derived are based on anticipated market values for the properties in accordance with the 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, an 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.

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13. Fair value measurement (continued)

	Investment property classification
	Office	Industrial	Retail and leisure	All
30 June 2023
Gross ERV (per sq ft)¹
Range	£14.00 - £107.50	£5.00 - £24.00	£2.50 - £91.80	£2.50 - £107.50
Weighted average	£43.86	£13.21	£13.38	£16.78
True equivalent yield
Range	4.3% - 9.7%	5.1% - 6.7%	5.7% - 10.5%	4.3% - 10.5%
Weighted average	6.4%	5.4%	7.3%	6.3%

30 June 2022
Gross ERV (per sq ft)¹
Range	£13.91 - £100.50	£5.00 - £20.00	£2.50 - £88.94	£2.50 - £100.50
Weighted average	£42.30	£11.95	£13.29	£16.72
True equivalent yield
Range	4.1% - 12.0%	3.0% - 4.9%	4.7% - 20.1%	3.0% - 20.1%
Weighted average	5.2%	3.6%	6.3%	4.9%

31 December 2022
Gross ERV (per sq ft)¹
Range	£14.00 - £107.50	£5.00 - £22.50	£2.50 - £88.94	£2.50 - £107.50
Weighted average	£46.18	£12.71	£13.54	£17.20
True equivalent yield
Range	4.3% - 9.7%	5.2% - 6.3%	6.0% - 10.5%	4.3% - 10.5%
Weighted average	5.9%	5.5%	7.2%	6.2%

1. Equivalent rental value (per square foot).

Fixed income securities and equities

At 30 June 2023 the Group held £318.4 million (30 June 2022: £371.3 million, 31 December 2022: £366.4 million) in private credit investments, and £1,581.0 million (30 June 2022: £1,432.7 million, 31 December 2022: £1,587.3 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 IFRS Condensed Consolidated Statement of Financial Position. They are initially measured at cost and are subsequently remeasured to fair value following a monthly valuation process 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 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.

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13. Fair value measurement (continued)

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 equity 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 equity 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 methodologies and the point in the range of valuations to select as the fair value.

Sensitivity of Level 3 valuations

Investment in Collective Investment Schemes

The valuation of certain investments in CIS 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 above, investment property is initially measured at cost including related acquisition costs and subsequently valued monthly by professional external valuers at their respective fair values. The following table sets out the effect of applying reasonably possible alternative assumptions, being a 5% movement in estimated rental value and a 25bps movement in the relative yield, to the valuation of the investment properties. Any change in the value of investment property is matched by the 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	Favourable changes	Unfavourable changes
		£'Million	£'Million	£'Million
30 June 2023	Expected rental value / Relative yield	1,191.9	1,311.0	1,103.8
30 June 2022	Expected rental value / Relative yield	1,647.6	1,823.8	1,492.0
31 December 2022	Expected rental value / Relative yield	1,294.5	1,410.8	1,186.6

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13. Fair value measurement (continued)

Fixed income securities and equities

As set out 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	Favourable changes	Unfavourable changes
		£'Million	£'Million	£'Million
30 June 2023	Fixed income securities	318.4	297.2	286.5
	Equities	1,582.5	1,779.2	1,402.6
30 June 2022	Fixed income securities	371.3	378.4	364.3
	Equities	1,432.7	1,546.6	1,303.5
31 December 2022	Fixed income securities	366.4	374.2	358.3
	Equities	1,587.3	1,783.5	1,380.3

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14. Cash generated from operations

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Cash flows from operating activities
Profit/(loss) before tax for the period	385.0	(295.5)	2.8
Adjustments for:
Amortisation of purchased value of in-force business	1.6	1.6	3.2
Amortisation of computer software	7.3	4.4	9.3
Depreciation	11.3	10.5	21.7
Impairment of goodwill	-	-	1.5
Loss on disposal of computer software	-	-	0.5
Loss on disposal of property and equipment, including leased assets	0.5	0.2	0.9
Equity-settled share-based payment charge	9.9	10.4	20.5
Interest income	(48.1)	(18.3)	(61.8)
Interest expense	7.0	6.0	12.4
Increase in provisions	9.5	0.3	1.9
Exchange rate losses/(gains)	0.4	-	(0.7)
	384.4	(280.4)	12.2
Changes in operating assets and liabilities
Decrease in deferred acquisition costs²	15.2	16.9	42.3
Decrease/(increase) in investment property	102.6	(79.1)	274.0
(Increase)/decrease in other investments	(9,664.4)	10,853.6	2,378.9
(Increase)/decrease in reinsurance assets²	(0.7)	4.8	20.2
Increase in other receivables^2,3	(199.8)	(526.1)	(303.1)
Increase/(decrease) in insurance contract liabilities²	4.8	(62.6)	(98.1)
Increase/(decrease) in financial liabilities (excluding borrowings)	7,184.2	(6,575.2)	(1,138.3)
Decrease in deferred income	(16.8)	(12.6)	(32.2)
Increase/(decrease) in other payables^2,3	479.3	200.6	(390.4)
Increase/(decrease) in net assets attributable to unit holders	2,215.4	(3,497.2)	(1,740.6)
	119.8	323.1	(987.3)
Cash generated from/(used in) operations	504.2	42.7	(975.1)

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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15. Share capital, earnings per share and dividends

Share capital

	Number of ordinary shares	Called-up share capital
		£'Million
At 1 January 2022	540,530,529	81.1
- Issue of shares	459,028	0.1
- Exercise of options	2,811,390	0.4
At 30 June 2022	543,800,947	81.6
- Exercise of options	434,810	-
At 31 December 2022	544,235,757	81.6
- Exercise of options	4,320,187	0.7
At 30 June 2023	548,555,944	82.3

Ordinary shares have a par value of 15 pence per share (30 June 2022: 15 pence per share, 31 December 2022: 15 pence per share) and are fully paid.

Included in the issued share capital are 3,684,721 (30 June 2022: 2,312,387, 31 December 2022: 2,207,186) shares held in the Shares in trust reserve with a nominal value of £0.6 million (30 June 2022: £0.3 million, 31 December 2022: £0.3 million). The shares are held by the SJP Employee Benefit Trust and the St. James's Place Share Incentive Plan Trust to satisfy certain share-based payment schemes. The Trustees of the SJP Employee Benefit Trust retain the right to dividends on the shares held by the Trust but have chosen to waive their entitlement to the dividends on 2,062,545 shares at 30 June 2023 (30 June 2022: 923,201 shares, 31 December 2022: 815,737 shares). The trustees of the St. James's Place Share Incentive Plan Trust retain the right to dividends on forfeited shares held by the Trust but have chosen to waive their entitlement to the dividends on 146 shares at 30 June 2023 (30 June 2022: 372 shares, 31 December 2022: 671 shares).

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.

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15. Share capital, earnings per share and dividends (continued)

Earnings per share

	Six months ended 30 June 2023	Six months ended 30 June 2022¹	Year ended 31 December 2022¹
	£'Million	£'Million	£'Million
Earnings
Profit after tax attributable to equity shareholders (for both basic and diluted EPS)	161.6	208.2	406.8

	Million	Million	Million
Weighted average number of shares
Weighted average number of ordinary shares in issue (for basic EPS)	546.0	541.8	542.7
Adjustments for outstanding share options	2.1	4.4	5.1
Weighted average number of ordinary shares (for diluted EPS)	548.1	546.2	547.8

	Pence	Pence	Pence
Earnings per share (EPS)
Basic earnings per share	29.6	38.4	75.0
Diluted earnings per share	29.5	38.1	74.3

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Dividends

The following dividends have been paid by the Group:

	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	£'Million	£'Million	£'Million
Final dividend in respect of 2021 - 40.41 pence per ordinary share	-	218.9	218.9
Interim dividend in respect of 2022 - 15.59 pence per ordinary share	-	-	84.7
Final dividend in respect of 2022 - 37.19 pence per ordinary share	203.1	-	-
Total dividends	203.1	218.9	303.6

The Directors have resolved to pay an interim dividend of 15.83 pence per share (30 June 2022: 15.59 pence per share). This amounts to £86.8 million (30 June 2022: £84.7 million) and will be paid on 22 September 2023 to shareholders on the register at 25 August 2023.

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16. Events after the reporting date

On 26 July 2023, the Board announced the introduction of a cap to ongoing product charges on client bond and pension investments with a duration longer than 10 years. The announcement does not impact IFRS profit before tax or IFRS net assets at the reporting date. Further details can be found in the Chief Executive's Report.

17. Statutory accounts

The financial information shown in this publication is unaudited and does not constitute statutory accounts. The comparative figures for the financial year ended 31 December 2022 are not the Company's statutory accounts for the financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.

The report of the auditors was unmodified and did not include a reference to any matter to which the auditors drew attention to, by way of emphasis without modifying their report, and did not contain a statement under section 498 of the Companies Act 2006.

18. Approval of the Half-Year Report

These Condensed Consolidated Half-Year Financial Statements were approved by the Board of Directors on 26 July 2023.

19. National storage mechanism

A copy of the Half-Year Report will be submitted shortly to the National Storage Mechanism (NSM) and will be available for inspection at the NSM, which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

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Independent review report to St. James's Place plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed St. James's Place plc's condensed consolidated interim financial statements (the "interim financial statements") in the Press Release and Half-Year Report and Accounts of St. James's Place plc for the 6 month period ended 30 June 2023 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

· the Condensed Consolidated Statement of Financial Position as at 30 June 2023;

· the Condensed Consolidated Statement of Comprehensive Income for the period then ended;

· the Condensed Consolidated Statement of Cash Flows for the period then ended;

· the Condensed Consolidated Statement of Changes in Equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the Press Release and Half-Year Report and Accounts of St. James's Place plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Press Release and Half-Year Report and Accounts and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

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Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Press Release and Half-Year Report and Accounts, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Press Release and Half-Year Report and Accounts in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Press Release and Half-Year Report and Accounts, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the Press Release and Half-Year Report and Accounts based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP

Chartered Accountants

Bristol

26 July 2023

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Responsibility Statement of the Directors in respect of the Half-Year Financial Report

The Directors confirm that this consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the UK and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

· an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.

The Directors of St. James's Place plc are listed in the St. James's Place plc Annual Report for 31 December 2022. A list of current Directors is maintained on the St. James's Place plc website: www.sjp.co.uk.

The Directors are responsible for the maintenance and integrity of the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

By order of the Board:

Andrew Croft, Chief Executive	Craig Gentle, Chief Financial Officer
26 July 2023	26 July 2023

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Supplementary Information: Consolidated Half-Year Financial Statements on a Cash Result Basis

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Consolidated Statement of Comprehensive Income

on a Cash Result Basis

	Note	Six months ended 30 June 2023	Six months ended 30 June 2022	Year ended 31 December 2022
	Note	£'Million	£'Million	£'Million
Fee and commission income		1,354.9	639.5	1,854.2
Expenses		(988.9)	(947.8)	(1,898.9)
Investment return	5	51.5	(14.6)	29.1
Profit/(loss) before tax		417.5	(322.9)	(15.6)
Tax attributable to policyholders' returns		(169.3)	555.0	501.1
Tax attributable to shareholders' returns		(45.8)	(38.0)	(75.4)
Total Cash result profit for the period		202.4	194.1	410.1

The Note references above cross refer to the Notes to the Condensed Consolidated Financial Statements under IFRS as adopted by the UK on pages 50 to 102, except where denoted in Roman numerals.

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Consolidated Statement of Changes in Equity
on a Cash Result Basis

		Equity attributable to owners of the Parent Company
		Share capital	Share premium	Shares in trust reserve	Misc. reserves	Retained earnings	Total	Non-controlling interests	Total equity
	Note	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million	£'Million
At 1 January 2022		81.1	213.8	(8.5)	2.5	956.4	1,245.3	-	1,245.3
Cash result for the period		-	-	-	-	194.1	194.1	-	194.1
Dividends	15	-	-	-	-	(218.9)	(218.9)	-	(218.9)
Issue of share capital		0.1	5.6	-	-	-	5.7	-	5.7
Exercise of options		0.4	6.7	-	-	-	7.1	-	7.1
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		-	-	-	-	(18.1)	(18.1)	-	(18.1)
Impact of policyholder tax asymmetry		-	-	-	-	39.4	39.4	-	39.4
Change in goodwill, intangibles and other non-cash movements		-	-	-	-	(12.0)	(12.0)	-	(12.0)
At 30 June 2022		81.6	226.1	(4.1)	2.5	941.1	1,247.2	0.1	1,247.3
At 1 January 2023		81.6	227.8	(4.1)	2.5	1,071.9	1,379.7	0.2	1,379.9
Cash result for the period		-	-	-	-	202.3	202.3	0.1	202.4
Dividends	15	-	-	-	-	(203.1)	(203.1)	(0.2)	(203.3)
Exercise of options		0.7	5.7	-	-	-	6.4	-	6.4
Consideration paid for own shares		-	-	(0.5)	-	-	(0.5)	-	(0.5)
Shares sold during the year		-	-	3.8	-	(3.8)	-	-	-
Change in deferred tax		-	-	-	-	(12.1)	(12.1)	-	(12.1)
Impact of policyholder tax asymmetry		-	-	-	-	(17.5)	(17.5)	-	(17.5)
Change in goodwill, intangibles and other non-cash movements		-	-	-	-	(4.0)	(4.0)	-	(4.0)
At 30 June 2023		82.3	233.5	(0.8)	2.5	1,033.7	1,351.2	0.1	1,351.3

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Consolidated Statement of Financial Position
on a Cash Result Basis

	Note	30 June 2023	30 June 2022	31 December 2022
	Note	£'Million	£'Million	£'Million
Assets
Property and equipment		156.8	148.0	145.7
Deferred tax assets		2.2	3.0	2.5
Investment in associates		4.7	1.4	1.4
Reinsurance assets¹		7.0	11.6	5.6
Other receivables¹		2,064.1	1,253.6	1,369.2
Income tax assets		-	65.8	35.0
Fixed income securities	13	8.0	7.8	7.9
Investment in Collective Investment Schemes	13	1,250.5	1,370.5	1,271.7
Cash and cash equivalents		268.7	274.5	253.3
Total assets		3,762.0	3,136.2	3,092.3
Liabilities
Borrowings	12	189.2	371.8	163.8
Deferred tax liabilities		228.9	78.4	165.1
Insurance contract liabilities¹		20.1	20.4	17.9
Other provisions	11	55.5	44.4	46.0
Other payables¹		1,890.4	1,373.9	1,319.6
Income tax liabilities		26.6	-	-
Total liabilities		2,410.7	1,888.9	1,712.4
Net assets		1,351.3	1,247.3	1,379.9
Shareholders' equity
Share capital	15	82.3	81.6	81.6
Share premium		233.5	226.1	227.8
Shares in trust reserve		(0.8)	(4.1)	(4.1)
Miscellaneous reserves		2.5	2.5	2.5
Retained earnings		1,033.7	941.1	1,071.9
Shareholders' equity on a cash result basis		1,351.2	1,247.2	1,379.7
Non-controlling interests		0.1	0.1	0.2
Total equity on a Cash result basis		1,351.3	1,247.3	1,379.9

		Pence	Pence	Pence
Net assets per share		246.3	229.4	253.6

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

The Note references above cross refer to the Notes to the Condensed Consolidated Financial Statements under IFRS as adopted by the UK on pages 50 to 102, except where denoted in Roman numerals.

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Notes to the Consolidated Financial Statements
on a Cash Result Basis

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 8, 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 in the Statement of Comprehensive Income on a Cash Result Basis. The assets, liabilities and amortisation are set out in Note 7.

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.

4. Non-unit-linked insurance contract liabilities and reinsurance assets are removed in the Statement of Financial Position on a Cash Result Basis, with the exception of cash items relating to outstanding reinsurance receipts and insurance claims. The movement in the period relating to the balances removed from the Statement of Financial Position is also 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 movement 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.

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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 Condensed Consolidated Statement of Financial Position (on page 48), with adjustments made to accounting assets and liabilities to reflect the Solvency II regulations and the provision for insurance liabilities set equal to the associated unit liabilities.

The reconciliation between the IFRS and Solvency II Net Assets Balance Sheet as at 30 June 2023 is set out on page 28. The reconciliations as at 30 June 2022 and 31 December 2022 are provided on the following pages.

30 June 2022	IFRS Balance Sheet	Adjustment 1	Adjustment 2	Solvency II Net Assets Balance Sheet
	IFRS Balance Sheet	Adjustment 1	Adjustment 2	Solvency II Net Assets Balance Sheet
	£'Million	£'Million	£'Million	£'Million
Assets
Goodwill	33.2	-	(33.2)	-
Deferred acquisition costs¹	362.0	-	(362.0)	-
Purchased value of in-force business	12.8	-	(12.8)	-
Computer software	31.7	-	(31.7)	-
Property and equipment	148.0	-	-	148.0
Deferred tax assets¹	12.4	-	(9.4)	3.0
Investment in associates	1.4	-	-	1.4
Reinsurance assets¹	70.0	-	(58.4)	11.6
Other receivables^1,2	3,458.2	(2,188.7)	(15.9)	1,253.6
Income tax assets	65.8	-	-	65.8
Investment property	1,647.6	(1,647.6)	-	-
Equities	97,583.2	(97,583.2)	-	-
Fixed income securities	27,222.1	(27,214.3)	-	7.8
Investment in Collective Investment Schemes	5,175.2	(3,804.7)	-	1,370.5
Derivative financial instruments	1,861.9	(1,861.9)	-	-
Cash and cash equivalents	7,483.5	(7,209.0)	-	274.5
Total assets	145,169.0	(141,509.4)	(523.4)	3,136.2
Liabilities
Borrowings	371.8	-	-	371.8
Deferred tax liabilities	105.8	-	(27.4)	78.4
Insurance contract liabilities¹	506.0	(439.1)	(46.5)	20.4
Deferred income	550.0	-	(550.0)	-
Other provisions	44.4	-	-	44.4
Other payables^1,2	2,778.3	(1,404.4)	-	1,373.9
Investment contract benefits	102,396.5	(102,396.5)	-	-
Derivative financial instruments	2,397.6	(2,397.6)	-	-
Net asset value attributable to unit holders	34,871.8	(34,871.8)	-	-
Total liabilities	144,022.2	(141,509.4)	(623.9)	1,888.9
Net assets	1,146.8	-	100.5	1,247.3

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

² Restated to reclassify balances between Other receivables and Other payables. See Note 2c.

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	IFRS Balance Sheet	Adjustment 1	Adjustment 2	Solvency II Net Assets Balance Sheet
31 December 2022	£'Million	£'Million	£'Million	£'Million
Assets
Goodwill	33.6	-	(33.6)	-
Deferred acquisition costs¹	336.6	-	(336.6)	-
Purchased value of in-force business	11.2	-	(11.2)	-
Computer software	33.3	-	(33.3)	-
Property and equipment	145.7	-	-	145.7
Deferred tax assets¹	12.5	-	(10.0)	2.5
Investment in associates	1.4	-	-	1.4
Reinsurance assets¹	54.6	-	(49.0)	5.6
Other receivables¹	2,977.2	(1,604.8)	(3.2)	1,369.2
Income tax assets	35.0	-	-	35.0
Investment property	1,294.5	(1,294.5)	-	-
Equities	103,536.0	(103,536.0)	-	-
Fixed income securities	27,552.7	(27,544.8)	-	7.9
Investment in Collective Investment Schemes	5,735.4	(4,463.7)	-	1,271.7
Derivative financial instruments	3,493.0	(3,493.0)	-	-
Cash and cash equivalents	6,432.8	(6,179.5)	-	253.3
Total assets	151,685.5	(148,116.3)	(476.9)	3,092.3
Liabilities
Borrowings	163.8	-	-	163.8
Deferred tax liabilities	162.9	-	2.2	165.1
Insurance contract liabilities¹	470.5	(414.9)	(37.7)	17.9
Deferred income	530.4	-	(530.4)	-
Other provisions	46.0	-	-	46.0
Other payables¹	2,180.7	(842.0)	(19.1)	1,319.6
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 liabilities	150,413.7	(148,116.3)	(585.0)	1,712.4
Net assets	1,271.8	-	108.1	1,379.9

¹ Restated to reflect the adoption of IFRS 17. See Note 2c.

Adjustment 1 nets out the policyholder interest in unit-linked assets and liabilities.

Adjustment 2 comprises adjustment to the IFRS Condensed Consolidated Statement of Financial Position in line with Solvency II requirements, including removal of DAC, DIR, PVIF and their associated deferred tax balances, goodwill and other intangibles.

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Other Information

-114-

Glossary of Alternative Performance Measures

Within this document 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

APM	Definition	Why is this measure used?	Reconciliation to the Financial Statements
Solvency II net assets	Based on IFRS Net Assets, but with the following adjustments: 1. Reflection of the recognition requirements of the Solvency II regulations for assets and liabilities. In particular this removes deferred acquisition costs (DAC), deferred income (DIR), purchased value of in-force business (PVIF) 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.	Our ability to satisfy our liabilities to clients, and consequently our solvency, is central to our business. By removing the liabilities which are fully matched by assets, this presentation allows the reader to focus on the business operation. It also provides a simpler comparison with other wealth management companies.	Refer to page 28.
Total embedded value	A discounted cash flow valuation methodology, assessing the long-term economic value of the business. Our embedded value is determined in line with the EEV principles, originally set out by the Chief Financial Officers (CFO) Forum in 2004, and amended for subsequent changes to the principles, including those published in April 2016, following the implementation of Solvency II.	Life business and wealth management business differ from most other businesses, in that the expected shareholder income from the sale of a product emerges over a long period in the future. We therefore supplement the IFRS and Cash results by providing additional disclosure on an embedded value basis, which brings into account the net present value of expected future cash flows, as we believe that a measure of total economic value of the Group is useful to investors.	Not applicable.
EEV net asset value (NAV) per share	EEV net asset value per share is calculated as the EEV net assets divided by the period-end number of ordinary shares.	Total embedded value provides a measure of total economic value of the Group, and assessing the NAV per share allows analysis of the overall value of the Group by share.	Not applicable.
IFRS NAV per share	IFRS net asset value per share is calculated as the IFRS net assets divided by the period-end number of ordinary shares.	Total IFRS net assets provides a measure of value of the Group, and assessing the NAV per share allows analysis of the overall value of the Group by share.	Not applicable.

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Financial-performance-related APMs

APM	Definition	Why is this measure used?	Reconciliation to the Financial Statements
Cash result, and Underlying cash result	The Cash result is defined as the movement between the opening and closing Solvency II net assets adjusted as follows: 1. The movement in deferred tax is removed to reflect just the cash realisation from the deferred tax position; 2. The movements in goodwill and other intangibles are included; and 3. Other changes in equity, such as dividends paid in the period and equity-settled share option costs, are excluded. The Underlying cash result reflects the 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 any 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.	IFRS income statement methodology recognises non-cash items such as deferred tax and non-cash-settled share options. By contrast, dividends can only be paid to shareholders from appropriately fungible assets. The Board therefore uses the Cash result to monitor the level of cash generated by the business. While the Cash result gives an absolute measure of the cash generated in the period, the Underlying cash result is particularly useful for monitoring the expected long-term rate of cash emergence, which supports dividends and sustainable dividend growth.	Refer to Section 2.1 and 2.2 of the financial review and also see Note 3 to the Consolidated Financial Statements.
Underlying cash basic and diluted earnings per share (EPS)	These EPS measures are calculated as Underlying cash divided by the number of shares used in the calculation of IFRS basic and diluted EPS.	As Underlying cash is the best reflection of the cash generated by the business, Underlying cash EPS measures allow analysis of the shareholder cash generated by the business by share.	Not applicable.
EEV profit	Derived as the movement in the total EEV during the period.	Both the IFRS and Cash results reflect only the cash flows in the period. However, our business is long-term, and activity in the period can generate business with a long-term value. We therefore believe it is helpful to understand the full economic impact of activity in the period, which is the aim of the EEV methodology.	See Note 3 to the Consolidated Financial Statements.
EEV operating profit	A discounted cash flow valuation methodology, assessing the long-term economic value of the business. Our embedded value is determined in line with the EEV principles, originally set out by the Chief Financial Officers (CFO) Forum in 2004, and amended for subsequent changes to the principles, including those published in April 2016, following the implementation of Solvency II. The EEV operating profit reflects the total EEV result with an adjustment to strip out the impact of stock market and other economic effects during the period.	Both the IFRS and Cash results reflect only the cash flows in the period. However, our business is long-term, and activity in the period can generate business with a long-term value. We therefore believe it is helpful to understand the full economic impact of activity in the period, which is the aim of the EEV methodology. Within the EEV, many of the future cash flows derive from fund charges, which change with movements in stock markets. Since the impact of these changes is typically unrelated to the performance of the business, we believe that the EEV operating profit (reflecting the EEV profit,	See Note 3 to the Consolidated Financial Statements.

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APM	Definition	Why is this measure used?	Reconciliation to the Financial Statements
Policyholder and shareholder tax	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 the 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 the tax on shareholders' profits.	The UK tax regime facilitates the collection of tax from life insurance policyholders by making an equivalent charge within the corporate tax of the Company. The total tax charge for the insurance companies therefore comprises both this element and an element more closely related to normal corporation tax. Life insurance business impacted by this tax typically includes policy charges which align with the tax liability, to mitigate the impact on the corporate. As a result, when policyholder tax increases, the charges 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.	Disclosed as separate line items in the Statement of Comprehensive Income.
Profit before shareholder tax	A profit measure which reflects the IFRS result adjusted for policyholder tax, but before deduction of shareholder tax. Within the Consolidated Statement of Comprehensive Income, the full title of this measure is 'Profit before tax attributable to shareholders' returns'.	The IFRS methodology requires that the tax recognised in the Financial Statements should include the tax incurred on behalf of policyholders in our UK life assurance company. Since the policyholder tax charge is unrelated to the performance of the 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.	Disclosed as a separate line item in the Statement of Comprehensive Income.
Underlying profit	A profit measure which reflects the IFRS result adjusted to remove the DAC, DIR and PVIF adjustments.	The IFRS methodology promotes recognition of profits in line with the provision of services 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). 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.	Refer to Section 2.1 of the Financial Review.

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APM	Definition	Why is this measure used?	Reconciliation to the Financial Statements
Controllable expenses	The total of expenses which reflects Establishment, Development and our Academy.	We are focused on containing long-term growth in controllable expenses.	Full detail of the breakdown of expenses is provided in Section 2.2 of the Financial Review.

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