{ "documentInfo": { "documentType": "https://xbrl.org/2021/xbrl-json", "features": { "xbrl:canonicalValues": true }, "namespaces": { "ifrs-full": "http://xbrl.ifrs.org/taxonomy/2021-03-24/ifrs-full", "iso4217": "http://www.xbrl.org/2003/iso4217", "saga": "http://www.corporate.saga.co.uk/20230131", "scheme": "http://standards.iso.org/iso/17442", "xbrl": "https://xbrl.org/2021", "xbrli": "http://www.xbrl.org/2003/instance" }, "taxonomy": [ "http://www.corporate.saga.co.uk/xbrl/2023/2138004WWUJN94K2LH95-2023-01-31.xsd" ] }, "facts": { "f17429": { "value": "Statements of responsibilities
Directors\u2019 responsibilities
\n
The Directors are responsible for preparing the Annual Report and
\n
Accounts and the Group and parent company \ufb01nancial statements in
\n
accordance with applicable laws and regulations.
\n
Company law requires the Directors to prepare Group and parent
\n
company \ufb01nancial statements for each \ufb01nancial year. Under that law,
\n
they are required to prepare the Group \ufb01nancial statements in
\n
accordance with UK-adopted international accounting standards
\n
and in conformity with the requirements of the Companies Act 2006
\n
(the
Act
) and have elected to prepare the parent company \ufb01nancial
\n
statements in accordance with UK accounting standards,
\n
including\u00a0Financial Reporting Standard (
FRS
) 101 (Reduced
\n
Disclosure Framework).
\n
Under company law, the Directors must not approve the \ufb01nancial
\n
statements unless they are satis\ufb01ed that they give a true and fair view
\n
of the state of a\ufb00airs of the Group and parent company and of their
\n
pro\ufb01t or loss for that period (see Governance statements on page 71).
\n
In preparing each of the Group and parent company \ufb01nancial
\n
statements, the Directors are required to:
\n
\u2022
select suitable accounting policies and then apply
\n
them\u00a0consistently;
\n
\u2022
make judgements and estimates that are reasonable, relevant,
\n
reliable and prudent;
\n
\u2022
for the Group financial statements, state whether they have been
\n
prepared in accordance with UK-adopted international
\n
accounting standards;
\n
\u2022
for the parent company financial statements, state whether
\n
applicable UK accounting standards have been followed, subject
\n
to any material departures disclosed and explained in the parent
\n
company financial statements;
\n
\u2022
assess the Group and parent company\u2019s ability to continue as a
\n
going concern, disclosing, as applicable, matters related to going
\n
concern; and
\n
\u2022
use the going concern basis of accounting unless they either
\n
intend to liquidate the Group or the parent company or to cease
\n
operations or have no realistic alternative but to do so.
\n
The Directors are responsible for keeping adequate accounting
\n
records that are su\ufb03cient to show and explain the parent company\u2019s
\n
transactions and disclose with reasonable accuracy at any time the
\n
\ufb01nancial position of the parent company and enable them to ensure
\n
that its \ufb01nancial statements comply with the Act. They are also
\n
responsible for such internal controls as they determine are
\n
necessary to enable the preparation of \ufb01nancial statements that are
\n
free from material misstatement, whether due to fraud or error, and
\n
have general responsibility for taking such steps as are reasonably
\n
open to them to safeguard the assets of the Group and to prevent
\n
and detect fraud and other irregularities.
\n
Under applicable law and regulations, the Directors are also
\n
responsible for preparing a Strategic Report, Directors\u2019 Report,
\n
Directors\u2019 Remuneration Report and Corporate Governance
\n
Statement that comply with that law and those regulations.
\n
Disclosure of information to the\u00a0auditor
\n
Having made the requisite enquiries, so far as\u00a0each of the Directors
\n
is\u00a0aware, there is no relevant audit information (as de\ufb01ned by Section
\n
418(3) of the Act) of which the Company\u2019s auditor is unaware and the
\n
Directors have taken all the steps they ought\u00a0to have taken as
\n
Directors to make themselves aware of any relevant audit information
\n
and to ensure that the Company\u2019s auditor is aware of that information.
\n
Maintenance of website and single electronic
\n
reporting
\n
The Directors are responsible for the maintenance and integrity of
\n
the corporate and \ufb01nancial information included on the Company\u2019s
\n
website. Legislation in the UK governing the preparation and
\n
dissemination of \ufb01nancial statements may di\ufb00er from legislation
\n
in\u00a0other jurisdictions.
\n
In accordance with Disclosure Guidance and Transparency Rule
\n
4.1.14R, the \ufb01nancial statements will form part of the annual \ufb01nancial
\n
report prepared using the single electronic reporting format under
\n
the Transparency Directive European Single Electronic Format
\n
(
ESEF
) Regulation. The auditor\u2019s report on these \ufb01nancial statements
\n
provides no assurance over the ESEF format.
\n
Directors\u2019 responsibility statement
\n
Each of the Directors, who were in o\ufb03ce at the date of this report,
\n
whose names and responsibilities are listed on pages 74-75,
\n
con\ufb01rm\u00a0that, to the best of their knowledge:
\n
\u2022
the financial statements, prepared in accordance with the
\n
applicable set of accounting standards, give a true and fair view
\n
of\u00a0the assets, liabilities, financial position and profit or loss of the
\n
Company and the undertakings included in the consolidation
\n
taken as a\u00a0whole; and
\n
\u2022
the Management Report includes a fair\u00a0review of the development
\n
and performance of the business and the\u00a0position of the issuer,
\n
and the undertakings included in the consolidation taken as a
\n
whole, together\u00a0with a description of the principal risks and
\n
uncertainties that they face.
\n
The Directors consider the Annual Report and Accounts, taken
\n
as\u00a0a\u00a0whole, to be fair, balanced and understandable and provide
\n
the\u00a0information necessary for shareholders to assess the Group\u2019s
\n
position and performance, business model and strategy.
\n
By order of the Board
\n
Victoria Haynes
\n
Group Company Secretary
\n
17 April 2023
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"f18893": { "value": "298000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:OtherRevenue", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18897": { "value": "581100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Revenue", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18899": { "value": "377200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Revenue", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18903": { "value": "157200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ExpenseForPolicyholderClaimsAndBenefitsWithoutReductionForReinsuranceHeld", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18905": { "value": "94600000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ExpenseForPolicyholderClaimsAndBenefitsWithoutReductionForReinsuranceHeld", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18909": { "value": "99100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncomeFromContractsWithReinsurers", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18911": { "value": "63300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncomeFromContractsWithReinsurers", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18915": { "value": "58100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ClaimsAndBenefitsPaidNetOfReinsuranceRecoveries", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18917": { "value": "31300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ClaimsAndBenefitsPaidNetOfReinsuranceRecoveries", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18920": { "value": "1300000", "decimals": -5, "dimensions": { "concept": "saga:DecreaseInCreditLossAllowance", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18922": { "value": "1600000", "decimals": -5, "dimensions": { "concept": "saga:DecreaseInCreditLossAllowance", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18926": { "value": "250400000", "decimals": -5, "dimensions": { "concept": "saga:OtherCostOfSales", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18928": { "value": "113600000", "decimals": -5, "dimensions": { "concept": "saga:OtherCostOfSales", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18933": { "value": "307200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CostOfSales", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18935": { "value": "143300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CostOfSales", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18938": { "value": "273900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:GrossProfit", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18940": { "value": "233900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:GrossProfit", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18944": { "value": "216900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:SellingGeneralAndAdministrativeExpense", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18946": { "value": "212100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:SellingGeneralAndAdministrativeExpense", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18950": { "value": "-900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInAllowanceAccountForCreditLossesOfFinancialAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f18952": { "value": "-700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInAllowanceAccountForCreditLossesOfFinancialAssets", 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"ifrs-full:IncomeTaxExpenseContinuingOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19006": { "value": "4500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncomeTaxExpenseContinuingOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19009": { "value": "-259200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLoss", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19011": { "value": "-28000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLoss", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19015": { "value": "-259200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLossAttributableToOwnersOfParent", 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"2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:SharePremiumMember", "unit": "iso4217:GBP" } }, "f19607": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:RetainedEarningsMember", "unit": "iso4217:GBP" } }, "f19609": { "value": "3400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfSharebasedPaymentsMember", "unit": "iso4217:GBP" } }, "f19611": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember", "unit": "iso4217:GBP" } }, "f19613": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfCashFlowHedgesMember", "unit": "iso4217:GBP" } }, "f19615": { "value": "3400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19618": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:IssuedCapitalMember", "unit": "iso4217:GBP" } }, "f19620": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:SharePremiumMember", "unit": "iso4217:GBP" } }, "f19622": { "value": "1800000", "decimals": -5, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:RetainedEarningsMember", "unit": "iso4217:GBP" } }, "f19624": { "value": "-1800000", "decimals": -5, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfSharebasedPaymentsMember", "unit": "iso4217:GBP" } }, "f19626": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember", "unit": "iso4217:GBP" } }, "f19628": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfCashFlowHedgesMember", "unit": "iso4217:GBP" } }, "f19630": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:TransferUponVestingOfShareOptions", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19633": { "value": "21100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:IssuedCapitalMember", "unit": "iso4217:GBP" } }, "f19635": { "value": "648300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:SharePremiumMember", "unit": "iso4217:GBP" } }, "f19637": { "value": "-22400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:RetainedEarningsMember", "unit": "iso4217:GBP" } }, "f19639": { "value": "7400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfSharebasedPaymentsMember", "unit": "iso4217:GBP" } }, "f19641": { "value": "-800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember", "unit": "iso4217:GBP" } }, "f19643": { "value": "-700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:ReserveOfCashFlowHedgesMember", "unit": "iso4217:GBP" } }, "f19645": { "value": "652900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19659": { "value": "Consolidated statement of cash \ufb02ows
for the year ended 31 January 2023
\n
Note
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Loss before tax
(254.2)
(23.5)
\n
Depreciation, impairment and loss on disposal, of property, plant and equipment, and right-of-use assets
32.9
22.2
\n
Amortisation and impairment of intangible assets and goodwill, and (profit)/loss on disposal of software
278.6
20.6
\n
Impairment of assets held for sale
38
1.2
1.0
\n
Gain on lease modification
\u2013
(0.3)
\n
Share-based payment transactions
3.9
3.4
\n
Profit on disposal of assets held for sale
38
\u2013
(7.2)
\n
Finance costs
7
42.2
40.8
\n
Finance income
8
(1.5)
\u2013
\n
Interest income from investments
(1.5)
(0.3)
\n
Increase in trust accounts
(12.8)
(1.0)
\n
Movements in other assets and liabilities
(65.7)
29.3
\n
23.1
85.0
\n
Investment income interest received
1.5
0.3
\n
Interest paid
(37.6)
(34.2)
\n
Income tax paid
(0.9)
(4.6)
\n
Net cash flows (used in)/from operating activities
(13.9)
46.5
\n
Investing activities
\n
Proceeds from sale of property, plant and equipment, intangible assets and right-of-use assets
0.2
0.3
\n
Net proceeds from disposal of assets held for sale
38
\u2013
10.2
\n
Purchase of and payments for the construction of property, plant and equipment and intangible assets
(20.8)
(18.9)
\n
Net disposal/(purchase) of financial assets
25.6
(18.9)
\n
Acquisition of subsidiary
13
(0.9)
\u2013
\n
Net cash flows from/(used in) investing activities
4.1
(27.3)
\n
Financing activities
\n
Payment of principal portion of lease liabilities
32
(7.8)
(3.6)
\n
Proceeds from borrowings
32
\u2013
250.0
\n
Repayment of borrowings
32
(46.4)
(170.0)
\n
Debt issue costs
32
\u2013
(6.8)
\n
Net cash flows (used in)/from financing activities
(54.2)
69.6
\n
Net (decrease)/increase in cash and cash equivalents
(64.0)
88.8
\n
Cash and cash equivalents at the start of the year
255.7
166.9
\n
Cash and cash equivalents at the end of the year
25
191.7
255.7
\nThe Notes on pages 143-202 form an integral part of these consolidated \ufb01nancial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19669": { "value": "-254200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLossBeforeTax", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19671": { "value": "-23500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLossBeforeTax", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19674": { "value": "32900000", "decimals": -5, "dimensions": { "concept": "saga:DepreciationImpairmentAndLossOnDisposalOfPropertyPlantAndEquipmentAndRightOfUseAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19676": { "value": "22200000", "decimals": -5, "dimensions": { "concept": "saga:DepreciationImpairmentAndLossOnDisposalOfPropertyPlantAndEquipmentAndRightOfUseAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19679": { "value": "278600000", "decimals": -5, "dimensions": { "concept": "saga:AmortisationAndImpairmentOfIntangibleAssetsAndLossOnDisposalOfSoftware", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19681": { "value": "20600000", "decimals": -5, "dimensions": { "concept": "saga:AmortisationAndImpairmentOfIntangibleAssetsAndLossOnDisposalOfSoftware", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19685": { "value": "1200000", "decimals": -5, "dimensions": { "concept": "saga:ImpairmentOfAssetsHeldForSale", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19687": { "value": "1000000", "decimals": -5, "dimensions": { "concept": "saga:ImpairmentOfAssetsHeldForSale", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19690": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:AdjustmentsForGainLossOnLeaseModification", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19692": { "value": "-300000", "decimals": -5, "dimensions": { "concept": "saga:AdjustmentsForGainLossOnLeaseModification", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19695": { "value": "3900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForSharebasedPayments", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19697": { "value": "3400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForSharebasedPayments", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19701": { "value": "0", "decimals": -6, "dimensions": { "concept": "saga:AdjustmentsForProfitOnDisposalOfAssetsHeldForSale", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19703": { "value": "-7200000", "decimals": -5, "dimensions": { "concept": "saga:AdjustmentsForProfitOnDisposalOfAssetsHeldForSale", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19707": { "value": "42200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForFinanceCosts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19709": { "value": "40800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForFinanceCosts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19713": { "value": "1500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForFinanceIncome", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19715": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:AdjustmentsForFinanceIncome", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19718": { "value": "1500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForInterestIncome", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19720": { "value": "300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:AdjustmentsForInterestIncome", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19723": { "value": "-12800000", "decimals": -5, "dimensions": { "concept": "saga:AdjustmentsForIncreaseDecreaseInTrustAccounts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19725": { "value": "-1000000", "decimals": -5, "dimensions": { "concept": "saga:AdjustmentsForIncreaseDecreaseInTrustAccounts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19728": { "value": "-65700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:OtherAdjustmentsToReconcileProfitLoss", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19730": { "value": "29300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:OtherAdjustmentsToReconcileProfitLoss", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19732": { "value": "23100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19734": { "value": "85000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19737": { "value": "1500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:InterestReceivedClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19739": { "value": "300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:InterestReceivedClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19742": { "value": "37600000", "decimals": -5, "dimensions": { "concept": "ifrs-full:InterestPaidClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19744": { "value": "34200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:InterestPaidClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19747": { "value": "900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncomeTaxesPaidRefundClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19749": { "value": "4600000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncomeTaxesPaidRefundClassifiedAsOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19752": { "value": "-13900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19754": { "value": "46500000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInOperatingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19758": { "value": "200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProceedsFromDisposalsOfPropertyPlantAndEquipmentIntangibleAssetsOtherThanGoodwillInvestmentPropertyAndOtherNoncurrentAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19760": { "value": "300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProceedsFromDisposalsOfPropertyPlantAndEquipmentIntangibleAssetsOtherThanGoodwillInvestmentPropertyAndOtherNoncurrentAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19764": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromDisposalOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19766": { "value": "10200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProceedsFromDisposalOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperations", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19769": { "value": "20800000", "decimals": -5, "dimensions": { "concept": "saga:PurchaseOfAndPaymentsForTheConstructionOfPropertyPlantAndEquipmentAndIntangibleAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19771": { "value": "18900000", "decimals": -5, "dimensions": { "concept": "saga:PurchaseOfAndPaymentsForTheConstructionOfPropertyPlantAndEquipmentAndIntangibleAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19774": { "value": "25600000", "decimals": -5, "dimensions": { "concept": "saga:CashFlowsFromUsedInDisposalOrPurchaseOfFinancialAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19776": { "value": "-18900000", "decimals": -5, "dimensions": { "concept": "saga:CashFlowsFromUsedInDisposalOrPurchaseOfFinancialAssets", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19780": { "value": "900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsUsedInObtainingControlOfSubsidiariesOrOtherBusinessesClassifiedAsInvestingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19782": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsUsedInObtainingControlOfSubsidiariesOrOtherBusinessesClassifiedAsInvestingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19785": { "value": "4100000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19787": { "value": "-27300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19792": { "value": "7800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19794": { "value": "3600000", "decimals": -5, "dimensions": { "concept": "ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19798": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19800": { "value": "250000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProceedsFromBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19804": { "value": "46400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:RepaymentsOfBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19806": { "value": "170000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:RepaymentsOfBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19810": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsForDebtIssueCosts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19812": { "value": "6800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:PaymentsForDebtIssueCosts", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19815": { "value": "-54200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19817": { "value": "69600000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInFinancingActivities", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19820": { "value": "-64000000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19822": { "value": "88800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00/2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19825": { "value": "255700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19827": { "value": "166900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2021-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19831": { "value": "191700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2023-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19833": { "value": "255700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00", "unit": "iso4217:GBP" } }, "f19851": { "value": "Notes to the consolidated \ufb01nancial statements
1 Corporate Information
\n
Saga plc (the
Company
) is a public limited company incorporated
\n
and\u00a0domiciled in the United Kingdom under the Companies Act 2006
\n
(registration number 08804263). The Company is registered in
\n
England and its registered o\ufb03ce is located at Enbrook Park,
\n
Folkestone, Kent CT20 3SE.
\n
Saga o\ufb00ers a wide range of products and services to its customer
\n
base, which includes package and cruise holidays, general insurance
\n
products, personal \ufb01nance products and a range of media content
\n
including a monthly subscription magazine.
\n
2.1 Basis of preparation
\n
The consolidated \ufb01nancial statements of the Group have been
\n
prepared in accordance with UK-adopted international
\n
accounting\u00a0standards.
\n
The consolidated \ufb01nancial statements have been prepared on a
\n
going\u00a0concern basis and on a historical cost basis except as otherwise
\n
stated. The Group has reviewed the appropriateness of the going
\n
concern basis in preparing the \ufb01nancial statements, details of which
\n
are included below. Based on those assumptions, the Directors have
\n
concluded that it remains appropriate to adopt the going concern
\n
basis in preparing the \ufb01nancial statements.
\n
The Group\u2019s consolidated \ufb01nancial statements are presented in
\n
pounds sterling, which is also the parent company\u2019s functional
\n
currency, and all values are rounded to the nearest hundred thousand
\n
(\u00a3m), except when otherwise indicated. Each company in the Group
\n
determines its own functional currency and items included in the
\n
\ufb01nancial statements of each entity are measured using that
\n
functional\u00a0currency.
\n
The preparation of \ufb01nancial statements in compliance with
\n
UK-adopted international accounting standards requires the use
\n
of\u00a0certain critical accounting estimates. It also requires Group
\n
management to exercise judgement in applying the Group\u2019s
\n
accounting policies. The areas where signi\ufb01cant judgements and
\n
estimates have been made in preparing the \ufb01nancial statements
\n
and\u00a0their e\ufb00ect are disclosed in Note 2.6.
\n
The principal accounting policies adopted, which have been applied
\n
consistently, unless otherwise stated, are set out in Note 2.3 below.
\n
Going concern
\n
The Directors have performed an assessment of going concern
\n
to\u00a0determine the adequacy of the Group and Company\u2019s \ufb01nancial
\n
resources over a period of 14 months from the date of signing these
\n
\ufb01nancial statements, a period which includes the maturity of \u00a3150m
\n
of senior bonds in May 2024.
\n
This assessment is based on higher and lower case \ufb01nancial
\n
projections which incorporate scenario analysis and stress tests
\n
on\u00a0expected business performance.
\n
The Group\u2019s higher case modelling assumes good performance in
\n
the\u00a0Cruise division in 2023/24, on the back of strong booked load
\n
factors and per diems. Travel is also expected to achieve continued
\n
growth in\u00a0revenues with encouraging bookings for 2023/24 as at
\n
the\u00a0end of March 2023. As previously indicated, the outlook for
\n
Insurance is likely to be challenging over the next 12 to 18 months,
\n
with\u00a0high cost\u00a0and claims in\ufb02ation in a competitive market expected
\n
to\u00a0squeeze\u00a0margins.
\n
2
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
\n
The Group\u2019s lower case scenario incorporates lower load factors
\n
for\u00a0Ocean Cruise, lower levels of demand in River Cruise, and slower
\n
growth in the Travel business across the going concern period.
\n
Downside risks modelled for the Insurance business include the
\n
impact of worsening competitive market pressures on the Insurance
\n
Broking business, continued high cost and claims in\ufb02ation putting
\n
pressure on margins, among other stress tests. These stresses are
\n
partially o\ufb00set by discretionary cost savings and the deferral of
\n
investment expenditure that would be achieved in the event of
\n
downside trading risks materialising.
\n
To increase liquidity and consistent also with a strategy of reducing
\n
capital intensity, in the autumn of 2022, the Group commenced a sale
\n
process for its Underwriting business, Acromas Insurance Company
\n
Limited (
AICL
). The Group aims for this sale process to be concluded
\n
in the second half of 2023.
\n
However, given that there is no certainty that a sale of AICL will be
\n
concluded in the next 14 months, the Group has agreed a loan facility
\n
with Sir Roger De Haan. Under the terms of this facility, if the sale of
\n
AICL is not completed prior to the end of 2023, the Group will, from
\n
1\u00a0January 2024, be able to borrow up to \u00a350m to fund any liquidity
\n
needs, including repayment of the 2024 bonds. This facility is
\n
unsecured, on arms-length terms and can be drawn at the option of
\n
the Group on 30 days\u2019 notice. The facility matures on 30 June 2025,
\n
at which point any outstanding amounts, including interest, must be
\n
repaid. Availability of funds under the facility is not contingent on
\n
\ufb01nancial performance or on compliance with any \ufb01nancial covenants.
\n
Under both higher and lower case scenarios the Group expects to
\n
meet scheduled Ocean Cruise debt principal repayments as they fall
\n
due over the next 14 months, and to also meet the \ufb01nancial covenants
\n
relating to its secured cruise debt facilities (see Note 30) throughout
\n
the assessment period, except for the July 2023 testing date where
\n
lenders have agreed to a waiver of the EBITDA to debt repayment
\n
covenant ratio (see Note 41).
\n
In addition, in both higher and lower case scenarios and incorporating
\n
either the expected net proceeds from a sale of the Insurance
\n
Underwriting business or a draw down of the \u00a350m loan facility with
\n
Sir Roger De Haan, the Group expects to have su\ufb03cient resources to
\n
continue operations for at least the next 14 months and to repay the
\n
\u00a3150m senior bonds on maturity in May 2024 from Available Cash
\n
2
\n
resources.
\n
Over the same timeframe and on the same basis, the Group also
\n
expects to remain within the renegotiated \ufb01nancial covenants and
\n
other terms relating to its \u00a350m revolving credit facility (
RCF
), as
\n
set\u00a0out in Note 30, enabling it to draw down on this currently undrawn
\n
facility in 2024/25 to meet short-term working capital requirements
\n
should the need arise.
\n
Noting that it is not possible to predict accurately all possible future
\n
risks to the Group\u2019s future trading, based on this analysis and the
\n
scenarios modelled, the Directors are con\ufb01dent that the Group will
\n
have su\ufb03cient funds to continue to meet its liabilities as they fall due
\n
for a period of at least 14 months from the date of approval of these
\n
\ufb01nancial statements. They have therefore deemed it appropriate
\n
to\u00a0prepare the \ufb01nancial statements to 31 January 2023 on a going
\n
concern basis.
Notes to the consolidated \ufb01nancial statements continued
\n
144
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.2 Basis of consolidation
\n
The consolidated \ufb01nancial statements incorporate the \ufb01nancial
\n
statements of the Company and entities controlled by the Company
\n
(its
subsidiaries
) made up to 31 January each year. Control is
\n
achieved when the Group is exposed, or has rights, to variable returns
\n
from its involvement with an investee entity and has the ability to
\n
a\ufb00ect those returns through its power over the investee entity.
\n
The\u00a0existence and e\ufb00ect of potential voting rights that are currently
\n
exercisable or convertible are considered when assessing whether
\n
the Group controls another entity.
\n
Subsidiary companies are consolidated using the acquisition method.
\n
Subsidiaries are fully consolidated from the date of acquisition, being
\n
the date on which the Group obtained control, and continue to be
\n
consolidated until the date when such control ceases.
\n
In preparing these consolidated \ufb01nancial statements, any intra-group
\n
receivables, payables, income and expenses arising from intra-group
\n
trading are eliminated. Where accounting policies used in individual
\n
\ufb01nancial statements of a subsidiary company di\ufb00er from Group
\n
policies, adjustments are made to bring these policies in line with
\n
Group policies.
\n
The results of subsidiaries acquired, or disposed of, during the
\n
year\u00a0are included in the consolidated income statement from the
\n
e\ufb00ective date of acquisition or up to the e\ufb00ective date of disposal,
\n
as\u00a0appropriate. Where a subsidiary which constituted a separate
\n
major line of business is disposed of, it is disclosed as a discontinued
\n
operation.
\n
A change in the ownership interest of a subsidiary, without a loss
\n
of\u00a0control, is accounted for as an equity transaction.
\n
If the Group loses control over a subsidiary, it derecognises the
\n
related assets (including goodwill), liabilities, non-controlling interest
\n
and other components of equity while any resultant gain or loss is
\n
recognised in pro\ufb01t or loss. Any investment retained is recognised
\n
at\u00a0fair value.
\n
2.3 Summary of significant accounting policies
\n
a. Revenue recognition
\n
Revenue represents amounts receivable from the sale or supply
\n
of\u00a0goods and services provided to customers in the ordinary course
\n
of business and is recognised to the extent that it is probable that
\n
the\u00a0future economic bene\ufb01ts will \ufb02ow to the Group and the revenue
\n
can be reliably measured, regardless of when payment is received.
\n
The recognition policies for the Group\u2019s various revenue streams
\n
by\u00a0segment are as follows:
\n
i) Insurance
\n
The amounts received from customers for insurance policies
\n
comprise three main elements: the premium charged to the
\n
customer in respect of the insurance cover (
gross premium
);
\n
insurance premium tax (
IPT
); and an arrangement fee where
\n
applicable (only applied to policies that are brokered via a panel).
\n
The\u00a0gross premium itself comprises two elements: the premium
\n
charged by the underwriter of each policy (
net premium
), which
\n
may\u00a0be provided by the Group\u2019s in-house underwriter or by a
\n
third-party underwriter, plus any adjustment to the net premium
\n
that\u00a0is applied by the Group\u2019s broker during the broking service
\n
(
street pricing adjustment
).
\n
In addition, where the customer pays in instalments, the Group
\n
may\u00a0charge interest on the outstanding balance. The Group may
\n
also\u00a0charge additional fee income for mid-term cancellations and
\n
adjustments made to policies mid-term.
\n
IPT is excluded from all revenue recognised by the Group.
\n
For 12-month insurance policies with no option to \ufb01x the
\n
premium at renewal (
annual policies
):
\n
For insurance policies underwritten by the Group, the gross
\n
insurance premium is recognised on a straight-line time-apportioned
\n
basis over the period of cover. The portion of the premium ceded to
\n
reinsurers is also recognised on a straight-line time-apportioned
\n
basis over the period of cover as a reduction to revenue. This
\n
recognition basis is in line with the requirements of International
\n
Financial Reporting Standard (
IFRS
) 4.
\n
For insurance policies not underwritten by the Group, the portion of
\n
the gross premium that is retained by the Group, otherwise referred
\n
to as the street pricing adjustment, is recognised on the cover start
\n
date of each policy. The portion of the gross premium charged by the
\n
third-party underwriter, otherwise referred to as the net premium, is
\n
not recognised as revenue in the income statement. This recognition
\n
basis is in line with the requirements of IFRS 15.
\n
For 12-month insurance policies with the option to \ufb01x the
\n
premium over three years (
three-year \ufb01xed-price policies
):
\n
For three-year \ufb01xed-price policies, the option to \ufb01x the premium
\n
at\u00a0the \ufb01rst and second renewal points is deemed to be a separate
\n
performance obligation as de\ufb01ned by IFRS 15. The Group therefore
\n
defers a portion of the gross premium received in the \ufb01rst year of
\n
cover into years two and three, and a portion of the gross premium
\n
received in the second year of cover into year three, to coincide
\n
with\u00a0when the option has been exercised by the customer and so
\n
deemed to be ful\ufb01lled by the Group. The carrying value of the revenue
\n
deferred is recognised within contract liabilities in the statement of
\n
\ufb01nancial position.
\n
If a customer cancels a three-year \ufb01xed-price policy mid-term or
\n
chooses not to renew in the second or third years, any brought
\n
forward income deferral is recognised in the income statement at
\n
the\u00a0point the cover ends, being the point that the Group is released
\n
from the obligation to \ufb01x the price at renewal.
Saga plc
Annual Report and Accounts 2023
145
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses a cost-plus methodology to approximate a
\n
standalone selling price of the option to \ufb01x the customer price at
\n
renewal, by reference to an actuarial estimate of the premium that it
\n
would cost the Group to transfer the obligation to \ufb01x to a third party,
\n
plus an appropriate pro\ufb01t margin.
\n
The gross premium that is allocated to each of the three policy years
\n
is then measured as the gross premium charged in each year, less any
\n
income deferred to subsequent policy years for the option to \ufb01x, plus
\n
any brought forward income deferred from earlier policy years. The
\n
accounting in each policy year then follows the same principles as
\n
described above for annual policies.
\n
Where there is a switch of underwriter between the Group and a
\n
third-party underwriter at either of the renewal points within the
\n
three-year price-\ufb01x, the Group applies the relevant accounting policy
\n
for the subsequent policy year in line with either of the two methods
\n
as\u00a0described for annual policies.
\n
Management considers the de\ufb01nition of performance obligations for
\n
three-year \ufb01xed-price policies to be a signi\ufb01cant area of judgement.
\n
All insurance policies (both three-year \ufb01xed-price policies and
\n
annual policies):
\n
For all insurance policies, the arrangement fee that is charged in
\n
respect of the broking service is recognised on, or before, the cover
\n
start date of each policy on the date that each policy is arranged,
\n
being the point at which the performance obligation to broker the
\n
policy is ful\ufb01lled. It is measured by reference to the explicit price
\n
charged to customers for this service. Management considers the
\n
revenue recognition treatment of the arrangement fee to be a
\n
signi\ufb01cant area of judgement.
\n
Gross premiums received in advance of the cover start date of a
\n
policy are treated as advance receipts and included as contract
\n
liabilities in the statement of \ufb01nancial position.
\n
Premiums in respect of insurance policies underwritten by the Group
\n
that have a period of unexpired risk at the reporting date, and which
\n
relate to the period after the reporting date, are treated as unearned
\n
and included in gross insurance contract liabilities in the statement of
\n
\ufb01nancial position. The portion of those unearned premiums ceded to
\n
excess of loss reinsurers is recognised as a reinsurance asset on
\n
the\u00a0face of the statement of \ufb01nancial position. The portion of those
\n
unearned premiums ceded to quota share reinsurers is recognised
\n
as an asset netted o\ufb00 against reinsurance premiums withheld within
\n
trade payables, since there is a right of set-o\ufb00 within the contract.
\n
Subsequent changes to premiums mid-term are recognised on
\n
the\u00a0e\ufb00ective date of the mid-term adjustment. For those policies
\n
that\u00a0are underwritten by the Group, these changes are recognised
\n
on\u00a0a straight-line time-apportioned basis over the period of cover
\n
remaining on the policy. Reduction in premiums from mid-term
\n
cancellations are recognised on the e\ufb00ective date of the cancellation.
\n
Any fee income charged for a mid-term cancellation or adjustment is
\n
recognised on the date the adjustment is made, being the point that
\n
the mid-term service is ful\ufb01lled.
\n
Income from credit provided to customers to facilitate payment of
\n
their insurance premiums by instalments over the life of their policy
\n
is\u00a0treated as part of the revenue from insurance operations and
\n
recognised over the period of the policy in proportion to the
\n
outstanding premium balance.
\n
Pro\ufb01t commissions due under coinsurance or reinsurance
\n
arrangements are recognised and valued in accordance with the
\n
contractual terms to which they are subject, when it is highly probable
\n
that a signi\ufb01cant reversal of revenue will not occur, and on the same
\n
basis, where appropriate, as the related reinsured liabilities.
\n
For revenue earned from credit hire and repair services for non-fault
\n
claims (
credit hire and
credit repair
), the Group initially recognises
\n
the revenue at fair value, which is based on a historical assessment of
\n
debt recovery and discount levels. Credit hire revenue is recognised
\n
from the date that a vehicle is placed on hire equally over the duration
\n
of the hire. Credit repair revenue represents income from the
\n
recovery of the costs of repair of customers\u2019 vehicles. Credit repair
\n
revenue is recognised when the work has been completed. Late
\n
payment penalties a\ufb00orded under the terms of the Association of
\n
British Insurers General Terms of Agreement are recognised as they
\n
become payable by the insurance company.
\n
ii) Cruise and Travel
\n
Revenue from Cruise and Travel, where the Group does not operate
\n
the cruise ship, is recognised in line with the performance obligations
\n
that are included in a package holiday, namely the provision of \ufb02ights,
\n
accommodation, transfers and travel insurance. Revenue is
\n
recognised as and when each performance obligation is satis\ufb01ed,
\n
which is deemed to be when each service to the customer takes
\n
place. The standalone selling price of each performance obligation is
\n
estimated as the cost to provide each obligation plus a pro\ufb01t margin
\n
appropriate to the nature of each service. The price charged to each
\n
customer is then apportioned to each performance obligation based
\n
on the relative estimated standalone selling prices, in line with the
\n
requirements of IFRS 15.
\n
For Travel, revenue in relation to \ufb02ights and \ufb02ight upgrades is
\n
recognised on the date of each \ufb02ight; revenue in relation to
\n
accommodation is recognised over the duration of the holiday;
\n
revenue in relation to transfers is recognised on the date that the
\n
transfers occur before and after each holiday; and revenue in respect
\n
of travel insurance (which is underwritten by a third-party
\n
underwriter) is recognised on the cover start date of the insurance.
\n
Revenue in respect of Cruise holidays where the Group operates the
\n
cruise ship is also recognised in line with the performance obligations,
\n
being the cruise itself, \ufb02ights and/or rail journeys (where applicable),
\n
travel insurance and transfers. The portion of revenue allocated to
\n
the cruise itself is recognised on a per diem basis over the duration
\n
of\u00a0the cruise in line with when the performance obligation is satis\ufb01ed.
\n
The portion of revenue allocated to \ufb02ights and \ufb02ight upgrades
\n
(where\u00a0applicable) and transfers is recognised on the date that each
\n
trip is ful\ufb01lled, which is consistent with the approach adopted by the
\n
Travel business.
\n
Revenue from travel insurance for cruising holidays is recognised at
\n
the cover start date of the policy, which is usually at the point the
\n
customer makes a booking.
\n
An element of revenue which represents the non-refundable deposit
\n
received at the time of booking is recognised in the income statement
\n
immediately in line with the prevailing rate of cancellations.
\n
Revenue from sales in resort, for example for optional excursions, or
\n
on board a cruise ship operated by the Group, for example bar sales
\n
or optional excursions, is recognised as it is earned.
\n
Revenue from Cruise and Travel received in advance of when each
\n
performance obligation is satis\ufb01ed is included as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
Notes to the consolidated \ufb01nancial statements continued
\n
146
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
iii) Other Businesses and Central Costs
\n
Saga Money
\n
Revenue from personal \ufb01nance products is recognised when the
\n
customer contracts with the provider of the relevant personal
\n
\ufb01nance product where the revenue comprises a one-o\ufb00 payment
\n
by\u00a0the provider of the product.
\n
Where the personal \ufb01nance product is one that delivers a recurring
\n
income stream, the present value of the future expected revenue
\n
to\u00a0be received is recognised when the customer contracts with the
\n
provider of the relevant personal \ufb01nance product, and it is highly
\n
probable that a signi\ufb01cant reversal of revenue recognised will
\n
not\u00a0occur.
\n
For the Saga savings product, commissions are earned over the
\n
duration of the contract in line with the contractual amount due
\n
to\u00a0the\u00a0Group.
\n
For Saga equity release products, commissions are earned initially
\n
and over the lifetime of the product. Additionally, further
\n
commissions, where applicable are earned at each subsequent stage
\n
of the drawdown if any more of the advance is taken by the customer.
\n
Initial\u00a0commission relating to new business is recognised as revenue
\n
at the point the performance obligation with the Group\u2019s contracted
\n
business partners is satis\ufb01ed, and the customer has taken out the
\n
product. Where applicable, trail commission is recognised as the
\n
discounted future cash \ufb02ows expected to be received over the
\n
estimated life of the product and likewise for further commissions
\n
on\u00a0additional drawdowns undertaken by the customer.
\n
Saga Media
\n
Magazine subscription revenue is recognised on a straight-line
\n
basis\u00a0over the period of the subscription. Revenue generated from
\n
advertising within the magazine is recognised when the magazine
\n
is\u00a0provided to the customer.
\n
The element of subscriptions and advertising revenue relating to the
\n
period after the reporting date is recognised as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
\n
Printing and mailing
\n
Revenue from printing and mailing services is recognised in line
\n
with\u00a0the performance obligations within customer contracts.
\n
Market research
\n
Revenue from market research services is recognised when a
\n
performance obligation is satis\ufb01ed. Revenue recognised over time
\n
is\u00a0based on the proportion of the level of service performed.
\n
b. Cost recognition
\n
i) Insurance acquisition costs
\n
Acquisition costs arising from the selling or renewing of insurance
\n
policies underwritten by the Group are recognised on a straight-line
\n
time-apportioned basis over the period of the policy in which the
\n
related revenues are earned. The proportion of acquisition costs
\n
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\n
of\u00a0\ufb01nancial position.
\n
Incremental costs of obtaining an insurance contract not underwritten
\n
by the Group, namely fees charged by price-comparison websites,
\n
are recognised as an asset within trade and other receivables on the
\n
face of the statement of \ufb01nancial position. Such costs are amortised
\n
in line with the pattern of revenue for the related insurance contract,
\n
which incorporates the propensity for that contract to renew in
\n
future periods based on the prevailing rate of renewal for these types
\n
of contract. If the expected amortisation period is one year or less,
\n
then incremental costs are expensed when incurred.
\n
ii) Claims costs
\n
Claims costs incurred in respect of insurance policies underwritten
\n
by the Group include estimates for claims made for losses reported
\n
as occurring during the period together with the related handling
\n
costs, any adjustments to claims outstanding from previous periods,
\n
and an estimate for the cost of claims incurred during the period but
\n
not reported as at the reporting date. The portion of costs recovered
\n
from reinsurance is recognised as a reduction to those costs in the
\n
same period in which the costs are recognised. Further detail is
\n
provided in Note 28.
\n
iii) Finance costs
\n
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
\n
iv) All other expenses
\n
All other expenses are recognised in the income statement as they
\n
are incurred.
\n
c. Recognition of other income statement items
\n
i) Interest income
\n
Investment income in the form of interest is recognised in the income
\n
statement as it accrues and is calculated using the EIR method.
\n
Interest income is earned by the Group on both assets held at fair
\n
value through pro\ufb01t or loss (
FVTPL
), and assets held at fair value
\n
through other comprehensive income (
FVOCI
). Fees and
\n
commissions which are an integral part of the e\ufb00ective yield of the
\n
\ufb01nancial asset or liability are recognised as an adjustment to the EIR
\n
of\u00a0the instrument.
\n
ii) Dividend income
\n
Income in the form of dividends is recognised when the right to
\n
receive payment is established. For listed securities, this is the date
\n
that the security is listed as ex-dividend.
\n
iii) Gains and losses on financial investments at fair value
\n
Realised and unrealised gains and losses on \ufb01nancial investments
\n
are\u00a0recorded as investment income in the income statement, and
\n
represent net fair value gains and losses arising from changes in
\n
fair\u00a0value during the year.
Saga plc
Annual Report and Accounts 2023
147
Strategic report
Financial statements
Additional information
Governance
\n
d. Taxes
\n
i) Current income tax
\n
Income tax assets and liabilities for the current period are measured
\n
at the amount expected to be recovered from, or paid to, taxation
\n
authorities. The tax rates and tax laws used to compute the amount
\n
are those that are enacted or substantively enacted at the reporting
\n
date. Current income tax assets and liabilities also include adjustments
\n
in respect of tax expected to be payable or recoverable in respect of
\n
previous periods. Current income tax relating to items recognised
\n
in\u00a0other comprehensive income (
OCI
) and directly in equity is
\n
recognised in OCI or equity and not in the income statement.
\n
ii) Deferred tax
\n
Deferred tax is provided on temporary di\ufb00erences between the tax
\n
bases of assets and liabilities and their carrying amounts for \ufb01nancial
\n
reporting purposes at the reporting date.
\n
Deferred tax liabilities are recognised for all taxable temporary
\n
di\ufb00erences and deferred tax assets are recognised to the extent
\n
that\u00a0it is probable that taxable pro\ufb01t will be available against which the
\n
deductible temporary di\ufb00erences and the carry forward of unused
\n
tax credits and unused tax losses can be utilised.
\n
The carrying amount of deferred tax assets is reviewed at each
\n
reporting date and reduced to the extent that it is no longer probable
\n
that su\ufb03cient taxable pro\ufb01t will be available to allow all, or part of, the
\n
deferred tax asset to be utilised. Unrecognised deferred tax assets
\n
are reassessed at each reporting date and are recognised to the
\n
extent that it has become probable that future taxable pro\ufb01ts will
\n
allow the deferred tax asset to be recovered.
\n
Deferred tax assets and liabilities are measured at the tax rates that
\n
are expected to apply in the year when the asset is realised or the
\n
liability is settled, based on tax rates (and tax laws) that have been
\n
enacted or substantively enacted at the reporting date. Deferred
\n
tax\u00a0is charged or credited in the income statement, except when it
\n
relates to items charged or credited in OCI or equity, in which case
\n
the deferred tax is recognised in OCI or equity as appropriate.
\n
Deferred tax assets and deferred tax liabilities are o\ufb00set if a legally
\n
enforceable right exists to set-o\ufb00 current tax assets against current
\n
tax liabilities and the deferred taxes relate to the same taxable entity
\n
and the same taxation authority.
\n
e. Foreign currencies
\n
Transactions in foreign currencies are initially recorded by the Group
\n
at their respective functional currency spot rate at the date that the
\n
transaction \ufb01rst quali\ufb01es for recognition. Monetary assets and
\n
liabilities denominated in foreign currencies are retranslated at
\n
the\u00a0functional currency spot rate of exchange prevalent at the
\n
reporting date.
\n
f. Intangible assets
\n
Intangible assets acquired are measured on initial recognition at
\n
cost\u00a0and subsequent to initial recognition, are carried at cost less
\n
any\u00a0accumulated amortisation and accumulated impairment losses.
\n
The\u00a0cost of intangible assets acquired in a business combination
\n
is\u00a0their fair value at the date of acquisition. Internally generated
\n
intangibles, excluding internally developed software, are not
\n
capitalised and the related expenditure is re\ufb02ected in the income
\n
statement in the period in which the expenditure is incurred.
\n
The useful lives of intangible assets and goodwill are assessed as
\n
either \ufb01nite or inde\ufb01nite. Estimated useful lives are as follows:
\n
Goodwill
Inde\ufb01nite
\n
Software
3-10 years
\n
Intangible assets with \ufb01nite lives are amortised over their useful
\n
economic life on a basis appropriate to the consumption of the asset
\n
and are assessed for impairment whenever there is an indication that
\n
the intangible asset may be impaired. The amortisation period and
\n
the amortisation method for an intangible asset with a \ufb01nite useful life
\n
are reviewed at least at the end of each reporting period. Changes in
\n
the expected useful life or the expected pattern of consumption of
\n
future economic bene\ufb01ts embodied in the asset are considered to
\n
modify the amortisation period or method, as appropriate, and are
\n
treated as changes in accounting estimates. The amortisation
\n
expense on intangible assets with \ufb01nite lives is recognised in the
\n
income statement in the expense category that is consistent with
\n
the\u00a0function of the intangible assets.
\n
Goodwill is not amortised but is tested for impairment at least
\n
annually, at the cash generating unit (
CGU
) level. Where the carrying
\n
value of the asset exceeds the recoverable amount, an impairment
\n
loss is recognised in the income statement immediately.
\n
Gains or losses arising from derecognition of an intangible asset are
\n
measured as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset and are recognised in the income
\n
statement when the asset is derecognised.
\n
g. Business combinations and goodwill
\n
Business combinations are accounted for using the acquisition
\n
method. The cost of an acquisition is measured as the aggregate of
\n
the consideration transferred measured at acquisition date at fair
\n
value and the amount of any non-controlling interests in the acquiree.
\n
For each business combination, the Group elects whether to
\n
measure the non-controlling interests in the acquiree at fair value or
\n
at the proportionate share of the acquiree\u2019s identi\ufb01able net assets.
\n
When the Group acquires a business, it assesses the \ufb01nancial
\n
and\u00a0non-\ufb01nancial assets and liabilities assumed for appropriate
\n
classi\ufb01cation and designation in accordance with the contractual
\n
terms, economic circumstances and pertinent conditions as at
\n
the\u00a0acquisition date.
Notes to the consolidated \ufb01nancial statements continued
\n
148
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
Any contingent consideration to be transferred by the acquirer will
\n
be\u00a0recognised at fair value at the acquisition date. Contingent
\n
consideration classi\ufb01ed as an asset or liability that is a \ufb01nancial
\n
instrument within the scope of IFRS 9 \u2018Financial Instruments\u2019 is
\n
measured at fair value with the changes in fair value recognised in
\n
the\u00a0income statement.
\n
Any excess of the cost of acquisition over the fair values of the
\n
identi\ufb01able assets and liabilities is recognised as goodwill. If the cost
\n
of\u00a0acquisition is less than the fair values of the identi\ufb01able assets
\n
and\u00a0liabilities of the acquired business, the di\ufb00erence is recognised
\n
directly in the income statement in the year of acquisition.
\n
Acquisition-related costs are expensed as incurred and included
\n
in\u00a0administrative expenses.
\n
After initial recognition, goodwill is measured at cost less any
\n
accumulated impairment losses. Goodwill is allocated to CGUs at the
\n
point of acquisition and is reviewed at least annually for impairment.
\n
h. Impairment of non-financial assets
\n
Goodwill is not subject to amortisation and is tested annually for
\n
impairment, or more frequently if events or changes in circumstances
\n
indicate that it might be impaired. If such an indication exists, the
\n
recoverable amount is estimated and compared with the carrying
\n
amount. If the recoverable amount is less than the carrying amount,
\n
the asset is considered impaired and is written down to its
\n
recoverable amount and the impairment loss is recognised
\n
immediately in the income statement.
\n
Other assets are tested for impairment whenever events or changes
\n
in circumstances indicate that the carrying amount may not be
\n
recoverable. If there is any indication that an asset may be impaired,
\n
a\u00a0recoverable amount is estimated for the individual asset. If it is not
\n
possible to estimate the recoverable amount of the individual asset,
\n
the recoverable amount is determined according to the CGU to
\n
which the asset belongs.
\n
For impairment testing, assets are grouped together into the
\n
smallest group of assets that generate cash in\ufb02ows from continuing
\n
use that are largely independent of the cash in\ufb02ows of other assets or
\n
CGUs. Goodwill arising from a business combination is allocated to
\n
CGUs, or groups of CGUs that are expected to bene\ufb01t from the
\n
synergies of the combination.
\n
The recoverable amount is calculated as the higher of fair value less
\n
costs to sell, and value-in-use. In assessing value-in-use, where
\n
appropriate, estimated future cash \ufb02ows are discounted to their
\n
present value using a pre-tax discount rate that re\ufb02ects current
\n
market assessments of the time value of money and the risks speci\ufb01c
\n
to the asset. In determining fair value less costs of disposal, recent
\n
market transactions are taken into\u00a0account. If no such transactions
\n
can be identi\ufb01ed, an appropriate valuation model is used. These
\n
calculations are corroborated by\u00a0valuation multiples, quoted share
\n
prices for publicly traded companies or other available fair value
\n
indicators. The Group bases its value-in-use calculations on detailed
\n
budgets, plans and long-term growth assumptions, which are
\n
prepared separately for each of the Group\u2019s CGUs to which individual
\n
assets are allocated.
\n
i. Property, plant and equipment
\n
Property, plant and equipment is stated at cost, net of accumulated
\n
depreciation and impairment losses. Where an item of property, plant
\n
and equipment comprises major components having di\ufb00erent useful
\n
lives, they are accounted for separately.
\n
Assets in the course of construction at the statement of \ufb01nancial
\n
position date are classi\ufb01ed separately. These assets are transferred
\n
to other asset categories when they become available for their
\n
intended use.
\n
Depreciation is charged to the income statement on a straight-line
\n
basis so as to write-o\ufb00 the depreciable amount of property, plant and
\n
equipment over their estimated useful lives. The depreciable amount
\n
is the cost of an asset less its residual value. Land and assets in the
\n
course of construction are not depreciated. Estimated useful lives
\n
are\u00a0as follows:
\n
Buildings, properties and related \ufb01xtures:
\n
Buildings
50 years
\n
Fixtures and \ufb01ttings
3-20 years
\n
Ocean cruise ships
30 years
\n
Computers
3-6 years
\n
Plant, vehicles and other equipment
3-10 years
\n
Costs relating to ocean cruise ship mandatory dry-dockings are
\n
capitalised and depreciated over the period up to the next
\n
dry-docking, where appropriate. The International Convention for
\n
the\u00a0Safety of Life at Sea regulations stipulate that ships have to be
\n
dry-docked twice in an interval of \ufb01ve years, with the interval between
\n
consecutive dry-dockings being not less than two years and not more
\n
than three years. All other repairs and maintenance costs are
\n
recognised in the income statement as incurred.
\n
An item of property, plant and equipment is derecognised upon
\n
disposal, or when no future economic bene\ufb01ts are expected from its
\n
use or disposal. Any gain or loss arising on derecognition of an asset
\n
(calculated as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset) is included in the income statement
\n
when the asset is derecognised.
\n
Estimated residual values and useful lives are reviewed annually.
\n
In\u00a0relation to the annual review of estimated residual values and
\n
useful\u00a0lives of ocean cruise ships, potential environmental regulatory
\n
changes are also considered. The shipping industry has made a
\n
commitment to reduce CO
\n
2
\n
emissions by 40% by 2030 (from a
\n
2008 baseline), and the UK Government has made commitments to
\n
reach net zero emissions by 2050. The EEXI (carbon design/technical
\n
e\ufb03ciency indicator) and CII (in-service/operational carbon intensity
\n
e\ufb03ciency indicator) regulations were introduced internationally
\n
during the year to enable the industry to meet the 2030 target, and
\n
the Group\u2019s ocean cruise ships meet the requirements of these
\n
regulations. The end of their useful economic lives of 30 years will have
\n
been reached by 2049 in the case of Spirit of Discovery and 2051 in
\n
the case of Spirit of Adventure.
\n
j. Non-current assets held for sale
\n
The Group classi\ufb01es non-current assets as held for sale if their
\n
carrying amount will be recovered principally through a sale
\n
transaction rather than through continuing use. To be classi\ufb01ed as
\n
held for sale, an asset must be available for immediate sale in its
\n
present condition subject only to terms that are usual and customary
\n
for the sale of such assets, and the sale must be highly probable. A sale
\n
is considered to be highly probable when management is committed
\n
to a plan to sell an asset and an active programme to locate a buyer
\n
and complete the plan has been initiated at a price that is reasonable
\n
in relation to its current fair value, and there is an expectation that the
\n
sale will be completed within one year from the date of classi\ufb01cation.
\n
Non-current assets classi\ufb01ed as held for sale are carried on the
\n
Group\u2019s statement of \ufb01nancial position at the lower of their carrying
\n
amount and fair value less costs to sell.
\n
Property, plant and equipment and intangible assets, once classi\ufb01ed
\n
as held for sale, are not depreciated or amortised.
Saga plc
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Strategic report
Financial statements
Additional information
Governance
\n
k. Financial instruments
\n
i) Financial assets
\n
On initial recognition, a \ufb01nancial asset is classi\ufb01ed as either amortised cost, FVOCI or FVTPL. The classi\ufb01cation of \ufb01nancial assets is based
\n
on\u00a0the business model in which a \ufb01nancial asset is managed, and its contractual cash \ufb02ow characteristics. Derivatives embedded in contracts
\n
where the host is a \ufb01nancial asset in the scope of the standard are never separated. Instead, the hybrid \ufb01nancial instrument as a whole is
\n
assessed for classi\ufb01cation.
\n
Initial recognition
Subsequent measurement
\n
Amortised cost
A \ufb01nancial asset is measured at amortised cost (plus any
\n
directly attributable transaction costs) if it meets both of
\n
the following conditions and is not elected to be designated
\n
as FVTPL:
\n
\u2022
It is held within a business model whose objective is to
\n
hold assets to collect contractual cash flows.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
The Group classi\ufb01es trade receivables, other receivables and
\n
deposits with \ufb01nancial institutions as held at amortised cost.
\n
These assets are subsequently measured at amortised
\n
cost using the EIR method. The amortised cost is reduced
\n
by any impairment losses (see (ii) below). Interest income,
\n
foreign exchange gains and losses and impairments
\n
are\u00a0recognised in pro\ufb01t or loss as they are incurred.
\n
Any\u00a0gain\u00a0or\u00a0loss on derecognition is recognised in pro\ufb01t
\n
or\u00a0loss immediately.
\n
FVOCI
A debt investment is measured at FVOCI (plus any directly
\n
attributable transaction costs) if it meets both of the
\n
following conditions and is not elected to be designated
\n
as\u00a0FVTPL:
\n
\u2022
It is held within a business model whose objective is
\n
achieved by both collecting contractual cash flows and
\n
selling financial assets.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
On initial recognition of an equity investment that is not held
\n
for trading, the Group may irrevocably elect to present
\n
subsequent changes in the investment\u2019s fair value in OCI.
\n
This election is made on an investment-by-investment basis.
\n
The Group classi\ufb01es debt securities as FVOCI.
\n
Debt instruments are subsequently measured at fair value.
\n
Interest income calculated using the EIR method, foreign
\n
exchange gains and losses and impairments are recognised
\n
in pro\ufb01t or loss. Other net gains and losses are recognised
\n
in\u00a0OCI. On derecognition, gains and losses accumulated in
\n
OCI are recycled to pro\ufb01t or loss.
\n
Equity investments are measured at fair value. Dividends
\n
are recognised as income in pro\ufb01t or loss unless the
\n
dividend clearly represents a recovery of part of the cost of
\n
the investment. Other net gains and losses are recognised
\n
in OCI and are never reclassi\ufb01ed to pro\ufb01t or loss.
\n
FVTPL
All \ufb01nancial assets not classi\ufb01ed as amortised cost or
\n
FVOCI\u00a0as described above are classi\ufb01ed as FVTPL and
\n
held\u00a0at fair value. This includes all derivative \ufb01nancial assets.
\n
On initial recognition, the Group may irrevocably elect
\n
to\u00a0designate a \ufb01nancial asset that otherwise meets the
\n
requirements to be measured at amortised cost or
\n
FVOCI\u00a0as FVTPL if doing so eliminates, or signi\ufb01cantly
\n
reduces, an accounting mismatch that would otherwise
\n
arise. This election is made on an individual instrument basis.
\n
The Group classi\ufb01es loan funds, money market funds and
\n
foreign exchange forward contracts not designated in a
\n
hedging relationship, as FVTPL.
\n
These assets are subsequently measured at fair value.
\n
Net\u00a0gains and losses, including any interest or dividend
\n
income, are recognised in pro\ufb01t or loss, unless such
\n
instrument is designated in a hedging relationship
\n
(see (vi) overleaf).
\n
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash \ufb02ows from the asset have expired or when the Group has transferred
\n
substantially all the risks and rewards relating to the asset to a third party.
Notes to the consolidated \ufb01nancial statements continued
\n
150
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
ii) Impairment of financial assets
\n
The expected credit loss (
ECL
) impairment model applies to \ufb01nancial
\n
assets measured at amortised cost and debt investments at FVOCI.
\n
The Group measures loss allowances at an amount equal to 12-month
\n
ECLs, except for the following, which are measured as lifetime ECLs:
\n
\u2022
Debt securities that are determined to have high credit risk at
\n
the\u00a0reporting date.
\n
\u2022
Other debt securities and bank balances for which credit risk
\n
has\u00a0increased significantly since initial recognition.
\n
\u2022
Trade receivables and contract assets that result from
\n
transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Group considers reasonable and supportable information
\n
that is relevant and available without undue cost or e\ufb00ort. This
\n
includes both quantitative and qualitative information and analysis,
\n
based on the Group\u2019s historical experience and informed credit
\n
assessment, including forward-looking information.
\n
The Group considers a debt security to have low credit risk when its
\n
credit risk rating is equivalent to the de\ufb01nition of \u2018investment grade\u2019.
\n
The Group considers this to be BBB- or higher as per credit
\n
rating\u00a0scales.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised
\n
cost\u00a0are deducted from the gross carrying amount of the assets,
\n
with\u00a0a corresponding charge to the income statement. For debt
\n
instruments measured at FVOCI, the loss allowance for debt
\n
investments at FVOCI is recognised in pro\ufb01t or loss and reduces
\n
the\u00a0fair value loss, or increases the fair value gain, otherwise
\n
recognised in\u00a0the statement of other comprehensive income.
\n
iii) Financial liabilities
\n
Initial recognition and measurement
\n
All \ufb01nancial liabilities are classi\ufb01ed as \ufb01nancial liabilities at amortised
\n
cost on initial recognition except for derivatives, which are classi\ufb01ed
\n
at\u00a0FVTPL, the gains or losses for which are recognised through OCI
\n
if\u00a0the instrument is designated as a hedging instrument in an e\ufb00ective
\n
cash \ufb02ow hedge.
\n
With the exception of lease liabilities, all \ufb01nancial liabilities are
\n
recognised initially at fair value and, in the case of loans and
\n
borrowings, net of directly attributable transaction costs.
\n
The Group\u2019s \ufb01nancial liabilities include trade and other payables, loans
\n
and borrowings, derivative \ufb01nancial instruments and lease liabilities.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\n
costs in the income statement.
\n
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged, cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability
\n
and\u00a0the recognition of a new liability. The di\ufb00erence in the respective
\n
carrying amounts is recognised in the income statement.
\n
iv) Derivatives
\n
Derivatives are measured at fair value both initially and subsequently
\n
to initial recognition. All changes in fair value of non-designated
\n
derivatives are recognised in the income statement immediately.
\n
Changes in fair value of derivatives designated as cash \ufb02ow hedges are
\n
initially recognised in OCI until such a point that they are recycled to
\n
pro\ufb01t or loss in the same period as the hedged item is recognised in
\n
pro\ufb01t or loss, or immediately if the hedged item is no longer expected
\n
to occur.
\n
Derivatives are presented as assets when the fair values are positive
\n
and as liabilities when the fair values are negative. A derivative is
\n
presented as a non-current asset or a non-current liability if the
\n
remaining maturity of the instrument is more than 12 months and
\n
it\u00a0is\u00a0not expected to be realised or settled within 12 months.
\n
v) Fair values
\n
The Group measures all \ufb01nancial instruments at fair value at each
\n
reporting date, other than those instruments measured at
\n
amortised\u00a0cost.
\n
Fair value is the price that would be required to sell an asset or
\n
to\u00a0transfer a liability in an orderly transaction between market
\n
participants at the measurement date. The fair value measurement
\n
is\u00a0based on the presumption that the transaction to sell the asset
\n
or\u00a0transfer the liability takes place either in the principal market
\n
accessible by the Group for the asset or liability or, in the absence
\n
of\u00a0a\u00a0principal market, in the most advantageous market accessible
\n
by\u00a0the Group for the asset or liability.
\n
The fair values are quoted market bid prices where there is an active
\n
market, or are based on valuation techniques when there is no active
\n
market or the instruments are unlisted. Valuation techniques include
\n
the use of recent arm\u2019s-length market transactions, discounted cash
\n
\ufb02ow analysis and other commonly used valuation techniques.
\n
For assets and liabilities that are recognised in the \ufb01nancial
\n
statements on a recurring basis, the Group determines whether
\n
transfers have occurred between levels in the hierarchy by
\n
reassessing categorisation at the end of each reporting period.
\n
vi) Hedge accounting
\n
The Group designates certain derivative \ufb01nancial instruments as
\n
cash \ufb02ow hedges of certain forecast transactions. These transactions
\n
are highly probable to occur and present an exposure to variations
\n
in\u00a0cash \ufb02ows that could ultimately a\ufb00ect amounts determined in
\n
pro\ufb01t\u00a0or loss.
\n
The Group has elected to adopt the general hedge accounting model
\n
in IFRS 9. This requires the Group to ensure that hedge accounting
\n
relationships are aligned with its risk management objectives and
\n
strategy and to apply a qualitative and forward-looking approach
\n
to\u00a0assessing hedge e\ufb00ectiveness.
Saga plc
Annual Report and Accounts 2023
151
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses forward foreign exchange and commodity swap
\n
contracts to hedge the variability in cash \ufb02ows arising from changes
\n
in\u00a0foreign currency rates and oil prices respectively. For foreign
\n
exchange contracts, the Group designates the fair value change of
\n
the full forward price as the hedging instrument in cash \ufb02ow hedging
\n
relationships. For commodity hedging, the Group designates the fair
\n
value change of the benchmark oil price. The e\ufb00ective portion of
\n
changes in fair value of hedging instruments is accumulated in a cash
\n
\ufb02ow hedge reserve as a separate component of equity. Any ine\ufb00ective
\n
portion of the fair value gain or loss is recognised immediately within
\n
the income statement.
\n
When a hedging instrument no longer meets the criteria for hedge
\n
accounting (through maturity, sale, or other termination), hedge
\n
accounting is discontinued prospectively. If the hedged forecast
\n
transaction is still expected to occur, the associated cumulative
\n
gain\u00a0or loss remains in the hedging reserve and is recognised in
\n
accordance with the above policy when the hedged forecast
\n
transaction occurs. If the hedged forecast transaction is no longer
\n
expected to occur, the cumulative unrealised gain or loss is
\n
recognised in the income statement immediately.
\n
l. Leases
\n
The Group leases various river cruise ships, buildings, equipment
\n
and\u00a0vehicles. The contract length of the lease varies considerably and
\n
may include extension or termination options as described below.
\n
At the inception of a contract, the Group assesses whether a
\n
contract is, or contains, a lease. A contract is, or contains, a lease if the
\n
contract conveys the right to control the use of an identi\ufb01ed asset for
\n
a period of time in exchange for consideration. To assess whether a
\n
contract conveys the right to control the use of an identi\ufb01ed asset,
\n
the\u00a0Group assesses whether: the contract involves the use of an
\n
identi\ufb01ed asset; the Group has the right to obtain substantially all of
\n
the economic bene\ufb01ts from use of the asset throughout the period
\n
of\u00a0use and the Group has the right to direct the use of the asset.
\n
Leases are initially recognised as a right-of-use asset and a
\n
corresponding lease liability at the date at which the leased asset is
\n
available for use by the Group. The lease liability is initially measured
\n
at\u00a0the present value of the lease payments that are not paid at the
\n
commencement date. Where it is reasonably certain that an
\n
extension option will be triggered in a contract, lease payments to
\n
be\u00a0made in respect of the option will be included in the measurement
\n
of the lease liability.
\n
The lease payments are discounted using the interest rate implicit in
\n
the lease. If that rate cannot be readily determined, which is generally
\n
the case for leases in the Group, the Group\u2019s incremental borrowing
\n
rate is used. This is the rate that the Group would have to pay to
\n
borrow the funds necessary to obtain an asset of similar value to the
\n
right-of-use asset, in a similar economic environment, with similar
\n
terms, security and conditions.
\n
Lease payments are allocated between principal and \ufb01nance cost.
\n
The \ufb01nance cost is charged to the income statement over the lease
\n
period using the EIR method and the lease liability is measured at
\n
amortised cost using the EIR method.
\n
Right-of-use assets are initially measured at cost, comprising the
\n
present value of future lease payments plus any initial direct costs and
\n
restoration costs. Right-of-use assets are depreciated over the lease
\n
term on a straight-line basis except for the Group\u2019s river cruise ships.
\n
The unit of production method is used to depreciate river cruise ships
\n
in order to accurately re\ufb02ect the usage of the asset, which is seasonal.
\n
Payments associated with short-term leases of equipment and all
\n
leases of low-value assets are expensed in pro\ufb01t or loss as incurred
\n
in\u00a0line with the exemption allowed under paragraph 6 of IFRS 16.
\n
Short-term leases are leases with a lease term of 12 months or less
\n
without a purchase option. Low-value assets comprise IT equipment
\n
and small items of o\ufb03ce furniture.
\n
Extension and termination options are included in a number of
\n
property and river cruise ship leases across the Group. These are
\n
used to maximise operational \ufb02exibility in terms of managing the
\n
assets used in the Group\u2019s operations. The majority of extension and
\n
termination options held are exercisable only by the Group and not by
\n
the respective lessor.
\n
The Group remeasures the lease liability (and makes a corresponding
\n
adjustment to the related right-of-use asset) whenever:
\n
\u2022
the lease term has changed or there is a significant event or
\n
change in circumstances resulting in a change in the assessment
\n
of exercise of a purchase option, in which case the lease liability is
\n
remeasured by discounting the revised lease payments using a
\n
revised discount rate; or
\n
\u2022
a lease contract is modified and the lease modification is not
\n
accounted for as a separate lease, in which case the lease liability
\n
is\u00a0remeasured based on the lease term of the modified lease by
\n
discounting the revised lease payments using a revised discount
\n
rate at the effective date of the modification.
\n
m. Borrowing costs
\n
Borrowing costs directly attributable to the acquisition, construction
\n
or production of an asset that necessarily takes a substantial period
\n
of time to get ready for its intended use or sale are capitalised as part
\n
of the cost of the respective asset. All other borrowing costs are
\n
expensed in the period in which they occur.
\n
Borrowing costs consist of interest and fees that an entity incurs in
\n
connection with the borrowing of funds.
\n
n. Cash and short-term deposits
\n
Cash and short-term deposits in the statement of \ufb01nancial position
\n
comprise cash at bank and in hand, and short-term deposits with a
\n
maturity of three months or less from their inception date.
\n
For the purpose of the consolidated statement of cash \ufb02ows, cash
\n
and cash equivalents consist of cash, short-term deposits as de\ufb01ned
\n
above and short-term highly liquid investments (including money
\n
market funds) with original maturities of three months or less that are
\n
subject to an insigni\ufb01cant risk of change in value, net of outstanding
\n
bank overdrafts.
\n
o. Trust accounts
\n
All customer monies received in advance in relation to Air Travel
\n
Organiser\u2019s Licence (
ATOL
) licensable bookings are held in trust
\n
accounts until after the customer has travelled, when the Group
\n
has\u00a0ful\ufb01lled all its performance obligations with customers.
\n
The trust arrangement is governed by a deed between the Group,
\n
the\u00a0Civil Aviation Authority Air Travel Trustees and an independent
\n
Trustee, PT Trustees Limited, which determines the in\ufb02ows and
\n
out\ufb02ows from the accounts. The Group does not use advance
\n
receipts from customers in its Travel and River Cruise businesses
\n
to\u00a0fund its business operations.
\n
p. Trade and other receivables
\n
Trade and other receivables are initially recognised at fair value and
\n
subsequently measured at amortised cost. Loss allowances are
\n
measured as lifetime ECLs.
Notes to the consolidated \ufb01nancial statements continued
\n
152
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
q. Inventories
\n
Inventories are stated at the lower of cost and net realisable value.
\n
Costs include all costs incurred in bringing each product to its
\n
present location and condition. Net realisable value is based on
\n
estimated selling price less any further costs expected to be
\n
incurred\u00a0prior to completion and disposal.
\n
r. Insurance contract liabilities
\n
Insurance contract liabilities include an outstanding claims provision,
\n
a provision for unearned premiums and, if required, a provision for
\n
premium de\ufb01ciency.
\n
Outstanding claims provision
\n
The provision for outstanding claims is set on an individual claim basis
\n
and is based on the ultimate cost of all claims noti\ufb01ed but not settled,
\n
less amounts already paid by the reporting date, together with a
\n
provision for related claims handling costs. The provision also includes
\n
the estimated cost of claims incurred but not reported (
IBNR
) at the
\n
statement of \ufb01nancial position date, which is estimated using actuarial
\n
methods. The outstanding claims provision is not discounted for the
\n
time value of money, with the exception of claims settled as periodical
\n
payment orders (
PPOs
).
\n
The amount of any anticipated reinsurance, salvage or subrogation
\n
recoveries is separately identi\ufb01ed and reported within reinsurance
\n
assets and insurance contract liabilities respectively.
\n
Di\ufb00erences between the provisions at the reporting date and
\n
settlements and provisions in the following year (known as
run-o\ufb00
\n
deviations
) are recognised in the income statement as they arise.
\n
Provision for unearned premiums
\n
The provision for unearned premiums represents the portion of
\n
premiums received, or receivable, that relates to risks that have not
\n
yet expired at the reporting date. The provision is recognised when
\n
contracts are entered into and premiums are charged, and is
\n
recognised in the income statement as premium income over the
\n
term of the contract on a straight-line basis.
\n
Provision for premium deficiency
\n
At each reporting date, the Group reviews its unexpired risks and a
\n
liability adequacy test is performed to determine whether there is
\n
any\u00a0overall excess of expected claims and deferred acquisition costs
\n
over unearned premiums. This calculation uses current estimates of
\n
future contractual cash \ufb02ows after taking account of the investment
\n
return expected to arise on assets relating to the relevant insurance
\n
technical provisions. If these estimates show that the carrying
\n
amount of the unearned premiums (less related deferred acquisition
\n
costs) is inadequate, the de\ufb01ciency is recognised in the income
\n
statement by setting up a provision for premium de\ufb01ciency.
\n
The\u00a0deferred acquisition costs are written o\ufb00 before any provision
\n
is\u00a0made.
\n
s. Reinsurance assets
\n
Contracts entered into by the Group with reinsurers under which the
\n
Group is compensated for losses on insurance contracts issued, are
\n
classi\ufb01ed as reinsurance contracts. A contract is only accounted for
\n
as a reinsurance contract where there is signi\ufb01cant insurance risk
\n
transfer between the insurer and reinsurer.
\n
Reinsurance assets include balances due from reinsurance
\n
companies for ceded insurance liabilities under excess of loss cover.
\n
Amounts recoverable from reinsurers are estimated in a consistent
\n
manner with the outstanding claims provisions in accordance with
\n
the relevant reinsurance contract.
\n
The Group assesses its reinsurance assets for impairment at each
\n
statement of \ufb01nancial position date. For assets that are directly
\n
exposed to long-tail PPO liabilities, a general provision for impairment
\n
is provided, calculated on a wholesale basis by reference to published
\n
credit rating default curves. For all other reinsurance assets, the
\n
carrying value is written down to its recoverable amount only if there
\n
is objective evidence of impairment.
\n
For the funds-withheld quota share agreement in motor insurance,
\n
the obligation to pay funds and the right to receive reimbursement for
\n
incurred claims are presented on a net basis because there is a legally
\n
enforceable right to o\ufb00set these amounts and there is an intention to
\n
settle on a net basis or realise both the asset and settle the liability
\n
simultaneously. The reinsurance assets recognised under these
\n
agreements are therefore recognised as an o\ufb00set against premium
\n
ceded under the same agreement, within trade and other payables.
\n
t. Share-based payments
\n
The Group provides bene\ufb01ts to employees (including Executive
\n
Directors) in the form of share-based payment transactions, whereby
\n
employees render services as consideration for equity instruments
\n
(
equity-settled transactions
). The cost of equity-settled
\n
transactions is measured by reference to the fair value on the grant
\n
date and is recognised as an expense over the relevant vesting period,
\n
ending on the date on which the employee becomes fully entitled to
\n
the award.
\n
Fair values of share-based payment transactions are calculated using
\n
Black-Scholes and Monte-Carlo modelling techniques. In valuing
\n
equity-settled transactions, assessment is made of any vesting
\n
conditions to categorise these into market performance conditions,
\n
non-market performance conditions and service conditions.
\n
Where the equity-settled transactions have market performance
\n
conditions (that is, performance which is directly or indirectly linked
\n
to\u00a0the share price), the fair value of the award is assessed at the time
\n
of\u00a0grant and is not changed, regardless of the actual level of vesting
\n
achieved, except where the employee ceases to be employed prior
\n
to\u00a0the vesting date.
\n
For service conditions and non-market performance conditions, the
\n
fair value of the award is assessed at the time of grant and is
\n
reassessed at each reporting date to re\ufb02ect updated expectations
\n
for the level of vesting. No expense is recognised for awards that
\n
ultimately do not vest.
\n
At each reporting date prior to vesting, the cumulative expense is
\n
calculated, representing the extent to which the vesting period has
\n
expired and, in the case of non-market conditions, the best estimate
\n
of the number of equity instruments that will ultimately vest or, in the
\n
case of instruments subject to market conditions, the fair value on
\n
grant adjusted only for leavers. The movement in the cumulative
\n
expense since the previous reporting date is recognised in the
\n
income statement, with the corresponding increase being
\n
recognised in the share-based payments reserve.
\n
Upon vesting of an equity instrument, the cumulative cost in the
\n
share-based payments reserve is reclassi\ufb01ed to retained earnings
\n
in\u00a0equity.
\n
The dilutive e\ufb00ect of outstanding options is re\ufb02ected as additional
\n
share dilution in the computation of diluted (loss)/earnings per share.
\n
u. Retirement benefit schemes
\n
During the year, the Group operated a de\ufb01ned bene\ufb01t pension plan
\n
that requires contributions to be made to separately administered
\n
funds. The cost of providing bene\ufb01ts under the de\ufb01ned bene\ufb01t plan
\n
is\u00a0determined separately using the projected unit credit valuation
\n
method. The de\ufb01ned plan was closed to future accrual on
\n
31\u00a0October\u00a02021. From 1 November 2021, members moved from
\n
active to deferred status.
Saga plc
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Additional information
Governance
\n
Actuarial gains and losses arising in the year are credited/charged
\n
to\u00a0OCI and comprise the e\ufb00ects of changes in actuarial assumptions
\n
and experience adjustments due to di\ufb00erences between the previous
\n
actuarial assumptions and what has actually occurred. In particular,
\n
the di\ufb00erence between the interest income and the actual return
\n
on\u00a0plan assets is recognised in OCI.
\n
Other movements in the net surplus or de\ufb01cit, which include the
\n
current service cost, any past service cost and the e\ufb00ect of any
\n
curtailment or settlements, are recognised in the income statement.
\n
Past service costs are recognised in the income statement on the
\n
earlier of the date of plan curtailment and the date that the Group
\n
recognises restructuring-related costs. The Group no longer incurs
\n
any service costs or curtailment costs relating to the de\ufb01ned bene\ufb01t
\n
pension plan as the scheme is closed to future accrual. The interest
\n
cost, less interest income on assets held in the plans, is also charged
\n
to the income statement.
\n
The de\ufb01ned bene\ufb01t schemes are funded, with assets of the schemes
\n
held separately from those of the Group, in separate Trustee-
\n
administered funds. Scheme assets are measured using market
\n
values and scheme liabilities are measured using the projected unit
\n
actuarial method and are discounted at the current rate of return on
\n
a high-quality corporate bond of equivalent term and currency to the
\n
liability. Full actuarial valuations are obtained at least triennially and
\n
are\u00a0updated at each reporting date. The resulting de\ufb01ned bene\ufb01t
\n
asset or liability is presented separately on the face of the statement
\n
of \ufb01nancial position. The value of a pension bene\ufb01t asset is restricted
\n
to the amount that may be recovered, either through reduced
\n
contributions, or agreed refunds from the scheme.
\n
For de\ufb01ned contribution schemes, the amounts charged to the
\n
income statement are the contributions payable in the year.
\n
v. Provisions
\n
Provisions are recognised when the Group has a present obligation
\n
(legal or constructive) as a result of a past event, and it is probable
\n
that\u00a0an out\ufb02ow of resources embodying economic bene\ufb01ts will be
\n
required to settle the obligation and a reliable estimate can be made
\n
of the amount of the obligation. The expense relating to any provision
\n
is presented in the income statement net of any reimbursement.
\n
If\u00a0the e\ufb00ect of the time value of money is material, provisions are
\n
discounted using a current pre-tax rate that re\ufb02ects the risks speci\ufb01c
\n
to the liability. Where discounting is used, the increase in the provision
\n
due to the passage of time is recognised as a \ufb01nance cost.
\n
A provision is recognised for onerous contracts in which the
\n
unavoidable costs of meeting the obligations under the contract
\n
exceed the economic bene\ufb01ts expected to be received under it.
\n
The unavoidable costs re\ufb02ect the least net cost of exiting the
\n
contract, which is the lower of the cost of ful\ufb01lling it and any
\n
compensation or penalties arising from failure to ful\ufb01l it. The costs
\n
of ful\ufb01lling a contract comprise both the incremental costs and an
\n
allocation of other direct costs.
\n
w. Trade and other payables
\n
Trade and other payables are initially recognised at fair value and
\n
subsequently measured at amortised cost. They represent liabilities
\n
to pay for goods or services that have been received or supplied in
\n
the\u00a0normal course of business, invoiced by the supplier before the
\n
year end, but for which payment has not yet been made.
\n
x. Equity
\n
The Group has ordinary shares that are classi\ufb01ed as equity.
\n
Incremental external costs that are directly attributable to the
\n
issue\u00a0of these shares are recognised in equity, net of tax.
\n
2.4 Standards issued but not yet effective
\n
The following is a list of standards, and amendments to standards,
\n
that are in issue but are not e\ufb00ective or adopted as at 31 January
\n
2023. Except where separately disclosed, these standards are
\n
endorsed by\u00a0the UK Endorsement Board.
\n
a. IFRS 17 \u2018Insurance Contracts\u2019
\n
IFRS 17 \u2018Insurance Contracts\u2019 is a comprehensive new accounting
\n
standard that applies to all insurance and reinsurance contracts
\n
covering the principles of recognition, measurement, presentation
\n
and disclosure.
\n
IFRS 17 only applies to insurance contracts that are underwritten by
\n
the Group and related reinsurance contracts held. It does not a\ufb00ect
\n
the accounting for the Group\u2019s Insurance Broking activities.
\n
IFRS 17 is e\ufb00ective for annual reporting periods beginning on, or after,
\n
1 January 2023. The Group will initially apply IFRS 17 in its consolidated
\n
\ufb01nancial statements for the year ending 31 January 2024, with the
\n
date of initial application being 1 February 2023 and the transition
\n
date being 1 February 2022. The Group\u2019s consolidated \ufb01nancial
\n
statements for the year ending 31 January 2024 will include
\n
comparatives for the year ending 31 January 2023 restated onto
\n
an\u00a0IFRS 17 basis.
\n
The Group expects to apply IFRS 17\u2019s simpli\ufb01ed premium allocation
\n
approach (
PAA
) to all insurance contracts issued and reinsurance
\n
contracts held. All insurance contracts issued by the Group are
\n
eligible for the PAA as they have a one-year coverage period. The
\n
Group has a small number of reinsurance contracts held that have
\n
a\u00a0coverage period of more than one year which are expected to be
\n
eligible for the PAA as, at inception, the PAA is expected to produce a
\n
measurement of the liability for remaining coverage of the relevant
\n
group of reinsurance contracts that would not di\ufb00er materially from
\n
the one that would be produced by applying the standard\u2019s more
\n
complex general measurement model.
\n
Applying the PAA simpli\ufb01es the measurement of the IFRS 17 liability
\n
for remaining coverage, which will continue to be based on a deferred
\n
premium approach as under current IFRS. However, the IFRS 17
\n
liability for remaining coverage will di\ufb00er from current IFRS in relation
\n
to the following:
\n
\u2022
The IFRS 17 requirement to identify any contracts that are
\n
expected to be onerous at initial recognition. The expected
\n
losses\u00a0are recognised immediately in profit or loss, with a liability
\n
established on the balance sheet. Under current IFRS, these
\n
losses would be recognised in profit or loss over the coverage
\n
period of the insurance contracts.
\n
\u2022
The Group intends to take the PAA option to expense insurance
\n
acquisition costs immediately in profit or loss, meaning the IFRS 4
\n
deferred insurance acquisition cost asset will effectively be
\n
written\u00a0off.
\n
The measurement of insurance contract liabilities in relation to
\n
coverage provided before the statement of \ufb01nancial position date,
\n
referred to as the liability for incurred claims under IFRS 17,
\n
and\u00a0reinsurance contract assets will change.
\n
The IFRS 17 liability for incurred claims will be measured as the sum
\n
of\u00a0the following components (collectively referred to as the ful\ufb01lment
\n
cash \ufb02ows):
\n
\u2022
The expected future cash flows, all of which will be discounted
\n
using the risk-free rate at the statement of financial position
\n
date,\u00a0adjusted to reflect the illiquid characteristics of the
\n
insurance contracts.
Notes to the consolidated \ufb01nancial statements continued
\n
154
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\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.4 Standards issued but not yet effective
\n
continued
\n
\u2022
A \u2018risk adjustment for non-financial risk\u2019 (
risk adjustment
), being
\n
an explicit margin above the expected future cash flows that
\n
represents the compensation required for bearing non-financial
\n
uncertainty. The Group will derive the risk adjustment by selecting
\n
an appropriate confidence interval using the expected loss
\n
distribution for incurred claims.
\n
This di\ufb00ers from current IFRS under which:
\n
\u2022
only certain long-tail claim liabilities are discounted. This discounting
\n
uses a discount rate that doesn\u2019t typically move in line with market
\n
interest rates; and
\n
\u2022
the reserve margin is not explicit or linked to a target
\n
confidence\u00a0level.
\n
The cumulative impact of adopting IFRS 17 on the Group\u2019s reported
\n
net assets at the 1 February 2022 transition date is currently
\n
expected to be in the range of a \u00a314m decrease to an \u00a38m increase.
\n
This estimated impact is preliminary and may change as the Group\u2019s
\n
implementation work is completed.
\n
The impact of IFRS 17 on pro\ufb01t or loss compared to current IFRS
\n
will\u00a0be driven by the statement of \ufb01nancial position measurement
\n
di\ufb00erences described above. The only exception will be if the Group
\n
takes the IFRS 17 option to present the impact of changes in the
\n
IFRS\u00a017 discount rate on the measurement of the liability for incurred
\n
claims within other comprehensive income rather than within pro\ufb01t
\n
or loss. The Group has not yet made a \ufb01nal decision on whether this
\n
option will be taken.
\n
b. Classification of liabilities as current or
\n
non-current (amendments to IAS 1)
\n
The amendments aim to promote consistency in applying the
\n
requirements by helping companies determine whether, in the
\n
statement of \ufb01nancial position, debt and other liabilities with an
\n
uncertain settlement date should be classi\ufb01ed as current (due,
\n
or\u00a0potentially due, to be settled within one year) or non-current.
\n
The\u00a0amendments are e\ufb00ective for annual periods beginning on,
\n
or\u00a0after, 1 January 2024 and are not likely to have a material e\ufb00ect
\n
on\u00a0the Group\u2019s \ufb01nancial statements. These amendments are not
\n
currently endorsed by the UK Endorsement Board.
\n
c. Deferred tax related to assets and liabilities arising
\n
from a single transaction (amendments to IAS 12)
\n
The amendments clarify that the initial recognition exemption does
\n
not apply to transactions in which equal amounts of deductible and
\n
taxable temporary di\ufb00erences arise on initial recognition. They will
\n
typically apply to transactions such as leases of lessees and will
\n
require the recognition of additional deferred tax assets and liabilities.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2023. The amendments are not expected to
\n
have a material impact on the Group\u2019s \ufb01nancial statements.
\n
d. Disclosure of accounting policies (amendments
\n
to\u00a0IAS 1 and IFRS Practice Statement 2)
\n
The amendments require that an entity discloses its material
\n
accounting policies, instead of its signi\ufb01cant accounting policies.
\n
Further amendments explain how an entity can identify a material
\n
accounting policy. The amendments are e\ufb00ective for annual
\n
reporting\u00a0periods beginning on, or after, 1 January 2023.
\n
The\u00a0amendments are\u00a0not expected to have a material impact
\n
on\u00a0the\u00a0Group\u2019s \ufb01nancial statements.
\n
e. Definition of accounting estimates
\n
(amendments\u00a0to\u00a0IAS 8)
\n
The amendments replace the de\ufb01nition of a change in accounting
\n
estimates with a de\ufb01nition of accounting estimates. Under the new
\n
de\ufb01nition, accounting estimates are \u201cmonetary amounts in \ufb01nancial
\n
statements that are subject to measurement uncertainty\u201d. The
\n
amendments clarify that a change in accounting estimate that results
\n
from new information, or new developments, is not the correction of
\n
an error. The amendments are e\ufb00ective for annual reporting periods
\n
beginning on, or after, 1 January 2023. The amendments are not
\n
expected to have a material impact on the Group\u2019s \ufb01nancial
\n
statements.
\n
f. Definition of lease liability in a sale and leaseback
\n
(amendment to IFRS 16)
\n
The amendment clari\ufb01es how a seller-lessee subsequently measures
\n
sale and leaseback transactions that satisfy the requirements in
\n
IFRS\u00a015 to be accounted for as a sale. The amendment is e\ufb00ective
\n
for\u00a0annual reporting periods beginning on, or after, 1 January 2024.
\n
The amendment is not expected to have a material impact on the
\n
Group\u2019s \ufb01nancial statements. This amendment is not currently
\n
endorsed by the UK Endorsement Board.
\n
2.5 First time adoption of new standards and
\n
amendments
\n
The following is a list of standards, and amendments to standards,
\n
that became e\ufb00ective, or were adopted, for the \ufb01rst time during the
\n
year ended 31 January 2023.
\n
a. COVID-19-related rent concessions beyond
\n
30\u00a0June 2021 (amendment to IFRS 16)
\n
The amendment extends, by one year, the May 2020 amendment
\n
that provides lessees with an exemption from assessing whether
\n
a\u00a0COVID-19-related rent concession is a lease modi\ufb01cation.
\n
The\u00a0amendment was e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 April 2021. The Group did not take advantage of the
\n
exemption available under this amendment. The amendment has had
\n
no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
b. Property, plant and equipment \u2013 proceeds before
\n
intended use (amendments to IAS 16)
\n
The amendments prohibit deducting from the cost of an item of
\n
property, plant and equipment, any proceeds from selling items
\n
produced while bringing that asset to the location and condition
\n
necessary for it to be capable of operating in the manner intended by
\n
management. Instead, an entity recognises the proceeds from selling
\n
such items, and the cost of producing those items, in pro\ufb01t or loss.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2022. The amendments have had no e\ufb00ect on
\n
the Group\u2019s \ufb01nancial statements.
Saga plc
Annual Report and Accounts 2023
155
Strategic report
Financial statements
Additional information
Governance
\n
c. Onerous contracts \u2013 cost of fulfilling a contract (amendments to IAS 37)
\n
The amendments specify that the \u201ccost of ful\ufb01lling\u201d a contract comprises the \u201ccosts that relate directly to the contract\u201d. Costs that relate
\n
directly to a contract can either be incremental costs of ful\ufb01lling that contract (examples would be direct labour and materials) or an allocation
\n
of other costs that relate directly to ful\ufb01lling contracts (an example would be the allocation of the depreciation charge for an item of property,
\n
plant and equipment used in ful\ufb01lling the contract). The amendments are e\ufb00ective for annual reporting periods beginning on, or after, 1 January
\n
2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
d. Annual improvements to IFRS 2018-2020
\n
The improvements make minor amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and IAS 41. The amendments are e\ufb00ective for
\n
annual reporting periods beginning on, or after, 1 January 2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
e. Reference to the Conceptual Framework (amendments to IFRS 3)
\n
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without signi\ufb01cantly changing the requirements
\n
in\u00a0the standard. The amendment is e\ufb00ective for annual reporting periods beginning on, or after, 1 January 2022 and apply prospectively.
\n
The\u00a0amendment has had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
2.6 Significant accounting judgements, estimates and assumptions
\n
The preparation of \ufb01nancial statements requires the Group to select accounting policies and make estimates and assumptions that a\ufb00ect
\n
items reported in the primary consolidated \ufb01nancial statements and Notes to the consolidated \ufb01nancial statements.
\n
The major areas of judgement used as part of accounting policy application are summarised below:
\n
Significant judgements
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3a
Revenue recognition \u2013
\n
identi\ufb01cation of performance
\n
obligations within insurance
\n
contracts not underwritten
\n
by\u00a0the Group
\n
Identi\ufb01cation of performance obligations within insurance contracts with customers. In
\n
particular, management has exercised judgement in de\ufb01ning separate performance obligations
\n
as part of the Group\u2019s Insurance Broking services, namely:
\n
\u2022
the option to fix the customer\u2019s premium at renewal for three-year fixed-price insurance
\n
policies, which results in the deferral of a portion of revenue from policy years one and two
\n
to\u00a0policy years two and three; and
\n
\u2022
the arrangement of each insurance policy at the point the insurance cover is arranged,
\n
as\u00a0separate from the premium charged in respect of the insurance cover, which occurs on,
\n
or\u00a0before, the cover start date of each policy and results in a portion of revenue being
\n
recognised a number of days in advance of the cover start date.
\n
Please refer to Note 2.3a for further information on the Group\u2019s performance obligations relating
\n
to revenue recognition.
\n
2.3ai, 2.3r
\n
and 2.3s
\n
Classi\ufb01cation of insurance
\n
contracts
\n
Management has exercised judgement in de\ufb01ning which insurance policies that it arranges and
\n
underwrites constitute an insurance policy that is subject to the accounting principles of IFRS 4.
\n
This assessment is based on whether signi\ufb01cant insurance risk is transferred under each
\n
insurance contract and also includes the assessment of reinsurance contracts that the Group
\n
enters into.
\n
Policies that are arranged, and not underwritten, by the Group, primarily a portion of the motor
\n
and home insurance panels, private medical insurance (
PMI
) and travel insurance, are not
\n
deemed to constitute insurance policies as de\ufb01ned by IFRS 4, and so they are accounted for in
\n
line with the principles of IFRS 15.
\n
Policies that are both arranged and underwritten by the Group, primarily a portion of the motor
\n
and home insurance panels, are deemed to constitute insurance policies as de\ufb01ned by IFRS 4 and
\n
so are accounted for in line with the requirements of that standard.
\n
The Group\u2019s excess of loss and funds-withheld quota share reinsurance arrangements relating
\n
to\u00a0its motor underwriting line of business are deemed to transfer signi\ufb01cant insurance risk to the
\n
reinsurer, and so they are also accounted for in line with the requirements of IFRS 4.
Notes to the consolidated \ufb01nancial statements continued
\n
156
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Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3h
Impairment testing of
\n
goodwill\u00a0and other major
\n
classes\u00a0of assets
\n
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required.
\n
New pricing rules set by the FCA came into e\ufb00ect on 1 January 2022, following the conclusion
\n
of\u00a0the General Insurance Pricing Practices market study (
GIPP
). As a result of the impact of the
\n
GIPP changes on customer pricing, especially in the highly competitive motor insurance market,
\n
there has been a fall in policy volumes in the period to 31 July 2022 and the year to 31 January
\n
2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management have considered this to be an indicator of impairment and have therefore
\n
conducted full impairment reviews of the Insurance CGU as at 31 July 2022 and 31 January
\n
2023. As a result of these reviews, management deemed it necessary to impair the goodwill
\n
allocated to the Insurance CGU by \u00a3269.0m at 31 July 2022. No further impairment was
\n
deemed necessary in the six months to 31 January 2023.
\n
In the year to 31 January 2022, management did not deem it necessary to impair goodwill. Please
\n
refer to Note 16a for further detail.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant
\n
value to all Saga business units, in line with pre-acquisition expectations. However, because these
\n
bene\ufb01ts are largely associated with the continued employment of a small number of individuals,
\n
which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts
\n
in question, the Group decided to write-o\ufb00 in full the \u00a30.5m goodwill arising on acquisition in the
\n
period to 31 July 2022.
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel
\n
operations, management concluded that potential indicators of impairment existed and
\n
conducted impairment reviews at 31 July 2022 and 31 January 2022 of the Group\u2019s two ocean
\n
cruise ships, Spirit of Discovery and Spirit of Adventure. Management considered a range of
\n
scenarios and used its judgement to conclude that no impairment was necessary.
\n
As at 31 January 2023, management did not consider it necessary to conduct an impairment
\n
review of the Group\u2019s two ocean cruise ships since no new indicators of impairment were
\n
identi\ufb01ed. Please refer to Note 17 for further detail.
\n
In the prior year, given the delay in taking delivery of the river cruise ship, Spirit of the Rhine,
\n
along with the ongoing adverse impacts of the COVID-19 pandemic on the wider travel industry,
\n
management concluded that indicators of impairment existed and deemed it necessary to
\n
conduct an impairment review of the vessel at 31 January 2022. Management considered a
\n
range of scenarios and used its judgement to conclude that no impairment was necessary.
\n
Please refer to Note 18a for further detail.
\n
In the year to 31 January 2023, management did not consider it necessary to conduct an
\n
impairment review of right-of-use river cruise ship assets, since no new indicators of impairment
\n
were identi\ufb01ed.
\n
In year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on
\n
the\u00a0travel industry, management decided to restructure the Group\u2019s Tour Operations CGU
\n
(now\u00a0River Cruise and Travel). In light of this exercise, management exercised its judgement in
\n
relation to the impairment of software assets and performed an impairment review of software
\n
assets used by the Tour Operations business. As a result of this review, management deemed
\n
it\u00a0necessary to impair these software assets by \u00a39.4m and the software assets in the Central
\n
Costs division by \u00a30.5m. No further impairment was deemed necessary in the period to
\n
31\u00a0January 2023. Please refer to Note 16b for further detail.
\n
In the years to 31 January 2023 and 31 January 2022, in light of the Group obtaining freehold
\n
property market valuation reports, management exercised judgement in relation to the
\n
impairment of property assets held for sale. A net impairment charge of \u00a31.2m (2022: \u00a31.0m)
\n
was accordingly recognised. Please refer to Note 38 for further detail.
\n
2.3r
Insurance contract liabilities
Judgement is required in relation to the areas of uncertainty that may give rise to claims costs in
\n
excess of the actuarial best estimate of claims incurred, and the level of additional reserve margin
\n
to recognise in the \ufb01nancial statements above that estimate.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost
\n
development caused by the impact of the COVID-19 pandemic and recognised an additional
\n
claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk provision
\n
in relation to the COVID-19 pandemic was released over the year to 31 January 2023, re\ufb02ective
\n
of the improvement in the COVID-19 outlook. Please refer to Note 20d for further detail.
\n
2.6 Significant accounting judgements, estimates and assumptions
continued
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Strategic report
Financial statements
Additional information
Governance
\n
Significant estimates
\n
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\n
scheme obligation are set out in Note 27.
\n
2.6 Significant accounting judgements, estimates and assumptions
continued
Saga plc
Annual Report and Accounts 2023
159
Strategic report
Financial statements
Additional information
Governance
\n
3 Segmental information
\n
For management purposes, the Group is organised into business units based on their products and services. The Group has three reportable
\n
operating segments as follows:
\n
\u2022
Cruise and Travel:
comprises the operation and delivery of ocean and river cruise holidays as well as package tour and other holiday
\n
products. The Group owns and operates two ocean cruise ships. All other holiday and river cruise products are packaged together with
\n
third-party supplied accommodation, flights and other transport arrangements.
\n
\u2022
Insurance:
comprises the provision of general insurance products. Revenue is derived primarily from insurance premiums and broking
\n
revenues. The segment is further analysed into four product sub-segments:
\n
\u2022
Insurance Broking, consisting of:
\n
\u2013
Motor broking
\n
\u2013
Home broking
\n
\u2013
Other broking
\n
\u2022
Insurance Underwriting
\n
\u2022
Other Businesses and Central Costs:
comprises the Group\u2019s other businesses and its central cost base. The other businesses include
\n
Saga Money (the personal finance product offering), Saga Media and the Group\u2019s mailing and printing business.
\n
Segment performance is evaluated using the Group\u2019s key performance measure of Underlying Pro\ufb01t /(Loss) Before Tax
\n
3
\n
. Items not included
\n
within a speci\ufb01c segment relate to transactions that do not form part of the ongoing segment performance or which are managed at a
\n
Group\u00a0level.
\n
Transfer prices between operating segments are set on an arm\u2019s-length basis in a manner similar to transactions with third parties.
\n
Segment\u00a0income, expenses and results include transfers between business segments which are then eliminated on consolidation.
\n
Goodwill, corporate bonds and bank loans are not included within segments as they are managed on a Group basis.
\n
3
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
160
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
3 Segmental information
continued
\n
Insurance
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
305.5
77.7
57.6
45.3
75.2
255.8
24.3
(4.5)
581.1
\n
Cost of sales
(242.5)
(2.7)
\u2013
3.2
(56.1)
(55.6)
(9.1)
\u2013
(307.2)
\n
Gross profit/(loss)
63.0
75.0
57.6
48.5
19.1
200.2
15.2
(4.5)
273.9
\n
Administrative and selling
\n
expenses
(57.5)
(55.6)
(35.1)
(21.4)
(3.1)
(115.2)
(49.6)
4.5
(217.8)
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
(1.2)
(1.2)
(0.5)
(269.5)
(271.2)
\n
Net profit on disposal
\n
of\u00a0software
\u2013
0.1
\u2013
\u2013
\u2013
0.1
\u2013
\u2013
0.1
\n
Investment income/(loss)
\u2013
\u2013
\u2013
\u2013
3.7
3.7
(2.2)
\u2013
1.5
\n
Finance costs
(20.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(22.0)
\u2013
(42.2)
\n
Finance income
1.4
\u2013
\u2013
\u2013
\u2013
\u2013
0.1
\u2013
1.5
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/Profit Before Tax
\n
4
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Net fair value gain on
\n
derivative financial
\n
instruments
(1.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.4)
\n
Impairment of goodwill
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
269.5
269.5
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
0.6
0.6
0.5
\u2013
1.1
\n
Restructuring costs
2.2
\u2013
\u2013
\u2013
\u2013
\u2013
1.5
\u2013
3.7
\n
Acquisition costs relating
\n
to the Big Window
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.2
\u2013
0.2
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
2.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\n
IFRS 16 adjustment on
\n
river cruise\u00a0vessels
0.6
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.6
\n
Underlying (Loss)/
\n
Profit Before Tax
\n
4
\n
(9.9)
19.5
22.5
27.1
19.1
88.2
(56.8)
\u2013
21.5
\n
Total assets less
\n
liabilities
93.7
57.7
167.9
50.2
369.5
\n
All revenue is generated solely in the UK.
\n
4
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc
Annual Report and Accounts 2023
161
Strategic report
Financial statements
Additional information
Governance
\n
Insurance
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
94.7
85.0
60.2
35.3
84.7
265.2
21.5
(4.2)
377.2
\n
Cost of sales
(102.9)
(2.6)
\u2013
0.3
(29.9)
(32.2)
(8.2)
\u2013
(143.3)
\n
Gross (loss)/profit
(8.2)
82.4
60.2
35.6
54.8
233.0
13.3
(4.2)
233.9
\n
Administrative and selling
\n
expenses
(54.9)
(52.4)
(35.0)
(24.3)
(4.2)
(115.9)
(46.2)
4.2
(212.8)
\n
Impairment of assets
(9.7)
\u2013
\u2013
\u2013
(1.0)
(1.0)
(0.5)
\u2013
(11.2)
\n
Gain on lease modification
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.3
\u2013
0.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7.2
\n
Net profit/(loss) on
\n
disposal of software and
\n
right-of-use assets
0.1
(0.1)
\u2013
\u2013
\u2013
(0.1)
(0.4)
\u2013
(0.4)
\n
Investment income/(loss)
0.1
\u2013
\u2013
\u2013
3.5
3.5
(3.3)
\u2013
0.3
\n
Finance costs
(22.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(18.6)
\u2013
(40.8)
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/ Profit
\n
Before Tax
\n
5
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Net fair value loss on
\n
derivative financial
\n
instruments
2.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.7
\n
Impairment/loss on
\n
disposal of assets
9.8
\u2013
\u2013
\u2013
1.0
1.0
0.7
\u2013
11.5
\n
Restructuring costs
3.9
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
6.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(7.2)
\u2013
(7.2)
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
\n
Costs incurred for ocean
\n
cruise ship loan holiday
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
2.4
\n
Charge on closure of
\n
defined benefit pension
\n
scheme
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\u2013
2.0
\n
Underlying (Loss)/
\n
(Profit) Before Tax
\n
5
\n
(79.3)
29.9
25.2
11.3
54.1
120.5
(47.9)
\u2013
(6.7)
\n
Total assets less
\n
liabilities
\n
(re-presented)
67.2
77.0
189.1
319.6
652.9
\n
Total assets less liabilities have been re-presented due to a revision in the way that inter-company debtors and creditors are reported
\n
between segments. Inter-company debtors and creditors are excluded from re-presented total assets less liabilities.
\n
All revenue is generated solely in the UK.
\n
Total assets less liabilities detailed as adjustments relates to the following unallocated items:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Goodwill (Note 14)
449.6
718.6
\n
Group bonds and bank loans (excluding ocean cruise ship loans)
(399.4)
(399.0)
\n
50.2
319.6
\n
5
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
162
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
3 Segmental information
continued
\n
a) Disaggregation of revenue
\n
Major product lines
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
168.3
168.3
\n
River Cruise and Travel
137.2
137.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
189.5
\n
Less: ceded to reinsurers
(111.3)
\n
Net revenue on:
\n
Motor broking
27.7
50.0
77.7
77.7
\n
Home broking
\u2013
57.6
57.6
57.6
\n
Other broking
0.9
44.4
45.3
45.3
\n
Insurance Underwriting
49.6
25.6
75.2
75.2
\n
Money
7.9
7.9
\n
Media
10.3
10.3
\n
Insight
0.6
0.6
\n
Other
1.0
1.0
\n
305.5
78.2
177.6
255.8
19.8
581.1
\n
Major product lines
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
82.5
82.5
\n
River Cruise and Travel
12.2
12.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
203.0
\n
Less: ceded to reinsurers
(123.8)
\n
Net revenue on:
\n
Motor broking
26.7
58.3
85.0
85.0
\n
Home broking
\u2013
60.2
60.2
60.2
\n
Other broking
1.0
34.3
35.3
35.3
\n
Insurance Underwriting
51.5
33.2
84.7
84.7
\n
Money
5.9
5.9
\n
Media
9.9
9.9
\n
Other
1.5
1.5
\n
94.7
79.2
186.0
265.2
17.3
377.2
\n
Included in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).
\n
b) Contract balances
\n
The following table provides information about contract assets and contract liabilities from contracts with customers as accounted for under
\n
IFRS 15 (the amounts stated here do not include amounts accounted for under IFRS 4):
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Contract cost assets (Note 23)
2.5
2.6
\n
Contract liabilities (Note 29)
122.2
114.6
Saga plc
Annual Report and Accounts 2023
163
Strategic report
Financial statements
Additional information
Governance
\n
b) Contract balances
continued
\n
The contract cost assets relate to commissions paid to price-comparison websites to acquire new business policies not underwritten
\n
by\u00a0the\u00a0Group.
\n
Management expects that incremental commission fees paid to price-comparison websites as a result of obtaining insurance contracts
\n
are\u00a0recoverable. The Group has therefore capitalised them as contract assets amounting to \u00a31.7m for the year ended 31 January 2023
\n
(2022:\u00a0\u00a31.7m). These fees are amortised over the period of the expected renewal cycle. In the year to 31 January 2023, the amount of
\n
amortisation was \u00a31.8m (2022: \u00a32.0m) and there was no impairment loss in relation to the costs capitalised.
\n
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an
\n
expense\u00a0when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
\n
The contract liabilities relate to the deferral of revenue for performance obligations not satis\ufb01ed as at 31 January 2023, and comprise the
\n
advance consideration received from customers for holidays or cruises booked, but not travelled; and insurance premiums received in
\n
advance of the cover start date. There was no revenue recognised in the current reporting year that related to performance obligations that
\n
were satis\ufb01ed in a prior year.
\n
Signi\ufb01cant changes in the contract cost assets and the contract liabilities during the year are as follows:
\n
2023
2022
\n
Contract
\n
cost assets
\n
\u00a3m
\n
Contract
\n
liabilities
\n
\u00a3m
\n
Contract
\n
cost assets
\n
\u00a3m
\n
Contract
\n
liabilities
\n
\u00a3m
\n
Balance as at 1 February
2.6
114.6
2.9
82.2
\n
Released to the income statement in the period
(1.8)
(245.5)
(2.0)
(66.6)
\n
Additional contract balances incurred during the period
1.7
267.8
1.7
148.6
\n
Amounts refunded to customers
\u2013
(14.7)
\u2013
(49.6)
\n
Balance as at 31 January
2.5
122.2
2.6
114.6
\n
c) Transaction price allocated to the remaining performance obligations
\n
The transaction price allocated to three-year \ufb01xed-price insurance policy renewal options, where the remaining performance obligations are
\n
not expected to be satis\ufb01ed within the next 12 months, is \u00a31.1m (2022: \u00a30.7m). This is expected to be recognised as revenue in the subsequent
\n
one to three years.
\n
The transaction price allocated to customer contracts within the Cruise and Travel segment, where the remaining performance obligations
\n
are not expected to be satis\ufb01ed within the next 12 months, is \u00a31.4m (2022: \u00a30.8m). This is expected to be recognised as revenue in the
\n
subsequent one to two years.
\n
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance
\n
obligations that have original expected durations of one year or less.
\n
4 Administrative and selling expenses
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
\n
a. Auditors\u2019 remuneration
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1
Notes to the consolidated \ufb01nancial statements continued
\n
164
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
5 Impairment of assets
\n
a) Impairments during the year ended 31 January 2023
\n
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance CGU
\n
by\u00a0\u00a3269.0m.
\n
In addition, following the acquisition of The Big Window Consulting Limited (Note 13a), the goodwill arising on the transaction of \u00a30.5m was
\n
immediately impaired in full (Note 14).
\n
Following management\u2019s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
\n
equipment balance by \u00a30.5m (Note 17) and the carrying value of property assets classi\ufb01ed as held for sale by \u00a31.2m (Note 38).
\n
b) Impairments during the year ended 31 January 2022
\n
During the year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on the travel industry, management
\n
decided to restructure the Group\u2019s former Tour Operations CGU (now River Cruise and Travel CGUs). As a result of this restructuring,
\n
management performed an impairment review of software assets used by the Tour Operations business. The outcome of the review
\n
concluded that an impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022.
\n
Furthermore, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the Group\u2019s Central
\n
Costs business unit.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the\u00a0Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m (Note 17).
\n
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale by \u00a31.0m
\n
(Note 38).
\n
6 Investment income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest income recognised using the EIR method
4.7
4.4
\n
Gains on assets measured at FVTPL
0.7
0.2
\n
Amounts ceded under reinsurance contracts
(3.9)
(4.3)
\n
1.5
0.3
\n
7 Finance costs
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8
\n
8 Finance income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net fair value gain on derivative financial instruments
1.4
\u2013
\n
Net finance income on retirement benefit schemes
0.1
\u2013
\n
1.5
\u2013
Saga plc
Annual Report and Accounts 2023
165
Strategic report
Financial statements
Additional information
Governance
\n
9 Directors and employees
\n
Amounts charged to the income statement for the year are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Wages and salaries
112.1
97.0
\n
Social security costs
10.0
9.3
\n
Pension costs (Note 27)
9.9
12.0
\n
Total staff costs
132.0
118.3
\n
Sta\ufb00 costs (including restructuring and redundancy costs) of \u00a339.1m (2022: \u00a327.7m) and \u00a392.9m (2022: \u00a390.6m) have been allocated to
\n
cost of sales and to administrative and selling expenses respectively. Sta\ufb00 costs above exclude share-based payment charges of \u00a33.9m
\n
(2022: \u00a33.4m). Further detail on share-based payments can be found in Note 36.
\n
Average monthly number of employees:
\n
2023
\n
number
\n
2022
\n
number
\n
Cruise and Travel
2,261
1,705
\n
Insurance
1,704
1,519
\n
Other Businesses and Central Costs
554
552
\n
Total employee numbers
4,519
3,776
\n
Directors\u2019 remuneration
\n
The information required by the Companies Act 2006 and the Listing Rules of the FCA is contained on pages 92-123 in the Directors\u2019
\n
Remuneration Report.
\n
Compensation of key management personnel of the Group
\n
Key management personnel are de\ufb01ned as those persons having authority and responsibility for planning, directing and controlling the
\n
activities of the Group and comprise the Directors of the Company and the Executive Leadership Team.
\n
The amounts recognised as an expense during the \ufb01nancial year in respect of key management personnel are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Short-term benefits
6.4
6.0
\n
Termination costs
0.1
0.3
\n
Share-based payments
1.6
1.0
\n
8.1
7.3
\n
10 Tax
\n
The major components of the income tax expense are:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Consolidated income statement
\n
Current income tax
\n
Current income tax charge
1.1
3.4
\n
Adjustments in respect of previous years
(0.4)
(0.1)
\n
0.7
3.3
\n
Deferred tax
\n
Relating to origination and reversal of temporary differences
3.1
2.7
\n
Effect of tax rate change on opening balance
\u2013
(2.6)
\n
Adjustments in respect of previous years
1.2
1.1
\n
4.3
1.2
\n
Tax expense in the income statement
5.0
4.5
Notes to the consolidated \ufb01nancial statements continued
\n
166
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
10 Tax
continued
\n
Reconciliation of tax expense to loss before tax, multiplied by the UK corporation tax rate:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Loss before tax
(254.2)
(23.5)
\n
Tax at rate of 19.0% (2022: 19.0%)
(48.3)
(4.5)
\n
Adjustments in respect of previous years
0.8
1.0
\n
Effect of tax rate change on opening balance
\u2013
(2.6)
\n
Expenses not deductible for tax purposes:
\n
Impairment of goodwill
51.2
\u2013
\n
Other non-deductible expenses/non-taxed income
1.3
1.5
\n
Effect of Ocean Cruise business entering tonnage tax regime
\u2013
9.1
\n
Tax expense in the income statement
5.0
4.5
\n
The Group\u2019s tax expense for the year was \u00a35.0m (2022: \u00a34.5m) representing a tax e\ufb00ective rate of 32.7% before the impairment of goodwill
\n
(2022: negative 19.1%). In the prior year, the di\ufb00erence between the Group\u2019s tax e\ufb00ective rate and the standard rate of corporation tax of 19%
\n
is mainly due to the Group\u2019s Ocean Cruise business entering the tonnage tax regime on 1 February 2020.
\n
Adjustments in respect of previous years include a charge for the under-provision of tax in prior years of \u00a30.8m (2022: \u00a31.0m) and the impact
\n
of the change in the tax rate on opening deferred tax balances of \u00a3nil (2022: \u00a32.6m credit).
\n
Deferred tax
\n
Consolidated statement
\n
of financial position
\n
Consolidated income
\n
statement
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Excess of depreciation over capital allowances
3.2
4.4
1.2
(0.5)
\n
Retirement benefit scheme liabilities
3.0
(0.3)
1.5
(0.1)
\n
Short-term temporary differences:
\n
\u2013 Designated hedges recognised through OCI
(0.3)
0.5
\u2013
\u2013
\n
\u2013 Fair value reserve
4.1
0.3
\u2013
\u2013
\n
\u2013 Share-based payment reserve
2.0
1.6
(0.4)
(0.6)
\n
\u2013 General bad debt provision
0.6
1.6
1.0
1.2
\n
\u2013 Capitalised borrowing costs
(2.6)
(2.8)
(0.2)
0.6
\n
\u2013 IFRS 16 transition adjustments
1.2
1.4
0.2
0.3
\n
\u2013 Other
(1.0)
\u2013
1.0
0.3
\n
Deferred tax charge
4.3
1.2
\n
Net deferred tax assets
10.2
6.7
\n
Deferred tax is re\ufb02ected in the statement of \ufb01nancial position as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred tax assets
16.1
12.3
\n
Deferred tax liabilities
(5.9)
(5.6)
\n
Net deferred tax assets
10.2
6.7
\n
Reconciliation of net deferred tax assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
At 1 February
6.7
6.7
\n
Tax charge recognised in the income statement
(4.3)
(1.2)
\n
Tax credit recognised in OCI
7.8
1.2
\n
At 31 January
10.2
6.7
\n
On 3 March 2021, it was announced that the corporation tax rate would increase from 19% to 25% from 1 April 2023. This increase was
\n
substantively enacted on 24 May 2021. As a result, the closing deferred tax balances at the statement of \ufb01nancial position date have been
\n
re\ufb02ected at 25%. Net deferred tax assets/(liabilities) are expected to be normally settled in more than 12 months.
Saga plc
Annual Report and Accounts 2023
167
Strategic report
Financial statements
Additional information
Governance
\n
11 Dividends
\n
The Board of Directors does not recommend the payment of a \ufb01nal dividend for the 2022/23 \ufb01nancial year (2022: nil pence per share).
\n
For the current and prior year, no interim or \ufb01nal dividends were declared, or paid, during the year.
\n
The distributable reserves of Saga plc are \u00a3386.6m de\ufb01cit as at 31 January 2023, which are equal to the retained earnings reserve.
\n
If necessary, its subsidiary companies hold signi\ufb01cant reserves from which a dividend can be paid. Subsidiary distributable reserves are
\n
available immediately, with the exception of companies within the River Cruise, Travel and Insurance Underwriting businesses which require
\n
regulatory approval before any dividends can be declared and paid. Under the terms of the ship debt facilities, dividends remain restricted
\n
until the ship debt principal repayments that were deferred as part of the ship debt repayment holiday are fully repaid (Note 30). In addition,
\n
under the terms of the RCF, dividends also remain restricted while leverage is above 3.0x (excluding Ocean Cruise EBITDA and debt).
\n
12 Loss per share
\n
Basic loss per share is calculated by dividing the loss after tax for the year attributable to ordinary equity holders of the parent by the weighted
\n
average number of ordinary shares outstanding during the period. Diluted loss per share is calculated by also including the weighted average
\n
number of ordinary shares that would be issued on conversion of all potentially dilutive options.
\n
There have been no other transactions involving ordinary shares, or potential ordinary shares, between the reporting date and the date of
\n
authorisation of these \ufb01nancial statements.
\n
The calculation of basic and diluted loss per share is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Loss attributable to ordinary equity holders
(259.2)
(28.0)
\n
Weighted average number of ordinary shares
\u2018m
\u2018m
\n
Ordinary shares as at 1 February
139.5
139.4
\n
Long-term Incentive Plan (
LTIP
) share options exercised
\u2013
0.1
\n
Ordinary shares as at 31 January
139.5
139.5
\n
Weighted average number of ordinary shares for basic loss per share and diluted loss per share
139.5
139.5
\n
Basic loss per share
(185.8p)
(20.1p)
\n
Diluted loss per share
(185.8p)
(20.1p)
\n
The table below reconciles between basic loss per share and Underlying Basic Earnings/(Loss) Per Share
\n
6
\n
:
\n
2023
2022
\n
Basic loss per share
\n
(185.8p)
(20.1p)
\n
Adjusted for:
\n
Derivative (gains)/losses
(1.1p)
1.4p
\n
Impairment, and net loss on disposal, of assets
0.8p
2.3p
\n
Impairment of Insurance goodwill
192.8p
\u2013
\n
Acquisition costs relating to the Big Window
0.5p
\u2013
\n
Charge on closure of defined benefit pension scheme
\u2013
1.1p
\n
Foreign exchange movement on lease liabilities
1.5p
(0.5p)
\n
Costs incurred for ocean cruise ship loan holiday
\u2013
1.3p
\n
Restructuring costs
2.7p
3.4p
\n
IFRS 16 lease accounting adjustment on river cruise vessels
0.5p
\u2013
\n
Underlying Basic Earnings/(Loss) Per Share
\n
6
\n
11.9p
(11.1p)
\n
6
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
168
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
13 Business combinations and disposals
\n
a) Acquisitions during the year ended 31 January 2023
\n
On 16 February 2022, the Group acquired The Big Window Consulting Limited (the
Big Window
), a specialist research and insight business
\n
focusing on ageing.
\n
The fair values of the identi\ufb01able assets and liabilities of the Big Window acquired on the date of acquisition were:
\n
\u00a3m
\n
Assets
\n
Trade and other receivables
0.1
\n
Cash
1.3
\n
Total assets
1.4
\n
Liabilities
\n
Trade and other payables
0.1
\n
Corporation tax liability
0.1
\n
Total liabilities
0.2
\n
Total identifiable net assets at fair value
1.2
\n
Goodwill arising on acquisition
0.5
\n
Cash purchase consideration transferred
1.7
\n
The purchase consideration of \u00a31.7m was settled in cash. In addition to the \u00a31.7m cash purchase consideration transferred, as part of the
\n
purchase agreement the Group granted a \u00a30.5m share-based payment arrangement which vests over three years subject to a number of
\n
conditions being met. The \u00a30.5m was transferred in cash to the Group\u2019s share administrators on the date of completion. Cash of \u00a31.3m was
\n
acquired with the Big Window, resulting in a net cash out\ufb02ow of \u00a30.9m.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant value to all Saga business units, in line with
\n
pre-acquisition expectations. However, because these bene\ufb01ts are largely associated with the continued employment of a small number
\n
of\u00a0individuals, which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts in question, the Group has
\n
written-o\ufb00 the \u00a30.5m goodwill arising on acquisition in full in the year to 31 January 2023 (Note 16a).
\n
The Big Window contributed \u00a30.6m of revenue and a loss of \u00a31.0m to the Group loss before tax from the date of acquisition to
\n
31 January 2023.
\n
b) Acquisitions during the year ended 31 January 2022
\n
There were no business acquisitions in the year ended 31 January 2022.
\n
c) Disposals
\n
There were no business disposals in the years ended 31 January 2023 and 31 January 2022.
\n
14 Goodwill
\n
Goodwill
\n
\u00a3m
\n
Cost
\n
At 1 February 2021 and 31 January 2022
1,471.4
\n
Acquisition of a subsidiary (Note 13a)
0.5
\n
At 31 January 2023
1,471.9
\n
Impairment
\n
At 1 February 2021 and 31 January 2022
752.8
\n
Charge for the year (Note 16a)
269.5
\n
At 31 January 2023
1,022.3
\n
Net book value
\n
At 31 January 2023
449.6
\n
At 31 January 2022
718.6
\n
Goodwill deductible for tax purposes amounts to \u00a3nil (2022: \u00a3nil).
Saga plc
Annual Report and Accounts 2023
169
Strategic report
Financial statements
Additional information
Governance
\n
15 Intangible assets
\n
Software
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
151.6
151.6
\n
Additions and internally developed software
11.2
11.2
\n
Disposals
(53.9)
(53.9)
\n
At 31 January 2022
108.9
108.9
\n
Additions and internally developed software
13.4
13.4
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
115.0
115.0
\n
Amortisation and impairment
\n
At 1 February 2021
95.0
95.0
\n
Amortisation
10.6
10.6
\n
Impairment of assets (Note 16b)
9.9
9.9
\n
Disposals
(53.7)
(53.7)
\n
At 31 January 2022
61.8
61.8
\n
Amortisation
9.2
9.2
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
63.7
63.7
\n
Net book value
\n
At 31 January 2023
51.3
51.3
\n
At 31 January 2022
47.1
47.1
\n
The net book value of software at 31 January 2023 includes internally generated software of \u00a326.2m (2022: \u00a326.0m) relating to Guidewire
\n
(the Group\u2019s Insurance Broking, policy administration and billing platform), including additions in the year of \u00a33.0m (2022: \u00a30.2m). The
\n
Guidewire platform has an expected useful economic life of 10 years, with \ufb01ve years of phase one expenditure remaining at 31 January 2023.
\n
Implementation and the commencement of amortisation of the Guidewire platform is on a phased basis, based on product re-platforming,
\n
and began in the year ended 31 January 2019.
\n
The net book value of software at 31 January 2023 also includes internally generated software of \u00a32.0m (2022: \u00a32.3m) relating to
\n
Tigerbay (the Group\u2019s travel booking reservation system) including additions in the year of \u00a3nil (2022: \u00a31.6m). The Tigerbay platform has an
\n
expected useful economic life of 10 years, with six years of phase one expenditure remaining at 31 January 2023. Implementation and the
\n
commencement of amortisation of the Tigerbay platform is on a phased basis, based on product re-platforming, and began in the year
\n
ended\u00a031 January 2020.
\n
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
\n
Group\u2019s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
\n
an\u00a0impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
\n
impairment charge of \u00a39.4m be recognised against the Group\u2019s software assets as at 31 January 2022, all of which related to the Tigerbay
\n
platform. In addition, the Group concluded that an impairment charge of \u00a30.5m to software assets was required in the Group\u2019s Central
\n
Costs division.
\n
The amortisation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
1.1
0.9
\n
Administrative and selling expenses (Note 4)
8.1
9.7
\n
9.2
10.6
\n
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.2m). The pro\ufb01t arising on disposal was \u00a30.1m
\n
(2022: \u00a30.1m loss).
Notes to the consolidated \ufb01nancial statements continued
\n
170
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
16 Impairment of intangible assets
\n
a) Goodwill
\n
Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment testing. The carrying value of
\n
goodwill by CGU is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Insurance
449.6
718.6
\n
449.6
718.6
\n
The Group tests all goodwill balances for impairment at least annually, and twice-yearly if indicators of impairment exist at the interim
\n
reporting date of 31 July. The impairment test compares the recoverable amount of each CGU to the carrying value of its net assets including
\n
the value of the allocated goodwill.
\n
On 1 January 2022, new pricing rules arising from the implementation of recommendations included in the FCA\u2019s GIPP market study came
\n
into e\ufb00ect. As a result, and against the background of a highly competitive motor insurance market, the Group saw a fall in policy volumes in
\n
the\u00a0period to 31 July 2022 and year to 31 January 2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management considered this to be an indicator of impairment and therefore conducted full impairment reviews of the Insurance CGU as at
\n
31\u00a0July 2022 and 31 January 2023.
\n
The recoverable amount of the Insurance CGU has been determined based on a value-in-use calculation using nominal cash \ufb02ow projections
\n
from the Group\u2019s latest \ufb01ve-year \ufb01nancial forecasts to 2027/28, which are derived using past experience of the Group\u2019s trading, combined
\n
with the anticipated impact of changes in macroeconomic and regulatory factors. A terminal value has been calculated using the Gordon
\n
Growth Model based on the \ufb01fth year of those projections and an annual growth rate of 2.0% (July 2022: 2.0%; January 2022: 2.0%) as
\n
the\u00a0expected long-term average nominal growth rate of the UK economy. The cash \ufb02ows have then been discounted to present value
\n
using a suitably risk-adjusted nominal discount rate based on a market-participant view of the cost of capital and debt relevant to the
\n
insurance\u00a0industry.
\n
As at 31 January 2023, the pre-tax discount rate used for the Insurance CGU was 13.0% (July 2022: 12.7%; January 2022: 11.5%). The Group\u2019s
\n
\ufb01ve-year \ufb01nancial forecasts incorporate the modelled impact of the new pricing rules and the estimated impact this will likely have on future
\n
new business pricing and retention rates. As per IAS 36.44, incremental cash \ufb02ows directly attributable to growth initiatives not yet enacted
\n
at\u00a0the balance sheet date have then been removed for the purpose of the value-in-use calculation.
\n
The Group has also considered the impact of downside stresses, both in terms of adverse impacts to the cash \ufb02ow projections and to the
\n
discount rate. For the cash \ufb02ow stress test, the Group has modelled the impact of a more prudent outlook of the current competitive
\n
challenges seen in the insurance broking market, in combination with a more cautious nominal terminal growth rate of 1.5% (July 2022: 1.5%;
\n
January 2022: 1.5%), re\ufb02ecting a more conservative outlook for growth in the UK economy. For the discount rate stress test, the Group
\n
applied risk premia of +1.3ppt at 31 January 2023 (July 2022: +1.2ppt; January 2022: +1.5ppt).
\n
The headroom/(de\ufb01cit) for the Insurance CGU against the carrying value of goodwill at the time of the review of \u00a3449.6m at 31 January 2023
\n
and \u00a3718.6m at 31 July 2022 and 31 January 2022 was as follows:
\n
Headroom/(deficit) \u00a3m
\n
Central scenario
\n
Cash flow stress
\n
test scenario
\n
Discount rate stress
\n
test scenario
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
Insurance
153.9
(121.8)
146.3
12.0
(269.0)
89.7
92.6
(146.8)
(10.2)
\n
As at 31 July 2022, the Group determined that the recoverable amount of the goodwill asset allocated to the Insurance CGU was below the
\n
carrying value, and so the Directors took the decision to impair goodwill allocated to the Insurance CGU by \u00a3269.0m.
\n
At 31 January 2023, the recoverable amount of the Insurance goodwill asset is above the carrying value, and no further impairment is
\n
considered necessary.
\n
The headroom calculated is sensitive to the discount rate and terminal growth rate assumed, and to changes in the projected cash \ufb02ow of the
\n
CGU. Increased in\ufb02ationary pressures on claims, the evolving market response to the regulatory changes introduced in early 2022 and in
\n
particular the extent to which market prices move against Saga in a period of heightened global economic uncertainty, combine to increase
\n
the range of possible cash \ufb02ow outcomes in management\u2019s modelling. A quantitative sensitivity analysis for each of these as at 31 January 2023
\n
and its impact on the central scenario headroom against the carrying value of goodwill at the time of the review of \u00a3449.6m is as follows:
\n
Pre-tax discount rate
Terminal growth rate
Cash flow (annual)
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
+10%
\n
\u00a3m
\n
-10%
\n
\u00a3m
\n
Insurance
(47.7)
57.6
59.2
(46.6)
57.2
(57.2)
\n
Given these sensitivities, the Directors consider that there is no reasonably possible change in any of the key assumptions made in the
\n
assessment that, when taken in isolation, would give rise to an impairment greater than that already recognised. However, it is possible that
\n
adverse movements in all key assumptions combined could result in further impairment in future years.
\n
For the reasons explained in Note 13a, goodwill of \u00a30.5m arising on the acquisition of the Big Window was immediately impaired in full.
Saga plc
Annual Report and Accounts 2023
171
Strategic report
Financial statements
Additional information
Governance
\n
b) Other intangible assets
\n
Separately identi\ufb01able intangible assets are valued and their appropriate useful lives established at the time of acquisition. The carrying values
\n
of these assets and their remaining useful lives are reviewed annually for indicators of impairment.
\n
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
\n
Group\u2019s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
\n
an\u00a0impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
\n
impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022, all of which related to the
\n
Tigerbay platform. In addition, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the
\n
Group\u2019s Central Costs division.
\n
17 Property, plant and equipment
\n
Freehold
\n
land and
\n
buildings
\n
\u00a3m
\n
Long
\n
leasehold
\n
land and
\n
buildings
\n
\u00a3m
\n
Ocean
\n
cruise ships
\n
\u00a3m
\n
Plant and
\n
equipment
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
15.4
9.2
648.3
61.6
734.5
\n
Additions
\u2013
\u2013
2.7
4.4
7.1
\n
Disposals
(0.1)
\u2013
\u2013
(18.9)
(19.0)
\n
Transfer of asset class
\u2013
0.3
(0.5)
(0.9)
(1.1)
\n
Reclassification from assets held for sale (Note 38)
3.8
\u2013
\u2013
\u2013
3.8
\n
Reclassification to assets held for sale (Note 38)
(4.0)
\u2013
\u2013
\u2013
(4.0)
\n
At 31 January 2022
15.1
9.5
650.5
46.2
721.3
\n
Additions
\u2013
\u2013
6.5
1.7
8.2
\n
Disposals
\u2013
\u2013
(0.5)
(9.1)
(9.6)
\n
Transfer of asset class
\u2013
\u2013
(0.1)
0.1
\u2013
\n
Reclassification to assets held for sale (Note 38)
(14.7)
(4.3)
\u2013
(4.3)
(23.3)
\n
At 31 January 2023
0.4
5.2
656.4
34.6
696.6
\n
Depreciation and impairment
\n
At 1 February 2021
2.2
5.5
13.3
53.3
74.3
\n
Provided during the year
0.2
0.1
16.1
2.9
19.3
\n
Impairment of assets
0.2
\u2013
\u2013
0.1
0.3
\n
Disposals
\u2013
\u2013
\u2013
(18.4)
(18.4)
\n
Transfer of asset class
\u2013
0.3
(0.2)
(0.6)
(0.5)
\n
Reclassification from assets held for sale (Note 38)
0.8
\u2013
\u2013
\u2013
0.8
\n
Reclassification to assets held for sale (Note 38)
(1.0)
\u2013
\u2013
\u2013
(1.0)
\n
At 31 January 2022
2.4
5.9
29.2
37.3
74.8
\n
Provided during the year
0.2
0.2
20.5
2.6
23.5
\n
Impairment of assets
\u2013
\u2013
\u2013
0.5
0.5
\n
Disposals
\u2013
\u2013
(0.3)
(9.1)
(9.4)
\n
Reclassification to assets held for sale (Note 38)
(2.2)
(0.9)
\u2013
(0.7)
(3.8)
\n
At 31 January 2023
0.4
5.2
49.4
30.6
85.6
\n
Net book value
\n
At 31 January 2023
\u2013
\u2013
607.0
4.0
611.0
\n
At 31 January 2022
12.7
3.6
621.3
8.9
646.5
Notes to the consolidated \ufb01nancial statements continued
\n
172
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
17 Property, plant and equipment
continued
\n
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
21.5
17.1
\n
Administrative and selling expenses (Note 4)
2.0
2.2
\n
23.5
19.3
\n
During the year, the Group disposed of assets with a net book value of \u00a30.2m (2022: \u00a30.6m). The pro\ufb01t arising on disposal was \u00a3nil
\n
(2022:\u00a0\u00a30.4m loss).
\n
Due to the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel operations in the \ufb01rst half of the year, management
\n
concluded potential indicators of impairment continued to exist as at 31 July 2022 for both of its ocean cruise ships, Spirit of Discovery and
\n
Spirit of Adventure. Management therefore conducted impairment reviews at 31 July 2022 for both vessels, following previous reviews
\n
conducted at 31 January 2022.
\n
The impairment test was conducted using a methodology consistent with that applied as at 31 January 2022. The recoverable amount of
\n
each\u00a0ocean cruise ship was determined based on a value-in-use calculation using cash \ufb02ow projections from the Group\u2019s \ufb01ve-year \ufb01nancial
\n
forecasts to 2026/27 and applying a constant annual growth rate of 2% thereafter for subsequent periods until the end of the ship\u2019s useful
\n
economic life of 30 years, at which point a residual value of 15% of original cost was assumed. This was then discounted back to present value
\n
using a suitably risk-adjusted discount rate. The underlying forecast cash \ufb02ows were updated for the latest impact of the COVID-19 pandemic.
\n
In addition, a stress test of the potential adverse medium-term impact that the pandemic may have on demand for ocean cruises was also
\n
considered, with load factors capped at 80% throughout 2023/24. The annual growth rate beyond the \ufb01fth year of management forecasts
\n
was reduced to 1.5% in the stress test scenario, re\ufb02ecting a more cautious outlook for long-term growth in the UK economy.
\n
Potential environmental regulatory changes were also considered as part of this assessment. The shipping industry has made a commitment
\n
to reduce CO
\n
2
\n
emissions by 40% by 2030 (from a 2008 baseline), and the UK Government has made commitments to reach net zero
\n
emissions by 2050. The EEXI (carbon design/technical e\ufb03ciency indicator) and CII (in-service/operational carbon intensity e\ufb03ciency
\n
indicator) regulations were introduced internationally during the year to enable the industry to meet the 2030 target, and both of Saga\u2019s ocean
\n
cruise ships meet the requirements of these regulations. The end of their useful economic lives of 30 years will have been reached by 2049 in
\n
the case of Spirit of Discovery and 2051 in the case of Spirit of Adventure.
\n
The Group has not factored in any potential fuel modi\ufb01cations that may occur in the future into the cash \ufb02ow forecasts used for the
\n
impairment assessment of either ship. Whilst alternative fuels may present a viable route to decarbonisation for the Ocean Cruise business,
\n
there are signi\ufb01cant upstream supply challenges which will need to be resolved before these become viable for deployment. The main engines
\n
currently installed in the Group\u2019s ocean cruise ships are capable of being modi\ufb01ed for use with certain alternative fuels. Being new vessels, the
\n
design and speci\ufb01cation of the Group\u2019s ocean cruise ships was guided by a desire to maximise e\ufb03ciency through deployment of the most
\n
up-to-date technology. Their hull design maximises fuel e\ufb03ciency, onboard technology minimises fuel consumption and catalytic converters
\n
reduce carbon emissions. Additionally, the Group is planning to retro-\ufb01t shore power connections to both vessels, allowing them to use clean
\n
energy, where available, in ports of call and has commenced a study to evaluate other emerging technologies. The capital expenditure required
\n
for the shore power connections has been included in the forecast cash \ufb02ows used in the assessment.
\n
There is also currently no technological alternative to either oil or gas to power large vessels and it is not clear if such technology will ever be
\n
commercially viable, or in what time frame this might be achieved.
\n
The cash \ufb02ows were discounted to present value using a pre-tax discount rate of 8.6% (January 2022: 9.9%) for both vessels. As at 31 July 2022,
\n
the headroom for each of the ships against the carrying value was as follows:
\n
Headroom \u00a3m
\n
Central
\n
scenario
\n
Lower trading
\n
stress test
\n
scenario
\n
Spirit of Discovery
169.0
146.5
\n
Spirit of Adventure
114.7
91.6
\n
Based on these impairment tests, and looking at the likelihood of a range of outcomes, the Group was satis\ufb01ed that no impairment of either
\n
vessel was necessary as at 31 July 2022.
\n
In the second half of the year, further COVID-19 restrictions were lifted for cruise passengers and trading was in line with forecasts. Discount
\n
rates have risen, but not to the extent that they materially change the headroom in the impairment calculation. The Directors therefore
\n
concluded that there were no additional indicators of impairment at 31 January 2023, and accordingly no further impairment review has been
\n
deemed necessary.
Saga plc
Annual Report and Accounts 2023
173
Strategic report
Financial statements
Additional information
Governance
\n
As the Group is planning to vacate most of its properties (Note 38), management has concluded that this constitutes an indicator of
\n
impairment and has duly conducted an impairment review as at 31 January 2023 of the Group\u2019s freehold, and long leasehold, land and
\n
buildings, and related \ufb01xtures and \ufb01ttings. In relation to these freehold and long leasehold properties, value-in-use is negligible and so the
\n
Group has obtained market valuations to determine the fair value of each building. The outcome of these impairment reviews concluded that
\n
an impairment charge totalling \u00a30.5m relating to \ufb01xtures and \ufb01ttings should be recognised against the Group\u2019s assets as at 31 January 2023.
\n
At the year end, the Group reclassi\ufb01ed assets with a net book value of \u00a319.5m to assets held for sale (Note 38).
\n
In the prior year, the Group declassi\ufb01ed one of the properties classi\ufb01ed as held for sale at 31 January 2021, to property, plant and equipment
\n
since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
During the year ended 31 January 2023, a unsolicited conditional o\ufb00er for sale was accepted by the Group in respect of this property.
\n
As\u00a0a\u00a0consequence the property has been reclassi\ufb01ed back to assets held for sale as at the statement of \ufb01nancial position date.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m.
\n
18 Right-of-use assets
\n
Long
\n
leasehold
\n
land and
\n
buildings
\n
\u00a3m
\n
River
\n
cruise
\n
ships
\n
\u00a3m
\n
Plant and
\n
equipment
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
2.1
\u2013
5.9
8.0
\n
Additions
1.3
33.5
1.0
35.8
\n
Disposals
(0.7)
\u2013
(1.2)
(1.9)
\n
Transfer of asset class
4.0
\u2013
0.9
4.9
\n
Effect of modification of lease terms
(5.1)
\u2013
\u2013
(5.1)
\n
At 31 January 2022
1.6
33.5
6.6
41.7
\n
Additions
0.5
21.5
3.6
25.6
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(22.5)
\u2013
(22.5)
\n
At 31 January 2023
2.1
32.5
8.6
43.2
\n
Depreciation and impairment
\n
At 1 February 2021
1.6
\u2013
3.6
5.2
\n
Provided during the year
0.1
0.7
1.5
2.3
\n
Disposals
(0.7)
\u2013
(0.4)
(1.1)
\n
Transfer of asset class
4.1
\u2013
0.2
4.3
\n
Effect of modification of lease terms
(5.0)
\u2013
\u2013
(5.0)
\n
At 31 January 2022
0.1
0.7
4.9
5.7
\n
Provided during the year
0.4
7.4
1.1
8.9
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(0.5)
_
(0.5)
\n
At 31 January 2023
0.5
7.6
4.4
12.5
\n
Net book value
\n
At 31 January 2023
1.6
24.9
4.2
30.7
\n
At 31 January 2022
1.5
32.8
1.7
36.0
\n
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
7.8
1.6
\n
Administrative and selling expenses (Note 4)
1.1
0.7
\n
8.9
2.3
Notes to the consolidated \ufb01nancial statements continued
\n
174
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
18 Right-of-use assets
continued
\n
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.8m). The pro\ufb01t arising on disposal was \u00a3nil (2022: \u00a30.1m).
\n
The total cash out\ufb02ow for leases amounted to \u00a39.1m (2022: \u00a34.4m).
\n
River cruise ship additions in the year ended 31 January 2023 relate to the river cruise vessels, Spirit of the Danube (Note 37a),
\n
MS\u00a0River\u00a0Discovery II and MS Serenade 1. River cruise ship additions in the year ended 31 January 2022 related to the river cruise vessel,
\n
Spirit\u00a0of\u00a0the\u00a0Rhine.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8.
\n
In the year ended 31 January 2022, the modi\ufb01cation of lease terms relating to long leasehold land and buildings resulted in a gain of \u00a30.3m
\n
being reported in the income statement in the year.
\n
a) Impairment review of right-of-use assets
\n
During the year ended 31 January 2022, the Group took delivery of the river cruise ship, Spirit of the Rhine, under a 10-year lease. The ship\u2019s
\n
\ufb01rst cruise season was initially planned to commence on 1 April 2021, but due to the impact of the COVID-19 pandemic, the start of the \ufb01rst
\n
season was delayed for several months. The Group did not therefore take control of the asset until the ship\u2019s inaugural cruise took place in
\n
September 2021, at which point a right-of-use asset was recognised and a corresponding lease liability was capitalised on the statement of
\n
\ufb01nancial position.
\n
Given the carrying value of the asset is quantitatively material to the Group, combined with the ongoing adverse impacts of the COVID-19
\n
pandemic on the wider travel industry, which constitute an indicator of impairment, management deemed it necessary to conduct an
\n
impairment review on Spirit of the Rhine at 31 January 2022.
\n
Based on the impairment tests undertaken and looking at the likelihood of a range of outcomes, the Group was satis\ufb01ed that there was
\n
headroom over and above the carrying value of Spirit of the Rhine.
\n
The Group does not consider it necessary to conduct an impairment review of right-of-use assets as at 31 January 2023 since no new
\n
indicators of impairment exist in relation to the Spirit of the Rhine, Spirit of the Danube, MS River Discovery II or MS Serenade 1.
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Annual Report and Accounts 2023
175
Strategic report
Financial statements
Additional information
Governance
\n
19 Financial assets and financial liabilities
\n
a) Financial assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
Notes to the consolidated \ufb01nancial statements continued
\n
176
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Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
b) Financial liabilities
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.2
1.3
\n
0.2
1.3
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
1.0
2.7
\n
Fuel oil swaps
4.0
\u2013
\n
5.0
2.7
\n
Amortised cost
\n
Bonds and bank loans (Note 30)
854.6
896.5
\n
Lease liabilities
32.6
35.3
\n
Bank overdrafts
4.4
0.4
\n
891.6
932.2
\n
Total financial liabilities
896.8
936.2
\n
Current
118.6
56.1
\n
Non-current
778.2
880.1
\n
896.8
936.2
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial liabilities (as above and presented on the face of the statement of financial position)
896.8
936.2
\n
Trade payables (Note 26)
140.1
124.8
\n
Other payables (Note 26)
2.9
5.8
\n
Total financial liabilities (including trade and other payables)
1,039.8
1,066.8
\n
Except for the Group\u2019s bonds, the fair values of \ufb01nancial liabilities held at amortised cost are not materially di\ufb00erent from their carrying
\n
amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group\u2019s bonds (Note 30) at
\n
31\u00a0January 2023 is \u00a3334.3m (2022: \u00a3382.5m).
\n
All \ufb01nancial assets that are measured at FVTPL are mandatorily measured at FVTPL and all \ufb01nancial liabilities that are measured at FVTPL
\n
meet the de\ufb01nition of held for trading.
\n
c) Fair values
\n
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
\n
Valuation techniques include net present value and discounted cash \ufb02ow models, and comparison to similar instruments for which market
\n
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
\n
future oil prices.
\n
The objective of using valuation techniques is to arrive at a fair value determination that re\ufb02ects the price of the \ufb01nancial instrument at the
\n
reporting date, which would have been determined by market participants acting at arm\u2019s length.
\n
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
\n
of\u00a0these depends upon the liquidity of the relevant market.
Saga plc
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177
Strategic report
Financial statements
Additional information
Governance
\n
c) Fair values
continued
\n
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
\n
i) Level 1
\n
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
\n
All\u00a0money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
\n
market price.
\n
ii) Level 2
\n
These are valuation techniques for which all signi\ufb01cant inputs are taken from observable market data. These include valuation models used to
\n
calculate the present value of expected future cash \ufb02ows and may be employed either when no active market exists or when there are quoted
\n
prices available for similar instruments in active markets.
\n
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
\n
underlying instrument.
\n
All the derivative \ufb01nancial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
\n
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
\n
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
\n
attributable to derivative counterparty default risk.
\n
The fair values are periodically reviewed by the Group\u2019s Treasury Committees.
\n
iii) Level 3
\n
These are valuation techniques for which any signi\ufb01cant inputs are not based on observable market data.
\n
The following tables provide the quantitative fair value hierarchy of the Group\u2019s \ufb01nancial assets and \ufb01nancial liabilities that are held at fair value:
\n
At 31 January 2023
At 31 January 2022
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Financial assets measured
\n
at\u00a0fair value
\n
Foreign exchange forwards
\u2013
2.5
\u2013
2.5
\u2013
0.7
\u2013
0.7
\n
Fuel oil swaps
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
\u2013
1.2
\n
Loan funds
5.9
\u2013
\u2013
5.9
6.2
\u2013
\u2013
6.2
\n
Debt securities
254.4
\u2013
\u2013
254.4
280.8
\u2013
\u2013
280.8
\n
Money market funds
19.6
\u2013
\u2013
19.6
29.2
\u2013
\u2013
29.2
\n
Financial liabilities measured
\n
at fair value
\n
Foreign exchange forwards
\u2013
1.2
\u2013
1.2
\u2013
4.0
\u2013
4.0
\n
Fuel oil swaps
\u2013
4.0
\u2013
4.0
\u2013
\u2013
\u2013
\u2013
\n
Financial assets for which fair
\n
values are disclosed
\n
Deposits with institutions
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
\n
Financial liabilities for which
\n
fair values are disclosed
\n
Bonds and bank loans
\u2013
788.9
\u2013
788.9
\u2013
879.0
\u2013
879.0
\n
Lease liabilities
\u2013
32.6
\u2013
32.6
\u2013
35.3
\u2013
35.3
\n
Bank overdrafts
\u2013
4.4
\u2013
4.4
\u2013
0.4
\u2013
0.4
\n
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
\n
year (2022: none). The Group\u2019s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
\n
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
\n
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
\n
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
\n
which use current Platts index rates, discounted to present value.
Notes to the consolidated \ufb01nancial statements continued
\n
178
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Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
d) Cash flow hedges
\n
i) Forward currency risk
\n
During the year ended 31 January 2023, the Group designated 352 foreign exchange forward currency contracts as hedges of highly
\n
probable foreign currency cash expenses in future periods. These contracts are entered into to minimise the Group\u2019s exposure to foreign
\n
exchange risk.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Foreign currency cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Euro (
EUR
)
70
0.6
103
1.1
133
(2.5)
\n
US dollar (
USD
)
109
(0.2)
127
0.1
86
0.1
\n
Other currencies
173
(0.1)
216
(0.1)
212
\u2013
\n
Total
352
0.3
446
1.1
431
(2.4)
\n
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
\n
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
\n
ii) Commodity price risk
\n
The Group uses derivative \ufb01nancial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into \ufb01xed price
\n
contracts (
swaps
) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and are designated as cash \ufb02ow hedges. Hedging the price volatility of forecast fuel purchases is in accordance with the risk
\n
management strategy outlined by the Board of Directors.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Commodity cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Hedging instruments
68
(4.0)
68
(4.0)
36
1.2
\n
iii) Hedge maturity profile
\n
The table below summarises the present value of the highly probable forecast cash \ufb02ows that have been designated in a hedging relationship
\n
as at 31 January 2023. These cash \ufb02ows are expected to become determined in pro\ufb01t or loss in the same period in which the cash \ufb02ows occur.
\n
Determination period
\n
EUR
\n
\u00a3m
\n
USD
\n
\u00a3m
\n
Other
\n
currencies
\n
\u00a3m
\n
Currency
\n
hedges \u00a3m
\n
Fuel hedges
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
1 February 2023 to 31 July 2023
28.1
22.4
6.7
57.2
(1.8)
55.4
\n
1 August 2023 to 31 January 2024
20.4
20.6
5.8
46.8
(1.6)
45.2
\n
1 February 2024 to 31 July 2024
2.1
8.1
0.7
10.9
(0.3)
10.6
\n
1 August 2024 to 31 January 2025
0.1
2.2
0.5
2.8
(0.3)
2.5
\n
Total
50.7
53.3
13.7
117.7
(4.0)
113.7
\n
During the year, the Group recognised net losses of \u00a32.0m (2022: \u00a32.1m gains) on cash \ufb02ow hedging instruments through OCI into the
\n
hedging reserve. The Group recognised \u00a3nil gains (2022: \u00a3nil) through the income statement in respect of the ine\ufb00ective portion of hedges
\n
measured during the year.
\n
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value of \u00a30.7m, where forecast cash
\n
\ufb02ows are no longer expected to occur with a su\ufb03ciently high degree of certainty to meet the requirements of IFRS 9. The accumulated gains
\n
in\u00a0relation to these contracts of \u00a3nil have been reclassi\ufb01ed from the hedging reserve into pro\ufb01t or loss during the year. The Group has not
\n
de-designated any fuel oil swaps during the year. During the year, the Group recognised a \u00a30.3m loss (2022: \u00a31.2m gain) through the income
\n
statement in respect of matured hedges which have been recycled from OCI.
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Strategic report
Financial statements
Additional information
Governance
\n
20 Financial risk management objectives and policies
\n
The Group\u2019s principal \ufb01nancial liabilities comprise loans and borrowings, and trade and other payables. The main purpose of the loans and
\n
borrowings \ufb01nancial liabilities is to \ufb01nance the Group\u2019s operations and to provide guarantees to support its operations. The Group\u2019s principal
\n
\ufb01nancial assets include debt securities, deposits with \ufb01nancial institutions, money market funds, loan funds, trade and other receivables, and
\n
cash and short-term deposits. The Group also enters into derivative transactions such as foreign exchange forward contracts, fuel and gas oil
\n
swaps and interest rate swaps to manage its exposures to various risks.
\n
The Group is exposed to market risk, credit risk, liquidity risk, insurance risk and operational risk. The Group\u2019s senior management oversees
\n
these risks, supported by the Group Treasury function and Treasury Committees within the key areas of the Group that advise on \ufb01nancial
\n
risks and the appropriate \ufb01nancial risk governance framework for the Group. These functions and Committees ensure that the Group\u2019s
\n
\ufb01nancial risks are governed by appropriate policies and procedures and that \ufb01nancial risks are identi\ufb01ed, measured and managed in
\n
accordance with the Group\u2019s policies and risk objectives. All derivative activities are for risk management purposes and are carried out by
\n
the\u00a0Group\u2019s Treasury function. It is the Group\u2019s policy that no trading in derivatives for speculative purposes may be undertaken.
\n
The Group manages concentration risk on its \ufb01nancial assets through a policy of diversi\ufb01cation that is outlined in the Group Treasury Policy
\n
and approved by the Board. The policy de\ufb01nes the exposure limit by asset class and to third-party institutions based on the credit ratings of
\n
the individual counterparties, combined with the views of the Board. On a monthly basis, exposure to each asset class and counterparty is
\n
calculated and reported, and compliance with the policy is monitored.
\n
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
\n
a) Market risk
\n
Market risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate due to changes in market prices. The Group
\n
is\u00a0exposed to the following market risk factors:
\n
\u2022
Foreign currency risk
\n
\u2022
Commodity price risk
\n
\u2022
Interest rate risk
\n
The Group has policies and limits approved by the Board for managing the market risk exposure. These set out the principles that the business
\n
should adhere to for managing market risk and establishing the maximum limits that the Group is willing to accept considering strategy, risk
\n
appetite and capital resources. The Group has the ability to monitor market risk exposure on a daily basis and has established limits for each
\n
component of market risk.
\n
The Group uses derivatives for hedging its exposure to foreign currency and fuel oil price risks. The market risk policy explicitly prohibits the
\n
use of derivatives for speculative purposes. For risk exposures that the Group hedges, and for which the Group applies hedge accounting,
\n
ine\ufb00ectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the
\n
credit risk of the derivative counterparty. Hedge e\ufb00ectiveness is determined at the inception of the hedge relationship, and through periodic
\n
prospective e\ufb00ectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.
\n
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
\n
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\n
i) Foreign currency risk
\n
Foreign currency risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial asset or liability will \ufb02uctuate because of changes in foreign
\n
exchange rates. The Group\u2019s exposure to the risk of changes in foreign exchange rates relates primarily to the Group\u2019s operating activities
\n
(when revenue or expense is denominated in a di\ufb00erent currency from the Group\u2019s functional currency).
\n
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
\n
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign currency
\n
exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with the level of
\n
expected foreign currency sales and purchases.
Notes to the consolidated \ufb01nancial statements continued
\n
180
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
\n
rates, with all other variables held constant. The Group\u2019s exposure to foreign currency changes for all other currencies is not material.
\n
The\u00a0impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% forex
\n
rate change in
Effect on equity
Effect on profit after tax
\n
2023
EUR
+/\u2013 \u00a32.4m
+/\u2013 \u00a30.2m
\n
USD
+/\u2013 \u00a32.5m
+/\u2013 \u00a30.2m
\n
2022
EUR
+/\u2013 \u00a32.8m
+/\u2013 \u00a30.7m
\n
USD
+/\u2013 \u00a31.7m
+/\u2013 \u00a30.4m
\n
To the extent that forward exchange contracts are held as part of e\ufb00ective hedging relationships, any change to the fair value of the instrument
\n
will be o\ufb00set by an equal and opposite change to the cost of the hedged item.
\n
ii) Commodity price risk
\n
The Group is a\ufb00ected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of fuel and gas oil to
\n
sail its ocean cruise ships and therefore require a continuous supply of fuel and gas oil. The volatility in the price of fuel and gas oil has led to the
\n
decision to enter into commodity fuel and gas oil swap contracts. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and gas oil. Managing the price volatility of forecast oil purchases is in accordance with the risk management strategy
\n
outlined by the Board of Directors.
\n
The Group manages the purchase price using forward commodity purchase contracts based on future forecast fuel oil requirements.
\n
The following table shows the sensitivity of the fair value of fuel oil swaps to changes in the underlying fuel oil price (USD) with all other variables
\n
held constant. The impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
USD \u2013 Fuel oil price
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.0m
\n
2022
USD \u2013 Fuel oil price
+/\u2013 \u00a30.5m
+/\u2013 \u00a30.0m
\n
iii) Interest rate risk
\n
Interest rate risk is de\ufb01ned in IFRS 7 as the risk that the fair value or future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate because of changes
\n
in market interest rates.
\n
Interest rate risk arises primarily from medium and long-term investments in \ufb01xed interest securities. The market value of these investments
\n
is a\ufb00ected by the movement in interest rates. This is managed by a policy of holding the majority of investments to maturity by closely matching
\n
asset and liability duration.
\n
It is also ensured that the investment portfolio has a diversi\ufb01ed range of investments such that there is a combination of \ufb01xed and \ufb02oating rate
\n
securities, as well as other types of investment such as Retail Price Index linked securities.
\n
Interest rate risk also arises in respect of the Group\u2019s borrowings where the interest rate attaching to those borrowings is not \ufb01xed.
\n
Where the Group perceives there to be a signi\ufb01cant interest rate risk, it manages its exposure to such risks by purchasing interest rate caps
\n
to limit the risk.
\n
The following table shows the sensitivity of \ufb01nancial assets and liabilities to changes in the Sterling Overnight Index Average (
SONIA
). The
\n
impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 1% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
SONIA
+/\u2013 \u00a30.4m
+/\u2013 \u00a30.4m
\n
2022
SONIA
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.2m
Saga plc
Annual Report and Accounts 2023
181
Strategic report
Financial statements
Additional information
Governance
\n
b) Credit risk
\n
Credit risk is the risk that a counterparty will not meet its obligations under a \ufb01nancial instrument or customer contract, leading to a \ufb01nancial
\n
loss. The Group is exposed to credit risk in relation to its \ufb01nancial and reinsurance assets, outstanding derivatives, trade and other receivables,
\n
and cash and cash equivalents. The Group assesses its counterparty exposure in relation to the investment of surplus cash, fuel oil and foreign
\n
currency contracts, and undrawn credit facilities. The Group primarily uses published credit ratings to assess counterparty strength and
\n
therefore de\ufb01ne the credit limit for each counterparty in accordance with approved treasury policies.
\n
The credit risk in respect of trade and other receivables is generally limited as payment from customers is generally required before services
\n
are provided. At 31 January 2023, the maximum exposure to credit risk for trade receivables by operating segment was as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cruise and Travel
1.8
2.3
\n
Insurance
68.0
42.6
\n
Other Businesses and Central Costs
2.1
2.3
\n
71.9
47.2
\n
The variance between the quantum of the maximum exposure to credit risk for trade receivables (above) and total of trade receivables
\n
presented in \u2018Trade and other receivables\u2019 (Note 23) primarily relates to insurance instalment gross premium debtors due from customers,
\n
for which a corresponding related creditor exists with third-party insurers for the net premium. In the event of payment obligation default by
\n
a\u00a0customer no longer on risk, the impairment of the debtor balance by the Group would lead to a corresponding reduction in the related
\n
creditor with, or refund of net premium from, the third-party insurer. In the event of payment obligation default by a customer remaining on
\n
risk, the impairment of the debtor balance by the Group would not lead to a corresponding reduction in the related creditor with, or refund
\n
of\u00a0net premium from, the third-party insurer, and the Group would bear the credit risk relating to the debtor balance.
\n
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large
\n
number of small balances. The loss allowance required for these receivables is calculated in line with the simpli\ufb01ed method for trade
\n
receivables per IFRS 9, whereby lifetime ECLs are recognised irrelevant of the credit risk. The loss allowance is based on a combination of:
\n
(i)\u00a0aged debtor analysis; (ii) historical experience of write-o\ufb00s for each receivable; (iii) any speci\ufb01c indicators of credit deterioration observed;
\n
and (iv) management judgement. Loss rates are based on the probability of a receivable progressing through successive stages of delinquency
\n
to write-o\ufb00. Financial assets are written o\ufb00 when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
\n
repayment plan with the Group.
\n
On that basis, the loss allowance as at 31 January 2023 and 31 January 2022 was determined as follows for trade receivables:
\n
31 January 2023
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
0%
7%
6%
34%
15%
66%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3139.1m
\u00a32.1m
\u00a30.2m
\u00a30.1m
\u00a30.2m
\u00a30.7m
\u00a3142.4m
\n
Loss allowance (Note 23)
\u00a30.5m
\u00a30.1m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a30.5m
\u00a31.1m
\n
31 January 2022
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
1%
13%
4%
6%
4%
39%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3101.7m
\u00a31.2m
\u00a30.5m
\u00a30.4m
\u00a30.4m
\u00a310.7m
\u00a3114.9m
\n
Loss allowance (Note 23)
\u00a30.6m
\u00a30.2m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a34.2m
\u00a35.0m
\n
The loss allowance for trade receivables reconciles to the opening allowances as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
(restated)
\n
\u00a3m
\n
Opening loss allowance at 1 February
5.0
13.9
\n
Increase in loan loss allowance recognised in profit or loss during the year
1.3
0.7
\n
7
\n
Receivables written off during the year as uncollectable
(3.5)
(8.0)
\n
7
\n
Unused amount reversed
(1.7)
(1.6)
\n
7
\n
Closing loss allowance at 31 January
1.1
5.0
\n
7
Movements in the credit loss allowance for the year ended 31 January 2022 have been restated due to an incorrect allocation between the various movements in
\n
the\u00a0year
Notes to the consolidated \ufb01nancial statements continued
\n
182
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
Credit risk in relation to deposits, debt securities and derivative counterparties is managed by the Group\u2019s Treasury function in accordance
\n
with the Group\u2019s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
\n
counterparty. Counterparty credit limits are reviewed on a regular basis and updated throughout the year subject to approval by the Board.
\n
The limits are set to minimise the concentration of risks and therefore mitigate \ufb01nancial loss through any potential counterparty failure.
\n
The Group is exposed to the risk of default on the reinsurance arrangements in its Insurance Underwriting business when amounts
\n
recoverable under those arrangements become due. The Group has entered into a funds-withheld quota share reinsurance contract to
\n
reduce its exposure to credit risk. Credit risk in respect of reinsurance arrangements is assessed at the time of entering into a reinsurance
\n
contract. The Group\u2019s reinsurance programme is only placed with reinsurers which meet the Group\u2019s \ufb01nancial strength criteria.
\n
The Group\u2019s maximum exposure to credit risk for the components of the statement of \ufb01nancial position at 31 January 2023 and 31 January
\n
2022 is the gross carrying amount except for derivative \ufb01nancial instruments and trade receivables. The Group\u2019s maximum exposure for
\n
\ufb01nancial guarantees and \ufb01nancial derivative instruments is noted under liquidity risk. None of the \ufb01nancial assets, other than trade receivables
\n
where a loss allowance has been determined as set out above, were impaired at the reporting date.
\n
The Group\u2019s \ufb01nancial assets and reinsurance assets are analysed by Moody\u2019s credit risk rating as follows:
\n
Ratings analysis
\n
31 January 2023
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
23.5
74.9
64.2
91.8
\u2013
254.4
\n
Money market funds
19.6
\u2013
\u2013
\u2013
\u2013
19.6
\n
Derivative assets
\u2013
\u2013
2.5
\u2013
\u2013
2.5
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
5.9
5.9
\n
43.1
74.9
66.7
91.8
5.9
282.4
\n
Reinsurance assets
\u2013
38.2
30.6
\u2013
\u2013
68.8
\n
Total
43.1
113.1
97.3
91.8
5.9
351.2
\n
31 January 2022
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
20.2
94.4
68.0
98.2
\u2013
280.8
\n
Money market funds
29.2
\u2013
\u2013
\u2013
\u2013
29.2
\n
Deposits with financial institutions
\u2013
\u2013
14.0
\u2013
\u2013
14.0
\n
Derivative assets
\u2013
\u2013
1.8
0.1
\u2013
1.9
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
6.2
6.2
\n
49.4
94.4
83.8
98.3
6.2
332.1
\n
Reinsurance assets
\u2013
36.3
29.1
\u2013
\u2013
65.4
\n
Total
49.4
130.7
112.9
98.3
6.2
397.5
\n
c) Liquidity risk
\n
Liquidity risk is the risk that the Group, although solvent, either does not have available su\ufb03cient \ufb01nancial resources to enable it to meet its
\n
obligations as they fall due or can secure them only at excessive cost. The Group\u2019s approach to managing liquidity risk is to evaluate current
\n
and expected liquidity requirements to ensure that it maintains su\ufb03cient reserves of cash or availability on its RCF. The Group manages
\n
its\u00a0obligations to pay claims to policyholders as they fall due by matching the maturity of investments to the expected maturity of
\n
claims\u00a0payments.
\n
The table below analyses the maturity of the Group\u2019s \ufb01nancial liabilities and insurance contract liabilities on contractual payments. The analysis
\n
of non-derivative \ufb01nancial liabilities is based on the remaining period at the reporting date to the contractual maturity date. The analysis of
\n
claims outstanding is based on the expected dates on which the claims will be settled and is before discounting, gross of reinsurance.
\n
31 January 2023
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
62.2
212.2
406.4
188.4
869.2
\n
Interest on bonds and bank loans
\u2013
33.6
28.8
46.0
13.4
121.8
\n
Insurance contract liabilities
\u2013
85.3
79.7
75.7
102.1
342.8
\n
Derivative liabilities
\u2013
4.1
1.1
\u2013
\u2013
5.2
\n
Lease liabilities
\u2013
8.9
3.5
10.0
10.2
32.6
\n
\u2013
194.1
325.3
538.1
314.1
1,371.6
Saga plc
Annual Report and Accounts 2023
183
Strategic report
Financial statements
Additional information
Governance
\n
31 January 2022
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
46.4
62.2
572.0
235.0
915.6
\n
Interest on bonds and bank loans
\u2013
32.7
31.3
65.4
20.0
149.4
\n
Insurance contract liabilities
\u2013
88.0
50.1
76.8
115.9
330.8
\n
Derivative liabilities
\u2013
3.7
0.3
\u2013
\u2013
4.0
\n
Lease liabilities
\u2013
3.9
3.6
11.4
16.4
35.3
\n
\u2013
174.7
147.5
725.6
387.3
1,435.1
\n
d) Insurance risk
\n
Insurance risk arises from the inherent uncertainties as to the occurrence, cost and timing of insured events that could lead to signi\ufb01cant
\n
individual or aggregated claims in terms of quantity or value. This could be for a number of reasons, including weather-related events, large
\n
individual claims, changes in claimant behaviour patterns such as increased levels of fraudulent activities, the use of PPOs, prospective or
\n
retrospective legislative changes, unresponsive and inaccurate pricing or reserving methodologies and the deterioration in the Group\u2019s ability
\n
to e\ufb00ectively and e\ufb03ciently handle claims while delivering excellent customer service.
\n
The Group manages insurance risk within its risk management framework as set out by the Board. The key policies and processes of mitigating
\n
these risks have been implemented, which include underwriting partnership arrangements, reinsurance excess of loss contracts, pricing
\n
policies and claims management, and administration policies.
\n
i) Underwriting and pricing risk
\n
The Group primarily underwrites motor insurance for private cars in the UK. The book consists of a large number of individual risks which are
\n
widely spread geographically, which helps to minimise concentration risk. The Group has controls in place to restrict access to its products to
\n
only those risks that it wishes to underwrite.
\n
The Group has management information to allow it to monitor underwriting performance on a continuous basis and the ability to make pricing
\n
and underwriting changes quickly. The Group undertakes detailed statistical analysis of underwriting experience for each rating factor and
\n
combination of rating factors, to enable it to adjust pricing for emerging trends.
\n
ii) Reserving risk
\n
Reserving risk is the risk that insu\ufb03cient funds have been set aside to settle claims as they fall due. The Group undertakes regular internal
\n
actuarial reviews and commissions external actuarial reviews at least once a year. These reviews estimate the future liabilities in order to
\n
consider the adequacy of the provisions.
\n
Claims which are subject to PPOs are a signi\ufb01cant source of uncertainty in the claim\u2019s reserves. Cash \ufb02ow projections are undertaken for
\n
PPO\u00a0claims to estimate the gross and net of reinsurance provisions required. PPO provisions are discounted to re\ufb02ect expectations of future
\n
investment returns and cost in\ufb02ation.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost development caused by the impact of the
\n
COVID-19 pandemic and recognised an additional claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk
\n
provision in relation to the COVID-19 pandemic has been released over the year to 31 January 2023, re\ufb02ective of the improvement in the
\n
COVID-19 outlook.
\n
iii) Reinsurance
\n
The Group purchases reinsurance to reduce the impact of individual large losses or accumulations from a single catastrophic event. During
\n
2018, the Group entered into a funds-withheld quota share reinsurance contract that reinsures 80% of the Group\u2019s motor claims risks limited
\n
by a loss ratio cap of 130%, e\ufb00ective from 1 February 2019. Prior to this, the Group had a funds-withheld quota share reinsurance contract in
\n
place that reinsured 75% of the Group\u2019s motor claims risks limited by a loss ratio cap of 120%. The Group also purchases individual excess of
\n
loss protections for the motor portfolio to limit the impact of a single large claim. Similar protections are in place for all years for which the
\n
Group has underwritten motor business.
\n
Reinsurance recoveries on individual excess of loss protections can take many years to collect, particularly if a claim is subject to a PPO.
\n
This\u00a0means that the Group has exposure to reinsurance credit risk for many years. Reinsurers are therefore required to have strong credit
\n
ratings and their \ufb01nancial health is regularly monitored.
\n
iv) Sensitivities
\n
The following table demonstrates the impact on pro\ufb01t and loss and equity of a \ufb01ve-percentage point variation in the recorded loss ratio at
\n
31\u00a0January 2023 and 31 January 2022. The impact of a 5% change in claims outstanding is also shown at the same dates. The impact is shown
\n
net of reinsurance and tax at the current rate. The impact to the statement of \ufb01nancial position as at 31 January 2023 and 31 January 2022
\n
of\u00a0a\u00a00.25% percentage point change in discount rate for PPOs is also shown.
\n
2023
2022
\n
Impact of a five-percentage point change in loss ratio
+/\u2013 \u00a33.0m
+/\u2013 \u00a33.3m
\n
Impact of 5% change in claims outstanding
+/\u2013 \u00a34.1m
+/\u2013 \u00a34.1m
\n
Impact of a 0.25 percentage point change in discount rate for PPOs
+/\u2013 \u00a32.0m
+/\u2013 \u00a32.2m
Notes to the consolidated \ufb01nancial statements continued
\n
184
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
e) Operational risk
\n
E\ufb00ective operational risk management requires the Group to identify, assess, manage, monitor, report and mitigate all areas of exposure.
\n
The\u00a0Group operates across a range of segments and operational risk is inherent in all of the Group\u2019s products and services, arising from the
\n
operation of assets, from external events and dependencies, and from internal processes and systems.
\n
The Group manages its operational risk through the risk management framework agreed by the Board, and through the use of risk
\n
management tools which, together, ensure that operational risks are identi\ufb01ed, managed and mitigated to the level accepted, and that
\n
contingency processes and disaster recovery plans are in place. Regular reporting is undertaken to segment boards and includes details of
\n
new and emerging risks, as well as monitoring of existing risks. Testing of contingency processes and disaster recovery plans is undertaken to
\n
ensure the e\ufb00ectiveness of these processes. The resilience of the Group\u2019s disaster recovery plans was demonstrated during the COVID-19
\n
lockdown. The Group was able to quickly move o\ufb03ce-based colleagues to working from home arrangements, ensuring that it was able to
\n
continue to support existing and new customers through the contact centre and support functions.
\n
All of the Group\u2019s operations are dependent on: the proper functioning of its IT and communication systems; its properties and other
\n
infrastructure assets; the need to adequately maintain and protect customer and employee data and other information; and the ability of
\n
the\u00a0Group to attract and retain colleagues. Speci\ufb01c areas of operational risk by segment include:
\n
i) Cruise and Travel
\n
The Cruise and Travel segment operates two ocean cruise ships, which are the Group\u2019s largest trading assets. Risk to the operation of these
\n
cruise ships arises from the impact of mechanical or other malfunction, non-compliance with regulatory requirements, and from global
\n
weather and socio-economic events. The tour holidays operated by the segment are also a\ufb00ected by global weather and socio-economic
\n
events which impact either the Group directly, or its suppliers. The Cruise and Travel segments transact with multiple suppliers which
\n
minimises the impact of any socio-economic events a\ufb00ecting its suppliers. The COVID-19 pandemic created an unprecedented challenge for
\n
the Group and a high level of uncertainty for all companies. This uncertainty eased as COVID-19 restrictions lifted. Further detail is provided
\n
within the basis of preparation and going concern sections in Note 2.1 on pages 143-144.
\n
ii) Insurance
\n
The Insurance segment is required to comply with various operational regulatory requirements, primarily in the UK but also within Gibraltar
\n
for its Underwriting business. To the extent that signi\ufb01cant external events could increase the incidence of claims, these would place additional
\n
strain on the claims handling function but any \ufb01nancial impact of such an event is considered to be an insurance risk.
\n
iii) Other Businesses and Central Costs
\n
The \ufb01nancial services business is required to comply with various operational regulatory requirements in the UK.
\n
21 Interests in unconsolidated structured entities
\n
A structured entity is de\ufb01ned as an entity that has been designed so that voting, or similar, rights are not the dominant factor in deciding who
\n
controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directed by means of
\n
contractual agreements. The Group has interests in unconsolidated structured entities in the form of investment funds comprising:
\n
\u2022
bank loan funds; and
\n
\u2022
money market funds.
\n
The nature and purpose of the bank loan funds are to diversify the investment portfolio and enhance the overall yield, while maintaining an
\n
acceptable level of risk for the portfolio as a whole.
\n
Bank loan funds invest in secured loans to companies rated below investment grade.
\n
The nature and purpose of the money market funds is to provide maximum security and liquidity for the funds invested while also providing an
\n
adequate return. The money market funds used by the Group are all members of the Institutional Money Market Funds Association. They are
\n
thus required to maintain speci\ufb01ed liquidity and diversi\ufb01cation characteristics of their underlying portfolios, which comprise investment grade
\n
investments in \ufb01nancial institutions.
\n
The Group invests in unconsolidated structured entities as part of its investment activities. The Group does not sponsor any of the
\n
unconsolidated structured entities.
\n
At 31 January 2023, the Group\u2019s total interest in unconsolidated structured entities was \u00a325.5m analysed as follows:
\n
Carrying
\n
value
\n
\u00a3m
\n
Interest
\n
income
\n
\u00a3m
\n
Fair value
\n
losses
\n
\u00a3m
\n
Loan funds
5.9
0.2
(0.3)
\n
Money market funds
19.6
0.5
\u2013
\n
These investments are typically managed under credit risk management as described in Note 20. The Group\u2019s maximum exposure to loss on
\n
the interests presented above is the carrying amount of the Group\u2019s investments. No further loss can be made by the Group in relation to
\n
these investments. For this reason, the total assets of the entities are not considered meaningful for the purposes of understanding the
\n
related risks and so have not been presented.
Saga plc
Annual Report and Accounts 2023
185
Strategic report
Financial statements
Additional information
Governance
\n
22 Inventories
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Raw materials
0.7
0.3
\n
Technical stocks
4.4
2.3
\n
Finished goods
1.9
3.7
\n
7.0
6.3
\n
Technical stocks are spare parts for the Group\u2019s ocean cruise ships. Finished goods primarily relate to ocean cruise ship fuel, food, bar and
\n
sundry stocks.
\n
23 Trade and other receivables
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Trade receivables (Note 20b)
142.4
114.9
\n
Loss allowance (Note 20b)
(1.1)
(5.0)
\n
141.3
109.9
\n
Other receivables
23.4
17.3
\n
Prepayments
25.8
16.8
\n
Contract cost assets (Note 3b)
2.5
2.6
\n
Deferred acquisition costs
13.9
18.2
\n
Other taxes and social security costs
5.6
4.7
\n
212.5
169.5
\n
An explanation of how the Group manages and measures the credit risk of trade receivables can be found in Note 20b. The Group expects
\n
trade and other receivables to be normally settled within 12 months. Due to the short-term nature of the current receivables, their carrying
\n
amount is considered to be the same as their fair value.
\n
24 Trust accounts
\n
The Civil Aviation Authority (
CAA
) and Association of British Travel Agents (
ABTA
) regulated the River Cruise and Travel businesses
\n
conducted by the Group in the UK during the year. To comply with its regulatory obligations, the Group is required to arrange \ufb01nancial security
\n
to protect customer monies, in addition to making ATOL Protection Contributions, which the Group pays into the Air Travel Trust Fund.
\n
From 25 September 2020, the Group changed its method of customer protection for ATOL licensable bookings from \ufb01nancial security
\n
bonds to paying customer monies into trust (
Trust Accounting
). Under Trust Accounting, all monies the Group receives from customers in
\n
respect of ATOL licensable holiday packages sold, are held in trust until such time as the Group has ful\ufb01lled its obligations to the customer. The
\n
trust is administered and controlled by an independent Trustee, PT Trustees Limited. Interest arising from the funds held on trust belongs to
\n
the Group.
\n
With the introduction of Trust Accounting in September 2020, the Group is no longer required to hold \ufb01nancial security bonds in relation to
\n
ATOL bookings. In relation to ABTA bookings a bonding requirement still exists (Note 37c).
\n
25 Cash and cash equivalents
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cash at bank and in hand
52.0
174.6
\n
Short-term deposits
124.5
52.3
\n
Cash and short-term deposits
176.5
226.9
\n
Money market funds
19.6
29.2
\n
Bank overdraft
(4.4)
(0.4)
\n
Cash and cash equivalents in the cash flow statement
191.7
255.7
\n
Included within cash and cash equivalents are amounts held by the Group\u2019s River Cruise, Travel and Insurance businesses, which are subject to
\n
contractual or regulatory restrictions (Note 35). These amounts held are not readily available to be used for other purposes within the Group
\n
and total \u00a334.2m (2022: \u00a369.1m). Available Cash
\n
8
\n
excludes these amounts.
\n
Cash at bank earns interest at \ufb02oating rates based on daily bank deposit rates. Short-term deposits are typically made for varying periods
\n
of\u00a0between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
\n
short-term deposit rates.
\n
The bank overdraft is subject to a guarantee in favour of the Group\u2019s bankers and is limited to the amount drawn. The bank overdraft is
\n
repayable on demand.
\n
8
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
186
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
26 Trade and other payables
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Trade payables
140.1
124.8
\n
Other payables
2.9
5.8
\n
Other taxes and social security costs
8.7
9.4
\n
Assets in the course of construction
4.5
3.8
\n
Accruals
41.5
55.9
\n
197.7
199.7
\n
All trade and other payables are current in nature. The carrying amounts of trade and other payables are considered to be the same as their
\n
fair values, due to their short-term nature.
\n
27 Retirement benefit schemes
\n
The Group operates retirement bene\ufb01t schemes for the employees of the Group consisting of de\ufb01ned contribution plans and a legacy de\ufb01ned
\n
bene\ufb01t plan.
\n
In July 2021, following the completion of a review of the Group\u2019s pension arrangements, a consultation process with active members
\n
was launched. The consultation process concluded during October 2021, and with e\ufb00ect from 31 October 2021, the Group closed both its
\n
existing schemes to future accrual: the Saga Pension Scheme (its de\ufb01ned bene\ufb01t plan) and the Saga Workplace Pension Plan (its de\ufb01ned
\n
contribution plan). In their place, the Group launched a new de\ufb01ned contribution pension scheme arrangement, operated as a Master Trust.
\n
This move served to reduce the risk of further de\ufb01cits developing in the future on the de\ufb01ned bene\ufb01t scheme, while moving to a fairer
\n
scheme for all colleagues.
\n
a) Defined contribution plans
\n
There are three de\ufb01ned contribution schemes in the Group at 31 January 2023 (2022: three). The total charge for the year in respect of the
\n
de\ufb01ned contribution schemes was \u00a39.9m (2022: \u00a34.5m). The assets of these schemes are held separately from those of the Group in funds
\n
under the control of Trustees.
\n
b) Defined benefit plan
\n
The Group operated a funded de\ufb01ned bene\ufb01t scheme, the Saga Pension Scheme, which was closed to future accrual on 31 October 2021.
\n
From 1 November 2021, members moved from active to deferred status, with future indexation of deferred pensions before retirement
\n
measured by reference to the Consumer Price Index. During the prior year, a net expense of \u00a32.0m was recognised as a past service cost
\n
(within administrative and selling expenses) relating to the closure. The assets of the scheme are held separately from those of the Group
\n
in\u00a0independently administered funds.
\n
The scheme is governed by the employment laws of the UK. The level of bene\ufb01ts provided depends on the member\u2019s length of service and
\n
average salary while a member of the scheme. The scheme requires contributions to be made to a separately administered fund which is
\n
governed by a Board of Trustees and consists of an equal number of employer and employee representatives. The Board of Trustees is
\n
responsible for the administration of the plan assets and for the de\ufb01nition of the investment strategy.
\n
The long-term investment objectives of the Trustees and the Group are to limit the risk of the assets failing to meet the liabilities of the scheme
\n
over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the scheme.
\n
To\u00a0meet those objectives, the scheme\u2019s assets are invested in di\ufb00erent categories of assets, with di\ufb00erent maturities designed to match
\n
liabilities as they fall due. The investment strategy will continue to evolve over time and is expected to match the liability pro\ufb01le increasingly
\n
closely. The pension liability is exposed to in\ufb02ation rate risks and changes in the life expectancy of members. As the plan assets include
\n
investments in quoted equities, the Group is exposed to equity market risk. The Group has provided super security to the Trustees of the
\n
scheme, which ranks before any liabilities under the senior facilities agreement (as detailed in Note 30). The value of the security is capped
\n
at\u00a0\u00a347.5m.
\n
The fair value of the assets and present value of the obligations of the Saga de\ufb01ned bene\ufb01t scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Fair value of scheme assets
224.1
412.0
\n
Present value of defined benefit obligation
(236.2)
(410.9)
\n
Defined benefit scheme (liability)/asset
(12.1)
1.1
\n
The present values of the de\ufb01ned bene\ufb01t obligation, and any related current service and past service costs, have been measured using the
\n
projected unit credit valuation method.
Saga plc
Annual Report and Accounts 2023
187
Strategic report
Financial statements
Additional information
Governance
\n
During the year ended 31 January 2023, the net position of the Saga Scheme has decreased by \u00a313.2m, resulting in an overall scheme de\ufb01cit
\n
of \u00a312.1m. The movements observed in the scheme\u2019s assets and obligations have been impacted signi\ufb01cantly by macroeconomic factors
\n
during the year where, at a global level, there have been rising in\ufb02ation and cost of living pressures, as well as shifts in long-term market yields.
\n
The present value of de\ufb01ned bene\ufb01t obligations decreased by \u00a3174.7m to \u00a3236.2m, primarily due to a 245bps increase in the discount rate
\n
which is based on increases in long-term trend corporate bond yields. The fair value of scheme assets decreased by \u00a3187.9m to \u00a3224.1m.
\n
The\u00a0decrease in asset values has been largely driven by the sharp rise in interest rates in the year. Liability driven investment (
LDI
) strategies
\n
resulted in assets being sold in order to meet the liquidity calls required by the fall in leveraged LDI values. The Saga scheme has a hedged
\n
component, but this is relative to gilt yields, rather than corporate bond yields, which are used to derive the de\ufb01ned bene\ufb01t obligation. A \u00a35.8m
\n
de\ufb01cit funding contribution was paid by the Group in February 2022 in relation to a recovery plan agreed under the latest triennial valuation
\n
of\u00a0the scheme as at 31 January 2020.
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2023:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
liability
\n
\u00a3m
\n
1 February 2022
412.0
(410.9)
1.1
\n
Pension cost charge to income statement
\n
Net interest
8.9
(8.8)
0.1
\n
Included in income statement
8.9
(8.8)
0.1
\n
Benefits paid
(6.8)
6.8
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(195.8)
\u2013
(195.8)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
184.3
184.3
\n
Experience adjustments
\u2013
(7.6)
(7.6)
\n
Sub-total included in OCI
(202.6)
183.5
(19.1)
\n
Total contributions by employer
5.8
\u2013
5.8
\n
At 31 January 2023
224.1
(236.2)
(12.1)
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2022:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
(liability)/
\n
surplus
\n
\u00a3m
\n
At 1 February 2021
411.2
(415.5)
(4.3)
\n
Pension cost charge to income statement
\n
Current service cost paid in cash during the period
\u2013
(3.9)
(3.9)
\n
Non-cash current service cost uplift
\u2013
(1.6)
(1.6)
\n
Total current service cost
\u2013
(5.5)
(5.5)
\n
Past service costs
\u2013
(2.0)
(2.0)
\n
Net interest
5.9
(5.9)
\u2013
\n
Included in income statement
5.9
(13.4)
(7.5)
\n
Benefits paid
(7.5)
7.5
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(5.8)
\u2013
(5.8)
\n
Actuarial changes arising from changes in demographic assumptions
\u2013
(5.3)
(5.3)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
16.2
16.2
\n
Experience adjustments
\u2013
(0.3)
(0.3)
\n
Sub-total included in OCI
(13.3)
18.1
4.8
\n
Total contributions by employer
8.2
(0.1)
8.1
\n
At 31 January 2022
412.0
(410.9)
1.1
Notes to the consolidated \ufb01nancial statements continued
\n
188
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
27 Retirement benefit schemes
continued
\n
b) Defined benefit plan
continued
\n
The major categories of assets in the scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Equities
16.4
50.2
\n
Bonds
92.2
159.4
\n
Property and alternatives
74.6
58.4
\n
Hedge funds
28.7
133.5
\n
Insured annuities
3.9
5.3
\n
Cash and other
8.3
5.2
\n
Total
224.1
412.0
\n
Equities and bonds are all quoted in active markets, while property and hedge funds are not. The impact of COVID-19 over the past three years
\n
and the Russia-Ukraine con\ufb02ict have increased the level of uncertainty and volatility in global \ufb01nancial markets. While the ultimate extent of the
\n
e\ufb00ect of this on the asset portfolio is not possible to quantify at this time, management has used the latest available fund pricing data to derive
\n
the valuations of assets which are not quoted in active markets.
\n
Within bonds is a hedging component totalling \u00a385.5m (2022: \u00a3118.7m).
\n
The pension scheme has not invested in any of the Group\u2019s own \ufb01nancial instruments.
\n
The principal assumptions used in determining pension bene\ufb01t obligations for the scheme are shown below:
\n
2023
2022
\n
Real rate of increase of pensions in payment
3.05%
3.45%
\n
Real rate of increase of pensions in deferment
3.00%
3.30%
\n
Discount rate \u2013 pensioner
4.65%
2.20%
\n
Discount rate \u2013 non-pensioner
4.60%
2.15%
\n
Inflation \u2013 pensioner
3.20%
3.80%
\n
Inflation \u2013 non-pensioner
3.15%
3.60%
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Male
27.8 yrs
27.8 yrs
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Female
29.5 yrs
29.5 yrs
\n
The discount rate assumption is used to calculate the de\ufb01ned bene\ufb01t obligation. The rate is derived from high quality corporate bonds,
\n
generally regarded as those with an AA rating. Management have opted to use the XPS Single Agency curve for deriving the discount rate
\n
assumptions at January 2023, rather than deriving the rate from the Merrill Lynch AA yield curve which was used for the 31 January 2022
\n
valuation. The impact of this change in methodology is estimated at a \u00a310.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
In addition, the scheme lost some of its in\ufb02ation hedge during the year and as a result management have made an allowance for in\ufb02ation risk
\n
premium of 0.2% (2022: nil). The impact of the change was an estimated \u00a35.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
Mortality assumptions are set using standard tables based on speci\ufb01c experience, where available, and allow for future mortality improvements.
\n
The scheme assumption is that a member currently aged 60 will live on average for a further 26.2 years if they are male and on average for a
\n
further 28.0 years if they are female.
\n
A quantitative sensitivity analysis for signi\ufb01cant assumptions as at 31 January 2023 and their impact on the scheme liabilities is as follows:
\n
Assumptions
Discount rate
Future inflation
Life expectancy
\n
Sensitivity
+/\u2013 0.25%
+/\u2013 0.25%
+/\u2013 1 year
\n
Increase
Decrease
Increase
Decrease
Increase
Decrease
\n
Impact \u00a3m
(12.3)
13.2
5.7
(6.1)
8.0
(9.2)
\n
Note: a positive impact represents an increase in the net de\ufb01ned bene\ufb01t liability.
\n
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity
\n
of the de\ufb01ned bene\ufb01t obligation to signi\ufb01cant actuarial assumptions, the same method has been applied as when calculating the pension
\n
liability recognised within the statement of \ufb01nancial position. The methods and types of assumption used in preparing the sensitivity analysis
\n
did not change compared to the prior period.
\n
The expected contribution in respect of the accrual of bene\ufb01ts payable to the scheme for the next \ufb01nancial year is \u00a3nil and the average
\n
duration of the de\ufb01ned bene\ufb01t plan obligation at the end of the reporting period has reduced from 22 to 23 years down to 20 to 21 years,
\n
due\u00a0to the signi\ufb01cant rise in the discount rate assumption. Formal actuarial valuations take place every three years for the scheme. The
\n
assumptions adopted for actuarial valuations are determined by the Trustees, agreed with the Group and are normally more prudent than
\n
the\u00a0assumptions adopted for IAS 19 purposes, which are best estimate. Where a funding de\ufb01cit is identi\ufb01ed, the Group and the Trustees
\n
may\u00a0agree a de\ufb01cit recovery plan to pay additional contributions above those needed to fund the scheme.
Saga plc
Annual Report and Accounts 2023
189
Strategic report
Financial statements
Additional information
Governance
\n
The Group\u2019s latest triennial valuation of the Saga Scheme de\ufb01ned bene\ufb01t plan was as at 31 January 2020. Saga plc, and certain guarantor
\n
subsidiaries in the Group, have provided a super security to the Trustees of the scheme, which ranks before any liabilities under the Group\u2019s
\n
bank facilities. The value of the security is capped at \u00a347.5m under the 2020 triennial valuation. Further to this valuation, a recovery plan was
\n
also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of \u00a35.8m during the year ended
\n
31\u00a0January 2023 and will make annual payments of \u00a35.8m totalling a further \u00a329.0m over the next \ufb01ve \ufb01nancial years, with the last payment
\n
being made on 29 February 2027. The total expected contributions in the year ending 31 January 2024 are \u00a35.8m and entirely relate to the
\n
\u00a35.8m recovery payment.
\n
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set periods
\n
of\u00a0time. Dependent upon the level of return on the scheme\u2019s assets between 31 January 2020 and 31 January 2027, any amount in the escrow
\n
account will be released to either the Group, or the scheme, by 30 June 2027.
\n
28 Insurance contract liabilities and reinsurance assets
\n
The analysis of gross and net insurance liabilities is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross
\n
Claims outstanding
285.2
292.8
\n
Provision for unearned premiums
83.1
93.9
\n
Total gross liabilities
368.3
386.7
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Recoverable from reinsurers
\n
Claims outstanding
62.1
59.1
\n
Provision for unearned premiums
6.7
6.3
\n
Total reinsurers\u2019 share of insurance liabilities (as presented on the face of the statement of financial position)
68.8
65.4
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
123.1
133.0
\n
\u2013 Provision for unearned premiums
44.6
50.7
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
Analysed as:
\n
Claims outstanding
185.2
192.1
\n
Provision for unearned premiums
51.3
57.0
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net
\n
Claims outstanding
223.1
233.7
\n
Provision for unearned premiums
76.4
87.6
\n
Total net insurance liabilities
299.5
321.3
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
(123.1)
(133.0)
\n
\u2013 Provision for unearned premiums
(44.6)
(50.7)
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
\n
Analysed as:
\n
Claims outstanding
100.0
100.7
\n
Provision for unearned premiums
31.8
36.9
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
Notes to the consolidated \ufb01nancial statements continued
\n
190
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
Reconciliation of movements in claims outstanding
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross claims outstanding at 1 February
292.8
329.5
\n
Less: reinsurance claims outstanding
(192.1)
(212.3)
\n
Net claims outstanding at 1 February
100.7
117.2
\n
Gross claims incurred
157.2
94.6
\n
Less: reinsurance recoveries
(99.1)
(63.3)
\n
Net claims incurred
58.1
31.3
\n
Gross claims paid
(164.8)
(131.3)
\n
Less: received from reinsurance
106.0
83.5
\n
Net claims paid
(58.8)
(47.8)
\n
Gross claims outstanding at 31 January
285.2
292.8
\n
Less: reinsurance claims outstanding
(185.2)
(192.1)
\n
Net claims outstanding at 31 January
100.0
100.7
\n
Reconciliation of movements in the provision for net unearned premiums
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross unearned premiums at 1 February
93.9
96.8
\n
Less: unearned reinsurance premiums
(57.0)
(62.3)
\n
Net unearned premiums at 1 February
36.9
34.5
\n
Gross premiums written
178.7
200.1
\n
Less: outward reinsurance premium
(105.6)
(118.5)
\n
Net premiums written
73.1
81.6
\n
Gross premiums earned
(189.5)
(203.0)
\n
Less reinsurance premium earned
111.3
123.8
\n
Net premiums earned
(78.2)
(79.2)
\n
Gross unearned premiums at 31 January
83.1
93.9
\n
Less: unearned reinsurance premiums
(51.3)
(57.0)
\n
Net unearned premiums at 31 January
31.8
36.9
\n
The net income of purchasing reinsurance in 2023 was \u00a322.4m (2022: \u00a37.7m cost).
\n
The insurance liabilities presented here, and on the face of the Group\u2019s statement of \ufb01nancial position, are based on an Ogden discount rate
\n
of \u20130.25%.
\n
a) Discounting
\n
Claims outstanding provisions are calculated on an undiscounted basis, with the exception of PPOs made by the courts as part of a bodily
\n
injury claim settlement. Claims outstanding provisions for PPOs are discounted at a rate of \u20131.5% (2022: \u20131.5%) representing the Group\u2019s
\n
view\u00a0on long-term carer wage in\ufb02ation, less the expected return on holding the invested \ufb01nancial assets associated with these claims.
\n
The value of claims outstanding before discounting was \u00a3342.8m (2022: \u00a3330.8m) gross of reinsurance and \u00a3116.2m (2022: \u00a3109.2m)
\n
net\u00a0of\u00a0reinsurance.
\n
The period between the statement of \ufb01nancial position date and the estimated \ufb01nal payment date was calculated using Ogden life expectancy
\n
tables, with appropriate adjustments where necessary for impaired life. The average life expectancy from PPO settlement date to the \ufb01nal
\n
PPO payment was 36 years (2022: 38 years) and the rate of investment return used to determine the discounted value of claims provisions
\n
was 2.0% (2022: 2.0%).
Saga plc
Annual Report and Accounts 2023
191
Strategic report
Financial statements
Additional information
Governance
\n
b) Analysis of claims incurred: claims development tables
\n
The following tables detail the Group\u2019s initial estimate of ultimate gross and net claims incurred over the past 10 years and the re-estimation
\n
at\u00a0subsequent \ufb01nancial period ends.
\n
The following table analyses the gross incurred claims (before deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Gross
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
238.4
(66.8)
(65.1)
(65.3)
(36.6)
(25.5)
(15.1)
(13.4)
(1.7)
(4.0)
n/a
n/a
45.6
\n
2015
231.6
12.9
(12.2)
(14.0)
(16.5)
(8.6)
(8.5)
(1.2)
(0.8)
182.7
(178.2)
4.5
\n
2016
250.0
2.2
(11.0)
(33.1)
(7.3)
(1.9)
(9.7)
0.2
189.4
(176.1)
13.3
\n
2017
204.2
(1.7)
(13.7)
(9.5)
(14.6)
(2.2)
(1.8)
160.7
(155.5)
5.2
\n
2018
196.9
5.4
(10.9)
(10.8)
(7.0)
(4.5)
169.1
(162.7)
6.4
\n
2019
185.4
4.5
(1.5)
(9.6)
(10.7)
168.1
(145.1)
23.0
\n
2020
182.4
9.1
(9.9)
(6.3)
175.3
(151.0)
24.3
\n
2021
142.9
(15.0)
(16.5)
111.4
(87.6)
23.8
\n
2022
136.6
19.4
156.0
(101.8)
54.2
\n
2023
166.4
166.4
(88.3)
78.1
\n
238.4
164.8
197.8
128.9
133.6
102.0
135.5
101.3
80.3
141.4
278.4
\n
Claims handling
\n
costs
\n
17.2
18.0
21.4
20.6
20.8
18.0
16.7
16.3
14.3
15.8
6.8
\n
255.6
182.8
219.2
149.5
154.4
120.0
152.2
117.6
94.6
157.2
285.2
\n
Favourable claims development over the year has resulted in a \u00a325.0m (2022: \u00a356.3m) reduction in the gross claims incurred in respect of
\n
prior years.
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
76%
72%
67%
63%
61%
58%
57%
56%
56%
56%
\n
2015
70%
73%
70%
66%
61%
58%
55%
55%
55%
\n
2016
77%
78%
75%
65%
62%
62%
59%
59%
\n
2017
70%
69%
65%
61%
56%
56%
55%
\n
2018
76%
78%
74%
70%
67%
65%
\n
2019
78%
80%
79%
75%
71%
\n
2020
78%
82%
78%
75%
\n
2021
64%
58%
50%
\n
2022
67%
77%
\n
2023
88%
Notes to the consolidated \ufb01nancial statements continued
\n
192
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
The following table analyses the net incurred claims (after deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Net
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
219.8
(57.8)
(72.8)
(53.9)
(35.3)
(28.1)
(13.0)
(11.1)
(2.3)
(4.7)
n/a
n/a
18.9
\n
2015
219.1
5.3
(9.2)
(11.1)
(16.4)
(5.0)
(7.9)
(1.0)
(0.8)
173.0
(168.5)
4.5
\n
2016
220.9
3.2
(15.1)
(22.5)
(9.1)
(5.8)
(4.6)
(1.7)
165.3
(161.2)
4.1
\n
2017
94.0
1.5
(3.8)
(1.9)
(3.6)
(0.5)
(1.8)
83.9
(78.7)
5.2
\n
2018
78.8
(0.8)
(1.6)
(2.7)
(1.7)
(4.4)
67.6
(61.2)
6.4
\n
2019
72.3
(0.2)
(0.1)
(2.0)
(9.6)
60.4
(42.7)
17.7
\n
2020
55.9
0.6
(1.4)
(0.2)
54.9
(48.8)
6.1
\n
2021
41.8
(4.9)
(2.0)
34.9
(29.6)
5.3
\n
2022
43.7
(1.8)
41.9
(35.7)
6.2
\n
2023
78.9
78.9
(60.1)
18.8
\n
219.8
161.3
153.4
34.1
18.8
0.7
25.1
11.2
25.3
51.9
93.2
\n
Claims handling
\n
costs
\n
17.2
18.0
21.5
11.5
10.5
8.9
5.7
7.0
6.0
6.2
6.8
\n
237.0
179.3
174.9
45.6
29.3
9.6
30.8
18.2
31.3
58.1
100.0
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
75%
71%
65%
62%
59%
56%
55%
54%
54%
54%
\n
2015
67%
69%
66%
63%
58%
56%
54%
53%
53%
\n
2016
70%
71%
66%
59%
56%
54%
53%
52%
\n
2017
56%
56%
54%
53%
51%
51%
50%
\n
2018
66%
65%
64%
62%
60%
56%
\n
2019
71%
71%
71%
69%
59%
\n
2020
63%
64%
62%
62%
\n
2021
53%
47%
44%
\n
2022
55%
53%
\n
2023
101%
\n
Favourable claims development over the year resulted in a \u00a327.0m (2022: \u00a318.4m) reduction in the net claims incurred in respect of prior years.
\n
29 Contract liabilities
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred revenue (Note 3b)
122.2
114.6
\n
122.2
114.6
\n
Current
119.6
113.0
\n
Non-current
2.6
1.6
\n
122.2
114.6
\n
Deferred revenue comprises amounts received within the Cruise and Travel segment for cruises and holidays with departure dates after
\n
the\u00a0reporting date, and insurance premiums and sales revenues received in the Insurance segment in respect of insurance policies which
\n
commence after the reporting date, and represents the performance obligations not yet satis\ufb01ed as at 31 January 2023.
Saga plc
Annual Report and Accounts 2023
193
Strategic report
Financial statements
Additional information
Governance
\n
30 Loans and borrowings
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Bonds
400.0
400.0
\n
Ship loans
469.2
515.6
\n
Revolving credit facility
\u2013
\u2013
\n
Accrued interest payable
5.5
5.9
\n
874.7
921.5
\n
Less: deferred issue costs
(20.1)
(25.0)
\n
854.6
896.5
\n
Bonds, RCF and term loan
\n
At 31 January 2023, the Group\u2019s \ufb01nancing facilities consisted of a \u00a3150.0m seven-year senior unsecured bond (repayable May 2024),
\n
a\u00a0\u00a3250.0m \ufb01ve-year senior unsecured bond (repayable July 2026) and a \u00a350.0m \ufb01ve-year RCF (expiry in May 2025). The bonds are listed
\n
on\u00a0the Irish Stock Exchange and are guaranteed by Saga Services Limited and Saga Mid Co Limited.
\n
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026 corporate bond is incurred at an
\n
annual interest rate of 5.5%. Interest payable on the Group\u2019s RCF, if drawn down, is incurred at a variable rate of SONIA plus a bank margin
\n
which is linked to the Group\u2019s leverage ratio.
\n
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF arrangement to remove certain
\n
clauses that were introduced during the COVID-19 pandemic and reduce the aggregate facility cost. The amendments to the RCF include:
\n
\u2022
removal of the \u00a340.0m minimum liquidity requirement;
\n
\u2022
removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024 bond has not been redeemed prior to
\n
this date; and
\n
\u2022
reduction of the RCF commitment from \u00a3100.0m to \u00a350.0m.
\n
In addition, dividends remain restricted while leverage (excluding Cruise) is above 3.0x.
\n
Subsequent to the above, the Group had further discussions with its lending banks behind the RCF and agreed the following amendments to
\n
the facility:
\n
\u2022
The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment of the 2024 bond if leverage exceeds
\n
5.5x, or liquidity is below \u00a3170m.
\n
\u2022
During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
\n
\u2022
Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
\n
\u2022
Amendments to the leverage and interest cover covenants attached to the facility, as follows:
\n
Leverage
\n
(excl. Ocean Cruise)
\n
Interest
\n
cover
\n
31 January 2023
4.75x
2.5x
\n
30 April 2023
6.75x
n/a
\n
31 July 2023
6.75x
2.5x
\n
31 October 2023
6.75x
n/a
\n
31 January 2024
5.5x
2.75x
\n
30 April 2024
5.5x
n/a
\n
31 July 2024
5.5x
3.0x
\n
31 October 2024
5.5x
n/a
\n
31 January 2025
4.75x
3.0x
\n
At 31 January 2023, the Group\u2019s \u00a350.0m RCF remained undrawn. Accrued interest payable on the Group\u2019s bonds at 31 January 2023 is
\n
\u00a32.2m (2022: \u00a32.8m).
\n
During the year ended 31 January 2022, the Group repaid its \u00a3200.0m \ufb01ve-year term loan (repayable May 2023) in full. Interest was incurred
\n
at a variable rate of London Inter-Bank O\ufb00ered Rate (LIBOR, since replaced by SONIA) plus a bank margin which was linked to the Group\u2019s
\n
leverage ratio.
Notes to the consolidated \ufb01nancial statements continued
\n
194
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
30 Loans and borrowings
continued
\n
Ocean cruise ship loans
\n
In June 2019, the Group drew down \u00a3245.0m of \ufb01nancing for its ocean cruise ship, Spirit of Discovery. The \ufb01nancing represents a 12-year
\n
\ufb01xed-rate sterling loan, secured against the Spirit of Discovery cruise ship asset, and backed by an export credit guarantee. The initial loan was
\n
repayable in 24 broadly equal instalments, with the \ufb01rst payment of \u00a310.2m paid in December 2019.
\n
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the Group\u2019s ship facilities. The Group\u2019s
\n
lenders agreed to a deferral of \u00a332.1m in principal payments under the ship facilities that were due up to 31 March 2021. These deferred
\n
amounts were to be paid between June 2021 and December 2024 for Spirit of Discovery and between September 2021 and March 2025
\n
for\u00a0Spirit of Adventure, and interest remained payable.
\n
On 29 September 2020, the Group drew down \u00a3280.8m of \ufb01nancing for its ocean cruise ship, Spirit of Adventure. The \ufb01nancing, secured
\n
against the Spirit of Adventure cruise ship asset, represents a 12-year \ufb01xed-rate sterling loan, backed by an export credit guarantee. The loan
\n
is repayable in 24 broadly equal instalments, with the \ufb01rst payment originally due six months after delivery in March 2021, but initially deferred
\n
to September 2021 as a result of the debt holiday described above.
\n
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise ship facilities. As part of an
\n
industry-wide package of measures to support the cruise industry, an extension of the existing debt deferral was agreed to 31 March 2022.
\n
The key terms of this deferral were:
\n
\u2022
all principal payments to 31 March 2022 (\u00a351.8m) deferred and repaid over five years;
\n
\u2022
all financial covenants until 31 March 2022 waived; and
\n
\u2022
dividends remain restricted while the deferred principal is outstanding.
\n
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 41). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Interest on the Spirit of Discovery ship loan is incurred at an e\ufb00ective annual interest rate of 4.31% (including arrangement and commitment
\n
fees). Interest on the Spirit of Adventure ship loan is incurred at an e\ufb00ective annual interest rate of 3.30% (including arrangement and
\n
commitment fees). Interest payable on the Group\u2019s ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
\n
Accrued interest payable on the Group\u2019s ocean cruise ship loans at 31 January 2023 is \u00a33.3m (2022: \u00a33.1m).
\n
Also since the year end, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga plc,
\n
Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of the
\n
loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is subject
\n
to\u00a0a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the facility
\n
is\u00a0payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024 and
\n
31\u00a0December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
\n
Total debt and finance costs
\n
At 31 January 2023, debt issue costs were \u00a320.1m (2022: \u00a325.0m). The movement in the year represents expense amortisation for
\n
the period.
\n
During the year, the Group charged \u00a341.0m (2022: \u00a337.4m) to the income statement in respect of fees and interest associated with the
\n
bonds, RCF, term loan and ship loans. In addition, \ufb01nance costs recognised in the income statement include \u00a31.2m (2022: \u00a30.7m) relating to
\n
interest and \ufb01nance charges on lease liabilities and net fair value losses on derivatives are \u00a3nil (2022: \u00a32.7m). The Group has complied with the
\n
\ufb01nancial covenants of its borrowing facilities during the current year and prior year.
Saga plc
Annual Report and Accounts 2023
195
Strategic report
Financial statements
Additional information
Governance
\n
31 Provisions
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
At 1 February 2021
4.9
6.8
11.7
\n
Utilised during the year
(4.8)
(8.5)
(13.3)
\n
Released unutilised during the year
\u2013
(0.4)
(0.4)
\n
Charge for the year
0.7
8.0
8.7
\n
At 31 January 2022
0.8
5.9
6.7
\n
Utilised during the year
(0.8)
(4.2)
(5.0)
\n
Released unutilised during the year
\u2013
(0.6)
(0.6)
\n
Charge for the year
\u2013
4.1
4.1
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
\u2013
4.4
4.4
\n
Non-current
\u2013
0.8
0.8
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
0.8
5.6
6.4
\n
Non-current
\u2013
0.3
0.3
\n
At 31 January 2022
0.8
5.9
6.7
\n
The COVID-19 pandemic led to a high level of disruption to private medical inpatient appointments over 2020 and 2021, with appointments
\n
and operations initially being delayed and rescheduled. In the year ended 31 January 2021, delayed appointments had a favourable impact on
\n
the underwriting performance of PMI, resulting in a pro\ufb01t share due from the underwriter. Due to the Group\u2019s public commitment to not pro\ufb01t
\n
from the impacts of COVID-19, a provision to o\ufb00set this pro\ufb01t share was made.
\n
Other provisions primarily comprise:
\n
\u2022
provisions for the return of insurance commission in respect of policies cancelled mid-term after the reporting date or as a result of being
\n
cancelled during the statutory cooling-off period after the reporting date;
\n
\u2022
credit hire and repair claims handling and litigation costs on income booked as at the reporting date;
\n
\u2022
fleet insurance at the estimated cost of settling all outstanding incidents at the reporting date;
\n
\u2022
customer remediation relating to areas where there is likely to be a requirement to remedy various errors that have had an adverse
\n
impact on customer outcomes; and
\n
\u2022
an employer liability provision relating to various Group-related, self-funded insurance arrangements.
\n
All provisions are expected to be fully utilised over the next 12 months with the exception of the \ufb02eet insurance, credit hire and repair claims
\n
handling and litigation costs, and employer liability provisions. The timing of \ufb02eet insurance costs is uncertain and will depend upon the nature
\n
of each incident. The costs of debt recovery on credit hire and repair claims handling and litigation costs are uncertain and will depend upon
\n
the nature and timing of each claim. The settlement cash out\ufb02ows from the employer liability provision depend on the timing of the settlement
\n
of claims.
\n
These items are reviewed and updated annually.
Notes to the consolidated \ufb01nancial statements continued
\n
196
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
32 Reconciliation of liabilities arising from financing activities
\n
The following tables analyse the cash and non-cash movements for liabilities arising from \ufb01nancing activities:
\n
Non-cash changes
\n
2022
\n
\u00a3m
\n
Financing
\n
cash flows
\n
\u00a3m
\n
New leases
\n
(Note 18)
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Lease liabilities (Note 37)
35.3
(7.8)
25.6
(20.5)
32.6
\n
Ship loans (Note 30)
515.6
(46.4)
\u2013
\u2013
469.2
\n
Bonds (Note 30)
400.0
\u2013
\u2013
\u2013
400.0
\n
Deferred issue costs (Note 30)
(25.0)
\u2013
\u2013
4.9
(20.1)
\n
Non-cash changes
\n
2021
\n
\u00a3m
\n
Financing
\n
cash flows
\n
\u00a3m
\n
New leases
\n
(Note 18)
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Lease liabilities (Note 37)
4.4
(3.6)
35.8
(1.3)
35.3
\n
Bank loans (Note 30)
70.0
(70.0)
\u2013
\u2013
\u2013
\n
Ship loans (Note 30)
515.6
\u2013
\u2013
\u2013
515.6
\n
Bonds (Note 30)
250.0
150.0
\u2013
\u2013
400.0
\n
Deferred issue costs (Note 30)
(26.8)
(6.8)
\u2013
8.6
(25.0)
\n
Included within \u2018Other\u2019 for lease liabilities are amounts relating to foreign exchange movements of \u00a32.0m credit (2022: \u00a30.9m debit), lease
\n
modi\ufb01cations of \u00a3nil (2022: \u00a30.4m debit) and lease re-assessments of \u00a322.5m debit (2022: \u00a3nil) (Note 18).
\n
Included within \u2018Other\u2019 for deferred issue costs is the amortisation of costs of \u00a34.9m (2022: \u00a38.6m).
\n
In the prior year, cash \ufb02ows relating to bonds comprise proceeds from borrowings of \u00a3250.0m, relating to a new \ufb01ve-year senior unsecured
\n
bond, less repayment of borrowings of \u00a3100.0m, relating to the existing seven-year senior unsecured 2024 bond.
\n
Accrued interest payable on the loans and bonds above is disclosed in Note 30. Interest paid during the year is included within operating
\n
activities in the consolidated statement of cash \ufb02ows.
\n
33 Called up share capital
\n
Ordinary shares
\n
Number
\n
Nominal
\n
value
\n
\u00a3
\n
Value
\n
\u00a3m
\n
Allotted, called up and fully paid
\n
At 1 February 2021
140,102,227
0.15
21.0
\n
Issue of shares \u2013 12 November 2021
235,044
0.15
0.1
\n
At 31 January 2022 and 31 January 2023
140,337,271
0.15
21.1
\n
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of \u00a30.1m, for transfer into an Employee Bene\ufb01t
\n
Trust to satisfy employee incentive arrangements.
\n
34 Reserves
\n
Share-based payment reserve
\n
Prior to vesting, the share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
\n
employees, including key management personnel, as part of their remuneration. More detail is provided in Note 36.
\n
Fair value reserve
\n
The fair value reserve comprises the unrealised gains or losses of FVOCI assets pending subsequent recognition in pro\ufb01t or loss once the
\n
investment is derecognised.
\n
Hedging reserve
\n
The hedging reserve comprises the e\ufb00ective portion of the cumulative net change in the fair value of hedging instruments used in cash \ufb02ow
\n
hedges pending subsequent recognition in: (a) pro\ufb01t or loss as the hedged cash \ufb02ows or items a\ufb00ect pro\ufb01t or loss; or (b) the statement of
\n
\ufb01nancial position as the hedged cash \ufb02ows or items a\ufb00ect property, plant and equipment.
Saga plc
Annual Report and Accounts 2023
197
Strategic report
Financial statements
Additional information
Governance
\n
35 Capital management
\n
The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns
\n
for shareholders and bene\ufb01ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
\n
For the purposes of the Group\u2019s capital management, capital comprises total equity of \u00a3369.5m (2022: \u00a3652.9m) as shown on the
\n
consolidated statement of \ufb01nancial position. The Group operates in a number of regulated markets and includes subsidiaries which are
\n
required to comply with speci\ufb01c requirements in respect of capital or other resources.
\n
The Group\u2019s \ufb01nancial services businesses are regulated primarily by the Financial Services Commission in Gibraltar and by the FCA in\u00a0the UK;
\n
and the cash requirements of its River Cruise and Travel businesses are regulated by the CAA in the UK. It is the Group\u2019s policy to comply with
\n
the requirements of these regulators in respect of capital adequacy or other similar tests at all times.
\n
The Group\u2019s regulated Underwriting business is based in Gibraltar and regulated by the FSC. The Underwriting business is required to ensure
\n
that it has a su\ufb03cient level of capitalisation in accordance with Solvency II.
\n
The Group and its subsidiaries have complied with externally-imposed capital requirements during the year. (The amounts set out in the
\n
following three paragraphs are provisional and unaudited).
\n
The Group monitored its ability to comply with the requirements of Solvency II throughout the year to 31 January 2023, having previously
\n
received approval from the FSC for the Undertaking of Speci\ufb01c Parameters when applying the standard formula to measure capital
\n
requirements for this business under Solvency II rules. Under Solvency II, AICL remained well capitalised, and at 31 January 2023 available
\n
capital was \u00a398.4m against a Solvency Capital Requirement of \u00a345.6m, giving 216% coverage. As at 31 January 2022, available capital was
\n
\u00a3115.1m against a Solvency Capital Requirement of \u00a354.1m, giving 213% coverage.
\n
The Group\u2019s regulated Insurance Broking business is based in the UK and regulated by the FCA. Due to the nature of the business, the capital
\n
requirements are signi\ufb01cantly less than for the Underwriting business, but the Group is required to comply with the Adequate Resources
\n
requirements of Threshold Condition 2.4 of the FCA Handbook. The Group undertakes a rigorous assessment against the requirements of
\n
this Condition on an annual basis and, as a consequence, calculates and holds an appropriate amount of capital in respect of the Insurance
\n
Broking business. The Minimum Regulatory Capital requirement of this business at 31 January 2023 was \u00a35.7m (2022: \u00a311.7m).
\n
The regulated River Cruise and Travel businesses are required to comply with a main test based on liquidity. The CAA liquidity test is a
\n
requirement to hold at least 70% of advanced customer receipts in cash on the last day of each month. The Group monitors its compliance
\n
with this test on a monthly basis including forward-looking compliance using budgets and forecasts. As at 31 January 2023 and 31 January
\n
2022, the businesses had su\ufb03cient coverage against this covenant.
\n
36 Share-based payments
\n
The Group has granted a number of di\ufb00erent equity-based awards to employees and customers which it has determined to be
\n
share-based payments:
\n
a. Share options and Free Shares offer granted at the time of the IPO
\n
\u2022
On 29 May 2014, nil cost options over 13,132,410 shares were granted to certain Directors and employees with no exercise price and
\n
no\u00a0service or performance vesting conditions. There are no cash settlement alternatives.
\n
\u2022
Eligible customers and employees who acquired their shares under the Customer or Employee Offers in the Prospectus received one
\n
bonus share for every 20 shares they acquired and held continuously for one year to 29 May 2015. As these were bonus shares, there
\n
was\u00a0no exercise price and no cash settlement alternative.
\n
b. Saga Transformation Plan (
STP
)
\n
\u2022
In July 2022, the Board and shareholders approved the issue of an additional new award called the STP. The\u00a0STP has a five-year vesting
\n
period and participants receive a 12.5% share in shareholder value (share price plus dividends) created above a \u00a36 per share hurdle over
\n
a five-year performance period commencing from the grant date, subject to continuing employment. For Directors and senior leaders,
\n
the STP will be equity-settled. For other employees, the STP will be settled in cash. There is a cap of \u00a388.0m on the value of awards that
\n
may vest, and the awards have a range of grant dates based on the tranche that each participant falls\u00a0into.
\n
\u2022
On 5 July 2022, nil cost options were issued under the STP to certain Directors and other senior employees which vest and become
\n
exercisable on the fifth anniversary of the grant date, subject to continuing employment.
\n
c. Restricted Share Plan (
RSP
)
\n
\u2022
The RSP is a discretionary executive share plan under which the Board may grant options over shares in Saga plc.
\n
\u2022
During the year, nil cost options over 2,548,775 shares were issued under the RSP to certain Directors and other senior employees
\n
which\u00a0vest and become exercisable on the third anniversary of the grant date, subject to continuing employment.
Notes to the consolidated \ufb01nancial statements continued
\n
198
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
36 Share-based payments
continued
\n
d. Long-term Incentive Plan (
LTIP
)
\n
\u2022
The LTIP is a legacy discretionary executive share plan under which the Board may, within certain limits and subject to applicable
\n
performance conditions, grant options over shares in Saga plc.
\n
\u2022
Up to 31 January 2017, these options are 50% linked to a non-market vesting condition, earnings per share, and 50% linked to a market
\n
vesting condition, total shareholder return (
TSR
).
\n
\u2022
From 1 February 2017 to 31 January 2018, these options were 60% linked to non-market vesting conditions (30% linked to basic earnings
\n
per share and 30% linked to organic earnings per share) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2018, these options were 60% linked to non-market vesting conditions (30% linked to organic earnings per share and
\n
30% linked to return on capital employed (
ROCE
)) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2019, these options are 75% linked to non-market vesting conditions (50% linked to operational and strategic measures
\n
and 25% linked to ROCE) and 25% linked to a market vesting condition, TSR.
\n
e. Deferred Bonus Plan (
DBP
)
\n
\u2022
On 28 April 2022, nil cost options over 345,353 shares were issued under the DBP to the Executive Directors reflecting their deferred
\n
bonus in respect of 2021/22, which vest and become exercisable on the third anniversary of the grant date. Under the DBP scheme,
\n
executives receive two-thirds of the bonus award in cash and one-third in the form of rights to shares of the Company.
\n
f. Employee Free Shares
\n
\u2022
There were no shares awarded during the year. Employee Free Shares are allocated at nil cost and the shares become beneficially owned
\n
over a three-year period from allocation, subject to continuing service.
\n
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
\n
on\u00a0receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date
\n
of\u00a0vesting to the date of their expiry. With the exception of share options granted at the time of the IPO, if an employee ceases to be employed
\n
by the Group, the option rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
\n
The table below summarises the movements in the number of share options outstanding for the Group and their weighted average
\n
exercise\u00a0price:
\n
IPO options
RSP
LTIP
DBP
STP
\n
Employee
\n
Free
\n
Shares
Total
\n
At 1 February 2022
8,437
1,362,338
618,203
365,502
\u2013
560,566
2,915,046
\n
Granted
\u2013
2,548,775
\u2013
345,353
\u2013
\u2013
2,894,128
\n
Forfeited
\u2013
(59,184)
(545,236)
\u2013
\u2013
(28,065)
(632,485)
\n
Exercised
(1,117)
\u2013
(9,402)
\u2013
\u2013
(40,453)
(50,972)
\n
At 31 January 2023
7,320
3,851,929
63,565
710,855
\u2013
492,048
5,125,717
\n
Exercise price
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\n
Exercisable at 31 January 2023
7,320
\u2013
63,565
33,094
\u2013
114,464
218,443
\n
Average remaining contractual life
\u2013
1.9 years
\u2013
1.5 years
4.4 years
1.0 years
1.7 years
\n
Average fair value at grant
\u00a327.75
\u00a32.11
\u00a39.84
\u00a33.26
n/a
\u00a35.80
\u00a32.75
\n
The average fair values at grant date have been restated to re\ufb02ect the impact of the share consolidation on 13 October 2020.
\n
The weighted average share price at the date of exercise for share options exercised during the year ended 31 January 2023 was \u00a31.48
\n
(2022:\u00a0\u00a33.85).
\n
The following information is relevant in the determination of the fair value of options granted during the year under the equity-settled and
\n
cash-settled share-based remuneration schemes operated by the Group.
\n
RSP
DBP
\n
Model used
Black-Scholes
Black-Scholes
\n
Expected life of share option
3 years
3 years
\n
Weighted average share price
\u00a31.55
\u00a32.43
Saga plc
Annual Report and Accounts 2023
199
Strategic report
Financial statements
Additional information
Governance
\n
As at 31 January 2023, the Group did not hold any liability in relation to cash-settled share-based remuneration that had vested by the end
\n
of\u00a0the year.
\n
As only limited historical data for the Group\u2019s share price is available, the Group estimated the Company\u2019s share price volatility as an average
\n
of\u00a0the volatilities of its TSR comparator group over a historical period commensurate with the expected life of the award immediately prior
\n
to\u00a0the date of the grant for awards under the RSP, DBP and Employee Free Share scheme.
\n
For awards under the new STP scheme, approved in July 2022, a volatility assumption of 31% has been employed, calculated based on volatility
\n
in Saga plc\u2019s historical share price in the \ufb01ve years to 31 December 2019. This time period was selected to strip out the impact of the COVID-19
\n
pandemic, which has had a signi\ufb01cant impact on Saga\u2019s business since the beginning of 2020. The impacts on the share price of pro\ufb01t warnings
\n
in December 2019 and April 2019 have also been excluded from the calculation.
\n
The total amount charged to the income statement in the year ended 31 January 2023 is \u00a33.9m (2022: \u00a33.4m). This has been charged to
\n
administrative and selling expenses.
\n
The Group did not enter into any share-based payment transactions with parties other than employees during the current period.
\n
37 Commitments and contingencies
\n
a) Lease commitments
\n
The Group leases various river cruise ships, o\ufb03ces, warehouses, equipment and vehicles. The contract lengths of the leases vary considerably
\n
and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered in a contract, lease
\n
payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum lease payments under
\n
lease contracts, together with the present values of the net minimum lease payments, are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Within one year
11.5
5.4
\n
Between one and five years
15.4
19.5
\n
After five years
11.1
18.0
\n
Total minimum lease payments
38.0
42.9
\n
Less amounts representing finance charges
(5.4)
(7.6)
\n
Present value of minimum lease payments
32.6
35.3
\n
As at 31 January 2023, the value of lease liabilities contracted for, but not provided for, in the \ufb01nancial statements in respect of right-of-use
\n
assets amounted to \u00a3nil (2022: \u00a342.5m). At 31 January 2022, these lease commitments related to the river cruise vessel, Spirit of the Danube
\n
which has been recognised within right-of-use assets (Note 18) during the year to 31 January 2023.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer to Note 18 for
\n
further detail.
\n
b) Commitments
\n
As at 31 January 2023, the capital amount contracted for, but not provided for, in the \ufb01nancial statements in respect of property, plant and
\n
equipment, amounted to \u00a3nil (2022: \u00a3nil).
\n
c) Contingent liabilities
\n
The CAA and ABTA regulate the Group\u2019s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
\n
customer protection. At 31 January 2023, the Group had \u00a328.4m (2022: \u00a319.4m) of Ocean Cruise and Travel related bonds in place.
Notes to the consolidated \ufb01nancial statements continued
\n
200
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
38 Assets held for sale
\n
At the end of the year ended 31 January 2021, the Group made the decision to initiate an active programme to locate buyers for a number of
\n
its freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a316.9m were considered to be equal to, or below,
\n
fair value less costs to sell and hence no revaluation at the point of reclassi\ufb01cation was required.
\n
During the year ended 31 January 2022, the Group disposed of a property reclassi\ufb01ed from property, plant and equipment to held for sale in
\n
the period. Cash consideration received (net of transaction costs) was \u00a310.2m and the carrying value of the property at the date of disposal
\n
was \u00a33.0m. Pro\ufb01t arising on disposal was \u00a37.2m.
\n
In addition, during the year ended 31 January 2022, the Group declassi\ufb01ed one of the properties from held for sale back to property, plant and
\n
equipment, since it was no longer being actively marketed for disposal. The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
Management conducted impairment reviews of the freehold property assets held for sale as at 31 January 2022 and 31 January 2023.
\n
In\u00a0relation to these freehold properties, value-in-use continued to be negligible and so the Group obtained updated market valuations to
\n
determine the fair value of each building. The outcome of these impairment reviews concluded that net impairment charges totalling \u00a31.2m
\n
(2022: \u00a31.0m) should be recognised against the Group\u2019s property assets held for sale as at 31 January 2023 and 31 January 2022
\n
respectively.
\n
At the end of the year ended 31 January 2023, the Group made the decision to initiate an active programme to locate buyers for a further two
\n
of its freehold properties and one of its long leasehold properties. The Group also reclassi\ufb01ed to held for sale the related \ufb01xtures and \ufb01ttings
\n
associated with one of these freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a315.9m for the
\n
properties and \u00a33.6m for the related \ufb01xtures and \ufb01ttings, total \u00a319.5m, were considered to be equal to, or below, fair value less costs to sell
\n
and hence no revaluation at the point of reclassi\ufb01cation was required. These properties are being actively marketed and the disposals are
\n
expected to be completed within 12 months of the end of the \ufb01nancial year.
\n
As at 31 January 2023, the carrying values of the properties classi\ufb01ed as held for sale, totalling \u00a331.2m, are representative of either each
\n
property\u2019s fair value or historic cost less accumulated depreciation and any impairment charges to date, whichever is lower.
Saga plc
Annual Report and Accounts 2023
201
Strategic report
Financial statements
Additional information
Governance
\n
39 Subsidiaries
\n
The entities listed below are subsidiaries of the Company or Group. All of the undertakings are wholly owned and included within the
\n
consolidated \ufb01nancial statements. The registered o\ufb03ce address for all entities registered in England is Enbrook Park, Sandgate, Folkestone,
\n
Kent CT20 3SE, United Kingdom. The registered o\ufb03ce address of Acromas Insurance Company Limited is 57/63 Line Wall Road, Gibraltar.
\n
The registered o\ufb03ce address of Saga Cruises GmbH is Industriegebiet S\u00fcd, 26871, Papenburg, Niedersachsen, Germany. The registered
\n
o\ufb03ce address of Sa\ufb00ron Maritime Limited is Aspire Corporate Services Limited, PO Box 191, Elizabeth House, Ruettes Brayes, St Peter Port,
\n
Guernsey, GY1 4HW.
\n
Company name
Country of registration
Nature of business
\n
Saga Personal Finance Limited
England
Delivery of regulated investment products
\n
Saga Services Limited
England
Regulated Insurance broking
\n
Acromas Insurance Company Limited
Gibraltar
Insurance underwriting
\n
CHMC Limited
\n
9
\n
England
Motor accident management
\n
PEC Services Limited
\n
9
\n
England
Repairer of automotive vehicles
\n
ST&H Limited
England
Tour operating
\n
Titan Transport (UK) Limited
England
Dormant company
\n
Saga Travel Group (UK) Limited (formerly Titan Travel (UK) Limited)
England
Tour operating
\n
Saga Travel Group Limited (formerly Titan Travel Group Limited)
England
Tour operating
\n
Titan Transport Limited
England
Tour operating
\n
Saga Cruises Limited
England
Cruising
\n
Saga Cruises IV Limited
England
Cruising
\n
Saga Cruises V Limited
England
Cruising
\n
Saga Cruises VI Limited
England
Cruising
\n
Saga Cruises GmbH
Germany
Cruising
\n
Saga Crewing Services Limited
\n
9
\n
England
Cruising
\n
Saffron Maritime Limited
Guernsey
Cruising
\n
CustomerKNECT Limited
\n
9
\n
(formerly MetroMail Limited)
England
Mailing house
\n
Saga Mid Co Limited
England
Debt service provider
\n
Saga Publishing Limited
\n
9
\n
England
Publishing
\n
Saga Membership Limited
\n
9
\n
England
Customer loyalty scheme
\n
The Big Window Consulting Limited
\n
9
\n
England
Research and insight analysis
\n
CHMC Holdings Limited
England
Dormant holding company
\n
ST&H Group Limited
England
Holding company
\n
Saga Leisure Limited
England
Dormant holding company
\n
Saga Group Limited
England
Provision of administrative function
\n
for\u00a0central costs
\n
Confident Services Limited
England
Dormant company
\n
Saga Healthcare Limited
England
Dormant company
\n
Saga Radio (North West) Limited
England
Dormant company
\n
9
These subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 31 January 2023. As required,
\n
Saga plc, the ultimate parent undertaking and controlling party of the Group, guarantees all outstanding liabilities to which these subsidiary companies are subject at
\n
the end of the financial year, until they are satisfied in full. This is in accordance with Section 479C of the Companies Act 2006. The guarantee is enforceable against
\n
Saga plc as the ultimate parent undertaking, by any person to whom the subsidiary companies listed above are liable in respect of those liabilities.
Notes to the consolidated \ufb01nancial statements continued
\n
202
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
40 Related party transactions
\n
There were no related party transactions in the year ended 31 January 2023.
\n
A working capital facility of \u00a310.0m, agreed with Sir Roger De Haan, the Non-Executive Chairman of Saga plc, to fund the short-term liquidity
\n
needs of the Cruise business was cancelled in July 2021.
\n
As set out in Note 30, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga
\n
plc, Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of
\n
the loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is
\n
subject to a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the
\n
facility is payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024
\n
and 31 December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
\n
41 Events after the reporting period
\n
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 30). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Also since 31 January, the Company has agreed a \u00a350m loan facility with Sir Roger De Haan, to commence on 1 January 2024, details of which
\nare set out in Note 40 above.", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19854": { "value": "1 Corporate Information
Saga plc (the
Company
) is a public limited company incorporated
\n
and\u00a0domiciled in the United Kingdom under the Companies Act 2006
\n
(registration number 08804263). The Company is registered in
\n
England and its registered o\ufb03ce is located at Enbrook Park,
\n
Folkestone, Kent CT20 3SE.
\n
Saga o\ufb00ers a wide range of products and services to its customer
\n
base, which includes package and cruise holidays, general insurance
\n
products, personal \ufb01nance products and a range of media content
\nincluding a monthly subscription magazine. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19857": { "value": "Saga plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19858": { "value": "Saga plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19859": { "value": "Saga plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19862": { "value": "public limited company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19864": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19865": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19868": { "value": "England", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19869": { "value": "Enbrook Park, Folkestone, Kent CT20 3SE.", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19873": { "value": "Saga o\ufb00ers a wide range of products and services to its customer
base, which includes package and cruise holidays, general insurance
\n
products, personal \ufb01nance products and a range of media content
including a monthly subscription magazine.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19881": { "value": "2.1 Basis of preparation
The consolidated \ufb01nancial statements of the Group have been
\n
prepared in accordance with UK-adopted international
\n
accounting\u00a0standards.
\n
The consolidated \ufb01nancial statements have been prepared on a
\n
going\u00a0concern basis and on a historical cost basis except as otherwise
\n
stated. The Group has reviewed the appropriateness of the going
\n
concern basis in preparing the \ufb01nancial statements, details of which
\n
are included below. Based on those assumptions, the Directors have
\n
concluded that it remains appropriate to adopt the going concern
\n
basis in preparing the \ufb01nancial statements.
\n
The Group\u2019s consolidated \ufb01nancial statements are presented in
\n
pounds sterling, which is also the parent company\u2019s functional
\n
currency, and all values are rounded to the nearest hundred thousand
\n
(\u00a3m), except when otherwise indicated. Each company in the Group
\n
determines its own functional currency and items included in the
\n
\ufb01nancial statements of each entity are measured using that
\n
functional\u00a0currency.
\n
The preparation of \ufb01nancial statements in compliance with
\n
UK-adopted international accounting standards requires the use
\n
of\u00a0certain critical accounting estimates. It also requires Group
\n
management to exercise judgement in applying the Group\u2019s
\n
accounting policies. The areas where signi\ufb01cant judgements and
\n
estimates have been made in preparing the \ufb01nancial statements
\n
and\u00a0their e\ufb00ect are disclosed in Note 2.6.
\n
The principal accounting policies adopted, which have been applied
\n
consistently, unless otherwise stated, are set out in Note 2.3 below.
\n
Going concern
\n
The Directors have performed an assessment of going concern
\n
to\u00a0determine the adequacy of the Group and Company\u2019s \ufb01nancial
\n
resources over a period of 14 months from the date of signing these
\n
\ufb01nancial statements, a period which includes the maturity of \u00a3150m
\n
of senior bonds in May 2024.
\n
This assessment is based on higher and lower case \ufb01nancial
\n
projections which incorporate scenario analysis and stress tests
\n
on\u00a0expected business performance.
\n
The Group\u2019s higher case modelling assumes good performance in
\n
the\u00a0Cruise division in 2023/24, on the back of strong booked load
\n
factors and per diems. Travel is also expected to achieve continued
\n
growth in\u00a0revenues with encouraging bookings for 2023/24 as at
\n
the\u00a0end of March 2023. As previously indicated, the outlook for
\n
Insurance is likely to be challenging over the next 12 to 18 months,
\n
with\u00a0high cost\u00a0and claims in\ufb02ation in a competitive market expected
\n
to\u00a0squeeze\u00a0margins.
\n
2
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
\n
The Group\u2019s lower case scenario incorporates lower load factors
\n
for\u00a0Ocean Cruise, lower levels of demand in River Cruise, and slower
\n
growth in the Travel business across the going concern period.
\n
Downside risks modelled for the Insurance business include the
\n
impact of worsening competitive market pressures on the Insurance
\n
Broking business, continued high cost and claims in\ufb02ation putting
\n
pressure on margins, among other stress tests. These stresses are
\n
partially o\ufb00set by discretionary cost savings and the deferral of
\n
investment expenditure that would be achieved in the event of
\n
downside trading risks materialising.
\n
To increase liquidity and consistent also with a strategy of reducing
\n
capital intensity, in the autumn of 2022, the Group commenced a sale
\n
process for its Underwriting business, Acromas Insurance Company
\n
Limited (
AICL
). The Group aims for this sale process to be concluded
\n
in the second half of 2023.
\n
However, given that there is no certainty that a sale of AICL will be
\n
concluded in the next 14 months, the Group has agreed a loan facility
\n
with Sir Roger De Haan. Under the terms of this facility, if the sale of
\n
AICL is not completed prior to the end of 2023, the Group will, from
\n
1\u00a0January 2024, be able to borrow up to \u00a350m to fund any liquidity
\n
needs, including repayment of the 2024 bonds. This facility is
\n
unsecured, on arms-length terms and can be drawn at the option of
\n
the Group on 30 days\u2019 notice. The facility matures on 30 June 2025,
\n
at which point any outstanding amounts, including interest, must be
\n
repaid. Availability of funds under the facility is not contingent on
\n
\ufb01nancial performance or on compliance with any \ufb01nancial covenants.
\n
Under both higher and lower case scenarios the Group expects to
\n
meet scheduled Ocean Cruise debt principal repayments as they fall
\n
due over the next 14 months, and to also meet the \ufb01nancial covenants
\n
relating to its secured cruise debt facilities (see Note 30) throughout
\n
the assessment period, except for the July 2023 testing date where
\n
lenders have agreed to a waiver of the EBITDA to debt repayment
\n
covenant ratio (see Note 41).
\n
In addition, in both higher and lower case scenarios and incorporating
\n
either the expected net proceeds from a sale of the Insurance
\n
Underwriting business or a draw down of the \u00a350m loan facility with
\n
Sir Roger De Haan, the Group expects to have su\ufb03cient resources to
\n
continue operations for at least the next 14 months and to repay the
\n
\u00a3150m senior bonds on maturity in May 2024 from Available Cash
\n
2
\n
resources.
\n
Over the same timeframe and on the same basis, the Group also
\n
expects to remain within the renegotiated \ufb01nancial covenants and
\n
other terms relating to its \u00a350m revolving credit facility (
RCF
), as
\n
set\u00a0out in Note 30, enabling it to draw down on this currently undrawn
\n
facility in 2024/25 to meet short-term working capital requirements
\n
should the need arise.
\n
Noting that it is not possible to predict accurately all possible future
\n
risks to the Group\u2019s future trading, based on this analysis and the
\n
scenarios modelled, the Directors are con\ufb01dent that the Group will
\n
have su\ufb03cient funds to continue to meet its liabilities as they fall due
\n
for a period of at least 14 months from the date of approval of these
\n
\ufb01nancial statements. They have therefore deemed it appropriate
\n
to\u00a0prepare the \ufb01nancial statements to 31 January 2023 on a going
\nconcern basis.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19884": { "value": "The consolidated \ufb01nancial statements of the Group have been
prepared in accordance with UK-adopted international
\naccounting\u00a0standards.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19913": { "value": "Going concern
The Directors have performed an assessment of going concern
\n
to\u00a0determine the adequacy of the Group and Company\u2019s \ufb01nancial
\n
resources over a period of 14 months from the date of signing these
\n
\ufb01nancial statements, a period which includes the maturity of \u00a3150m
\n
of senior bonds in May 2024.
\n
This assessment is based on higher and lower case \ufb01nancial
\n
projections which incorporate scenario analysis and stress tests
\n
on\u00a0expected business performance.
\n
The Group\u2019s higher case modelling assumes good performance in
\n
the\u00a0Cruise division in 2023/24, on the back of strong booked load
\n
factors and per diems. Travel is also expected to achieve continued
\n
growth in\u00a0revenues with encouraging bookings for 2023/24 as at
\n
the\u00a0end of March 2023. As previously indicated, the outlook for
\n
Insurance is likely to be challenging over the next 12 to 18 months,
\n
with\u00a0high cost\u00a0and claims in\ufb02ation in a competitive market expected
\n
to\u00a0squeeze\u00a0margins.
\n
2
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
\n
The Group\u2019s lower case scenario incorporates lower load factors
\n
for\u00a0Ocean Cruise, lower levels of demand in River Cruise, and slower
\n
growth in the Travel business across the going concern period.
\n
Downside risks modelled for the Insurance business include the
\n
impact of worsening competitive market pressures on the Insurance
\n
Broking business, continued high cost and claims in\ufb02ation putting
\n
pressure on margins, among other stress tests. These stresses are
\n
partially o\ufb00set by discretionary cost savings and the deferral of
\n
investment expenditure that would be achieved in the event of
\n
downside trading risks materialising.
\n
To increase liquidity and consistent also with a strategy of reducing
\n
capital intensity, in the autumn of 2022, the Group commenced a sale
\n
process for its Underwriting business, Acromas Insurance Company
\n
Limited (
AICL
). The Group aims for this sale process to be concluded
\n
in the second half of 2023.
\n
However, given that there is no certainty that a sale of AICL will be
\n
concluded in the next 14 months, the Group has agreed a loan facility
\n
with Sir Roger De Haan. Under the terms of this facility, if the sale of
\n
AICL is not completed prior to the end of 2023, the Group will, from
\n
1\u00a0January 2024, be able to borrow up to \u00a350m to fund any liquidity
\n
needs, including repayment of the 2024 bonds. This facility is
\n
unsecured, on arms-length terms and can be drawn at the option of
\n
the Group on 30 days\u2019 notice. The facility matures on 30 June 2025,
\n
at which point any outstanding amounts, including interest, must be
\n
repaid. Availability of funds under the facility is not contingent on
\n
\ufb01nancial performance or on compliance with any \ufb01nancial covenants.
\n
Under both higher and lower case scenarios the Group expects to
\n
meet scheduled Ocean Cruise debt principal repayments as they fall
\n
due over the next 14 months, and to also meet the \ufb01nancial covenants
\n
relating to its secured cruise debt facilities (see Note 30) throughout
\n
the assessment period, except for the July 2023 testing date where
\n
lenders have agreed to a waiver of the EBITDA to debt repayment
\n
covenant ratio (see Note 41).
\n
In addition, in both higher and lower case scenarios and incorporating
\n
either the expected net proceeds from a sale of the Insurance
\n
Underwriting business or a draw down of the \u00a350m loan facility with
\n
Sir Roger De Haan, the Group expects to have su\ufb03cient resources to
\n
continue operations for at least the next 14 months and to repay the
\n
\u00a3150m senior bonds on maturity in May 2024 from Available Cash
\n
2
\n
resources.
\n
Over the same timeframe and on the same basis, the Group also
\n
expects to remain within the renegotiated \ufb01nancial covenants and
\n
other terms relating to its \u00a350m revolving credit facility (
RCF
), as
\n
set\u00a0out in Note 30, enabling it to draw down on this currently undrawn
\n
facility in 2024/25 to meet short-term working capital requirements
\n
should the need arise.
\n
Noting that it is not possible to predict accurately all possible future
\n
risks to the Group\u2019s future trading, based on this analysis and the
\n
scenarios modelled, the Directors are con\ufb01dent that the Group will
\n
have su\ufb03cient funds to continue to meet its liabilities as they fall due
\n
for a period of at least 14 months from the date of approval of these
\n
\ufb01nancial statements. They have therefore deemed it appropriate
\n
to\u00a0prepare the \ufb01nancial statements to 31 January 2023 on a going
concern basis.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f19916": { "value": "The Directors have performed an assessment of going concern
to\u00a0determine the adequacy of the Group and Company\u2019s \ufb01nancial
\n
resources over a period of 14 months from the date of signing these
\n
\ufb01nancial statements, a period which includes the maturity of \u00a3150m
\nof senior bonds in May 2024.", "dimensions": { "concept": "ifrs-full:DescriptionOfUncertaintiesOfEntitysAbilityToContinueAsGoingConcern", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20013": { "value": "2.2 Basis of consolidation
The consolidated \ufb01nancial statements incorporate the \ufb01nancial
\n
statements of the Company and entities controlled by the Company
\n
(its
subsidiaries
) made up to 31 January each year. Control is
\n
achieved when the Group is exposed, or has rights, to variable returns
\n
from its involvement with an investee entity and has the ability to
\n
a\ufb00ect those returns through its power over the investee entity.
\n
The\u00a0existence and e\ufb00ect of potential voting rights that are currently
\n
exercisable or convertible are considered when assessing whether
\n
the Group controls another entity.
\n
Subsidiary companies are consolidated using the acquisition method.
\n
Subsidiaries are fully consolidated from the date of acquisition, being
\n
the date on which the Group obtained control, and continue to be
\n
consolidated until the date when such control ceases.
\n
In preparing these consolidated \ufb01nancial statements, any intra-group
\n
receivables, payables, income and expenses arising from intra-group
\n
trading are eliminated. Where accounting policies used in individual
\n
\ufb01nancial statements of a subsidiary company di\ufb00er from Group
\n
policies, adjustments are made to bring these policies in line with
\n
Group policies.
\n
The results of subsidiaries acquired, or disposed of, during the
\n
year\u00a0are included in the consolidated income statement from the
\n
e\ufb00ective date of acquisition or up to the e\ufb00ective date of disposal,
\n
as\u00a0appropriate. Where a subsidiary which constituted a separate
\n
major line of business is disposed of, it is disclosed as a discontinued
\n
operation.
\n
A change in the ownership interest of a subsidiary, without a loss
\n
of\u00a0control, is accounted for as an equity transaction.
\n
If the Group loses control over a subsidiary, it derecognises the
\n
related assets (including goodwill), liabilities, non-controlling interest
\n
and other components of equity while any resultant gain or loss is
\n
recognised in pro\ufb01t or loss. Any investment retained is recognised
\nat\u00a0fair value.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20051": { "value": "2.3 Summary of significant accounting policies
a. Revenue recognition
\n
Revenue represents amounts receivable from the sale or supply
\n
of\u00a0goods and services provided to customers in the ordinary course
\n
of business and is recognised to the extent that it is probable that
\n
the\u00a0future economic bene\ufb01ts will \ufb02ow to the Group and the revenue
\n
can be reliably measured, regardless of when payment is received.
\n
The recognition policies for the Group\u2019s various revenue streams
\n
by\u00a0segment are as follows:
\n
i) Insurance
\n
The amounts received from customers for insurance policies
\n
comprise three main elements: the premium charged to the
\n
customer in respect of the insurance cover (
gross premium
);
\n
insurance premium tax (
IPT
); and an arrangement fee where
\n
applicable (only applied to policies that are brokered via a panel).
\n
The\u00a0gross premium itself comprises two elements: the premium
\n
charged by the underwriter of each policy (
net premium
), which
\n
may\u00a0be provided by the Group\u2019s in-house underwriter or by a
\n
third-party underwriter, plus any adjustment to the net premium
\n
that\u00a0is applied by the Group\u2019s broker during the broking service
\n
(
street pricing adjustment
).
\n
In addition, where the customer pays in instalments, the Group
\n
may\u00a0charge interest on the outstanding balance. The Group may
\n
also\u00a0charge additional fee income for mid-term cancellations and
\n
adjustments made to policies mid-term.
\n
IPT is excluded from all revenue recognised by the Group.
\n
For 12-month insurance policies with no option to \ufb01x the
\n
premium at renewal (
annual policies
):
\n
For insurance policies underwritten by the Group, the gross
\n
insurance premium is recognised on a straight-line time-apportioned
\n
basis over the period of cover. The portion of the premium ceded to
\n
reinsurers is also recognised on a straight-line time-apportioned
\n
basis over the period of cover as a reduction to revenue. This
\n
recognition basis is in line with the requirements of International
\n
Financial Reporting Standard (
IFRS
) 4.
\n
For insurance policies not underwritten by the Group, the portion of
\n
the gross premium that is retained by the Group, otherwise referred
\n
to as the street pricing adjustment, is recognised on the cover start
\n
date of each policy. The portion of the gross premium charged by the
\n
third-party underwriter, otherwise referred to as the net premium, is
\n
not recognised as revenue in the income statement. This recognition
\n
basis is in line with the requirements of IFRS 15.
\n
For 12-month insurance policies with the option to \ufb01x the
\n
premium over three years (
three-year \ufb01xed-price policies
):
\n
For three-year \ufb01xed-price policies, the option to \ufb01x the premium
\n
at\u00a0the \ufb01rst and second renewal points is deemed to be a separate
\n
performance obligation as de\ufb01ned by IFRS 15. The Group therefore
\n
defers a portion of the gross premium received in the \ufb01rst year of
\n
cover into years two and three, and a portion of the gross premium
\n
received in the second year of cover into year three, to coincide
\n
with\u00a0when the option has been exercised by the customer and so
\n
deemed to be ful\ufb01lled by the Group. The carrying value of the revenue
\n
deferred is recognised within contract liabilities in the statement of
\n
\ufb01nancial position.
\n
If a customer cancels a three-year \ufb01xed-price policy mid-term or
\n
chooses not to renew in the second or third years, any brought
\n
forward income deferral is recognised in the income statement at
\n
the\u00a0point the cover ends, being the point that the Group is released
\n
from the obligation to \ufb01x the price at renewal.
Saga plc
Annual Report and Accounts 2023
145
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses a cost-plus methodology to approximate a
\n
standalone selling price of the option to \ufb01x the customer price at
\n
renewal, by reference to an actuarial estimate of the premium that it
\n
would cost the Group to transfer the obligation to \ufb01x to a third party,
\n
plus an appropriate pro\ufb01t margin.
\n
The gross premium that is allocated to each of the three policy years
\n
is then measured as the gross premium charged in each year, less any
\n
income deferred to subsequent policy years for the option to \ufb01x, plus
\n
any brought forward income deferred from earlier policy years. The
\n
accounting in each policy year then follows the same principles as
\n
described above for annual policies.
\n
Where there is a switch of underwriter between the Group and a
\n
third-party underwriter at either of the renewal points within the
\n
three-year price-\ufb01x, the Group applies the relevant accounting policy
\n
for the subsequent policy year in line with either of the two methods
\n
as\u00a0described for annual policies.
\n
Management considers the de\ufb01nition of performance obligations for
\n
three-year \ufb01xed-price policies to be a signi\ufb01cant area of judgement.
\n
All insurance policies (both three-year \ufb01xed-price policies and
\n
annual policies):
\n
For all insurance policies, the arrangement fee that is charged in
\n
respect of the broking service is recognised on, or before, the cover
\n
start date of each policy on the date that each policy is arranged,
\n
being the point at which the performance obligation to broker the
\n
policy is ful\ufb01lled. It is measured by reference to the explicit price
\n
charged to customers for this service. Management considers the
\n
revenue recognition treatment of the arrangement fee to be a
\n
signi\ufb01cant area of judgement.
\n
Gross premiums received in advance of the cover start date of a
\n
policy are treated as advance receipts and included as contract
\n
liabilities in the statement of \ufb01nancial position.
\n
Premiums in respect of insurance policies underwritten by the Group
\n
that have a period of unexpired risk at the reporting date, and which
\n
relate to the period after the reporting date, are treated as unearned
\n
and included in gross insurance contract liabilities in the statement of
\n
\ufb01nancial position. The portion of those unearned premiums ceded to
\n
excess of loss reinsurers is recognised as a reinsurance asset on
\n
the\u00a0face of the statement of \ufb01nancial position. The portion of those
\n
unearned premiums ceded to quota share reinsurers is recognised
\n
as an asset netted o\ufb00 against reinsurance premiums withheld within
\n
trade payables, since there is a right of set-o\ufb00 within the contract.
\n
Subsequent changes to premiums mid-term are recognised on
\n
the\u00a0e\ufb00ective date of the mid-term adjustment. For those policies
\n
that\u00a0are underwritten by the Group, these changes are recognised
\n
on\u00a0a straight-line time-apportioned basis over the period of cover
\n
remaining on the policy. Reduction in premiums from mid-term
\n
cancellations are recognised on the e\ufb00ective date of the cancellation.
\n
Any fee income charged for a mid-term cancellation or adjustment is
\n
recognised on the date the adjustment is made, being the point that
\n
the mid-term service is ful\ufb01lled.
\n
Income from credit provided to customers to facilitate payment of
\n
their insurance premiums by instalments over the life of their policy
\n
is\u00a0treated as part of the revenue from insurance operations and
\n
recognised over the period of the policy in proportion to the
\n
outstanding premium balance.
\n
Pro\ufb01t commissions due under coinsurance or reinsurance
\n
arrangements are recognised and valued in accordance with the
\n
contractual terms to which they are subject, when it is highly probable
\n
that a signi\ufb01cant reversal of revenue will not occur, and on the same
\n
basis, where appropriate, as the related reinsured liabilities.
\n
For revenue earned from credit hire and repair services for non-fault
\n
claims (
credit hire and
credit repair
), the Group initially recognises
\n
the revenue at fair value, which is based on a historical assessment of
\n
debt recovery and discount levels. Credit hire revenue is recognised
\n
from the date that a vehicle is placed on hire equally over the duration
\n
of the hire. Credit repair revenue represents income from the
\n
recovery of the costs of repair of customers\u2019 vehicles. Credit repair
\n
revenue is recognised when the work has been completed. Late
\n
payment penalties a\ufb00orded under the terms of the Association of
\n
British Insurers General Terms of Agreement are recognised as they
\n
become payable by the insurance company.
\n
ii) Cruise and Travel
\n
Revenue from Cruise and Travel, where the Group does not operate
\n
the cruise ship, is recognised in line with the performance obligations
\n
that are included in a package holiday, namely the provision of \ufb02ights,
\n
accommodation, transfers and travel insurance. Revenue is
\n
recognised as and when each performance obligation is satis\ufb01ed,
\n
which is deemed to be when each service to the customer takes
\n
place. The standalone selling price of each performance obligation is
\n
estimated as the cost to provide each obligation plus a pro\ufb01t margin
\n
appropriate to the nature of each service. The price charged to each
\n
customer is then apportioned to each performance obligation based
\n
on the relative estimated standalone selling prices, in line with the
\n
requirements of IFRS 15.
\n
For Travel, revenue in relation to \ufb02ights and \ufb02ight upgrades is
\n
recognised on the date of each \ufb02ight; revenue in relation to
\n
accommodation is recognised over the duration of the holiday;
\n
revenue in relation to transfers is recognised on the date that the
\n
transfers occur before and after each holiday; and revenue in respect
\n
of travel insurance (which is underwritten by a third-party
\n
underwriter) is recognised on the cover start date of the insurance.
\n
Revenue in respect of Cruise holidays where the Group operates the
\n
cruise ship is also recognised in line with the performance obligations,
\n
being the cruise itself, \ufb02ights and/or rail journeys (where applicable),
\n
travel insurance and transfers. The portion of revenue allocated to
\n
the cruise itself is recognised on a per diem basis over the duration
\n
of\u00a0the cruise in line with when the performance obligation is satis\ufb01ed.
\n
The portion of revenue allocated to \ufb02ights and \ufb02ight upgrades
\n
(where\u00a0applicable) and transfers is recognised on the date that each
\n
trip is ful\ufb01lled, which is consistent with the approach adopted by the
\n
Travel business.
\n
Revenue from travel insurance for cruising holidays is recognised at
\n
the cover start date of the policy, which is usually at the point the
\n
customer makes a booking.
\n
An element of revenue which represents the non-refundable deposit
\n
received at the time of booking is recognised in the income statement
\n
immediately in line with the prevailing rate of cancellations.
\n
Revenue from sales in resort, for example for optional excursions, or
\n
on board a cruise ship operated by the Group, for example bar sales
\n
or optional excursions, is recognised as it is earned.
\n
Revenue from Cruise and Travel received in advance of when each
\n
performance obligation is satis\ufb01ed is included as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
Notes to the consolidated \ufb01nancial statements continued
\n
146
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
iii) Other Businesses and Central Costs
\n
Saga Money
\n
Revenue from personal \ufb01nance products is recognised when the
\n
customer contracts with the provider of the relevant personal
\n
\ufb01nance product where the revenue comprises a one-o\ufb00 payment
\n
by\u00a0the provider of the product.
\n
Where the personal \ufb01nance product is one that delivers a recurring
\n
income stream, the present value of the future expected revenue
\n
to\u00a0be received is recognised when the customer contracts with the
\n
provider of the relevant personal \ufb01nance product, and it is highly
\n
probable that a signi\ufb01cant reversal of revenue recognised will
\n
not\u00a0occur.
\n
For the Saga savings product, commissions are earned over the
\n
duration of the contract in line with the contractual amount due
\n
to\u00a0the\u00a0Group.
\n
For Saga equity release products, commissions are earned initially
\n
and over the lifetime of the product. Additionally, further
\n
commissions, where applicable are earned at each subsequent stage
\n
of the drawdown if any more of the advance is taken by the customer.
\n
Initial\u00a0commission relating to new business is recognised as revenue
\n
at the point the performance obligation with the Group\u2019s contracted
\n
business partners is satis\ufb01ed, and the customer has taken out the
\n
product. Where applicable, trail commission is recognised as the
\n
discounted future cash \ufb02ows expected to be received over the
\n
estimated life of the product and likewise for further commissions
\n
on\u00a0additional drawdowns undertaken by the customer.
\n
Saga Media
\n
Magazine subscription revenue is recognised on a straight-line
\n
basis\u00a0over the period of the subscription. Revenue generated from
\n
advertising within the magazine is recognised when the magazine
\n
is\u00a0provided to the customer.
\n
The element of subscriptions and advertising revenue relating to the
\n
period after the reporting date is recognised as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
\n
Printing and mailing
\n
Revenue from printing and mailing services is recognised in line
\n
with\u00a0the performance obligations within customer contracts.
\n
Market research
\n
Revenue from market research services is recognised when a
\n
performance obligation is satis\ufb01ed. Revenue recognised over time
\n
is\u00a0based on the proportion of the level of service performed.
\n
b. Cost recognition
\n
i) Insurance acquisition costs
\n
Acquisition costs arising from the selling or renewing of insurance
\n
policies underwritten by the Group are recognised on a straight-line
\n
time-apportioned basis over the period of the policy in which the
\n
related revenues are earned. The proportion of acquisition costs
\n
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\n
of\u00a0\ufb01nancial position.
\n
Incremental costs of obtaining an insurance contract not underwritten
\n
by the Group, namely fees charged by price-comparison websites,
\n
are recognised as an asset within trade and other receivables on the
\n
face of the statement of \ufb01nancial position. Such costs are amortised
\n
in line with the pattern of revenue for the related insurance contract,
\n
which incorporates the propensity for that contract to renew in
\n
future periods based on the prevailing rate of renewal for these types
\n
of contract. If the expected amortisation period is one year or less,
\n
then incremental costs are expensed when incurred.
\n
ii) Claims costs
\n
Claims costs incurred in respect of insurance policies underwritten
\n
by the Group include estimates for claims made for losses reported
\n
as occurring during the period together with the related handling
\n
costs, any adjustments to claims outstanding from previous periods,
\n
and an estimate for the cost of claims incurred during the period but
\n
not reported as at the reporting date. The portion of costs recovered
\n
from reinsurance is recognised as a reduction to those costs in the
\n
same period in which the costs are recognised. Further detail is
\n
provided in Note 28.
\n
iii) Finance costs
\n
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
\n
iv) All other expenses
\n
All other expenses are recognised in the income statement as they
\n
are incurred.
\n
c. Recognition of other income statement items
\n
i) Interest income
\n
Investment income in the form of interest is recognised in the income
\n
statement as it accrues and is calculated using the EIR method.
\n
Interest income is earned by the Group on both assets held at fair
\n
value through pro\ufb01t or loss (
FVTPL
), and assets held at fair value
\n
through other comprehensive income (
FVOCI
). Fees and
\n
commissions which are an integral part of the e\ufb00ective yield of the
\n
\ufb01nancial asset or liability are recognised as an adjustment to the EIR
\n
of\u00a0the instrument.
\n
ii) Dividend income
\n
Income in the form of dividends is recognised when the right to
\n
receive payment is established. For listed securities, this is the date
\n
that the security is listed as ex-dividend.
\n
iii) Gains and losses on financial investments at fair value
\n
Realised and unrealised gains and losses on \ufb01nancial investments
\n
are\u00a0recorded as investment income in the income statement, and
\n
represent net fair value gains and losses arising from changes in
\n
fair\u00a0value during the year.
Saga plc
Annual Report and Accounts 2023
147
Strategic report
Financial statements
Additional information
Governance
\n
d. Taxes
\n
i) Current income tax
\n
Income tax assets and liabilities for the current period are measured
\n
at the amount expected to be recovered from, or paid to, taxation
\n
authorities. The tax rates and tax laws used to compute the amount
\n
are those that are enacted or substantively enacted at the reporting
\n
date. Current income tax assets and liabilities also include adjustments
\n
in respect of tax expected to be payable or recoverable in respect of
\n
previous periods. Current income tax relating to items recognised
\n
in\u00a0other comprehensive income (
OCI
) and directly in equity is
\n
recognised in OCI or equity and not in the income statement.
\n
ii) Deferred tax
\n
Deferred tax is provided on temporary di\ufb00erences between the tax
\n
bases of assets and liabilities and their carrying amounts for \ufb01nancial
\n
reporting purposes at the reporting date.
\n
Deferred tax liabilities are recognised for all taxable temporary
\n
di\ufb00erences and deferred tax assets are recognised to the extent
\n
that\u00a0it is probable that taxable pro\ufb01t will be available against which the
\n
deductible temporary di\ufb00erences and the carry forward of unused
\n
tax credits and unused tax losses can be utilised.
\n
The carrying amount of deferred tax assets is reviewed at each
\n
reporting date and reduced to the extent that it is no longer probable
\n
that su\ufb03cient taxable pro\ufb01t will be available to allow all, or part of, the
\n
deferred tax asset to be utilised. Unrecognised deferred tax assets
\n
are reassessed at each reporting date and are recognised to the
\n
extent that it has become probable that future taxable pro\ufb01ts will
\n
allow the deferred tax asset to be recovered.
\n
Deferred tax assets and liabilities are measured at the tax rates that
\n
are expected to apply in the year when the asset is realised or the
\n
liability is settled, based on tax rates (and tax laws) that have been
\n
enacted or substantively enacted at the reporting date. Deferred
\n
tax\u00a0is charged or credited in the income statement, except when it
\n
relates to items charged or credited in OCI or equity, in which case
\n
the deferred tax is recognised in OCI or equity as appropriate.
\n
Deferred tax assets and deferred tax liabilities are o\ufb00set if a legally
\n
enforceable right exists to set-o\ufb00 current tax assets against current
\n
tax liabilities and the deferred taxes relate to the same taxable entity
\n
and the same taxation authority.
\n
e. Foreign currencies
\n
Transactions in foreign currencies are initially recorded by the Group
\n
at their respective functional currency spot rate at the date that the
\n
transaction \ufb01rst quali\ufb01es for recognition. Monetary assets and
\n
liabilities denominated in foreign currencies are retranslated at
\n
the\u00a0functional currency spot rate of exchange prevalent at the
\n
reporting date.
\n
f. Intangible assets
\n
Intangible assets acquired are measured on initial recognition at
\n
cost\u00a0and subsequent to initial recognition, are carried at cost less
\n
any\u00a0accumulated amortisation and accumulated impairment losses.
\n
The\u00a0cost of intangible assets acquired in a business combination
\n
is\u00a0their fair value at the date of acquisition. Internally generated
\n
intangibles, excluding internally developed software, are not
\n
capitalised and the related expenditure is re\ufb02ected in the income
\n
statement in the period in which the expenditure is incurred.
\n
The useful lives of intangible assets and goodwill are assessed as
\n
either \ufb01nite or inde\ufb01nite. Estimated useful lives are as follows:
\n
Goodwill
Inde\ufb01nite
\n
Software
3-10 years
\n
Intangible assets with \ufb01nite lives are amortised over their useful
\n
economic life on a basis appropriate to the consumption of the asset
\n
and are assessed for impairment whenever there is an indication that
\n
the intangible asset may be impaired. The amortisation period and
\n
the amortisation method for an intangible asset with a \ufb01nite useful life
\n
are reviewed at least at the end of each reporting period. Changes in
\n
the expected useful life or the expected pattern of consumption of
\n
future economic bene\ufb01ts embodied in the asset are considered to
\n
modify the amortisation period or method, as appropriate, and are
\n
treated as changes in accounting estimates. The amortisation
\n
expense on intangible assets with \ufb01nite lives is recognised in the
\n
income statement in the expense category that is consistent with
\n
the\u00a0function of the intangible assets.
\n
Goodwill is not amortised but is tested for impairment at least
\n
annually, at the cash generating unit (
CGU
) level. Where the carrying
\n
value of the asset exceeds the recoverable amount, an impairment
\n
loss is recognised in the income statement immediately.
\n
Gains or losses arising from derecognition of an intangible asset are
\n
measured as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset and are recognised in the income
\n
statement when the asset is derecognised.
\n
g. Business combinations and goodwill
\n
Business combinations are accounted for using the acquisition
\n
method. The cost of an acquisition is measured as the aggregate of
\n
the consideration transferred measured at acquisition date at fair
\n
value and the amount of any non-controlling interests in the acquiree.
\n
For each business combination, the Group elects whether to
\n
measure the non-controlling interests in the acquiree at fair value or
\n
at the proportionate share of the acquiree\u2019s identi\ufb01able net assets.
\n
When the Group acquires a business, it assesses the \ufb01nancial
\n
and\u00a0non-\ufb01nancial assets and liabilities assumed for appropriate
\n
classi\ufb01cation and designation in accordance with the contractual
\n
terms, economic circumstances and pertinent conditions as at
\n
the\u00a0acquisition date.
Notes to the consolidated \ufb01nancial statements continued
\n
148
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Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
Any contingent consideration to be transferred by the acquirer will
\n
be\u00a0recognised at fair value at the acquisition date. Contingent
\n
consideration classi\ufb01ed as an asset or liability that is a \ufb01nancial
\n
instrument within the scope of IFRS 9 \u2018Financial Instruments\u2019 is
\n
measured at fair value with the changes in fair value recognised in
\n
the\u00a0income statement.
\n
Any excess of the cost of acquisition over the fair values of the
\n
identi\ufb01able assets and liabilities is recognised as goodwill. If the cost
\n
of\u00a0acquisition is less than the fair values of the identi\ufb01able assets
\n
and\u00a0liabilities of the acquired business, the di\ufb00erence is recognised
\n
directly in the income statement in the year of acquisition.
\n
Acquisition-related costs are expensed as incurred and included
\n
in\u00a0administrative expenses.
\n
After initial recognition, goodwill is measured at cost less any
\n
accumulated impairment losses. Goodwill is allocated to CGUs at the
\n
point of acquisition and is reviewed at least annually for impairment.
\n
h. Impairment of non-financial assets
\n
Goodwill is not subject to amortisation and is tested annually for
\n
impairment, or more frequently if events or changes in circumstances
\n
indicate that it might be impaired. If such an indication exists, the
\n
recoverable amount is estimated and compared with the carrying
\n
amount. If the recoverable amount is less than the carrying amount,
\n
the asset is considered impaired and is written down to its
\n
recoverable amount and the impairment loss is recognised
\n
immediately in the income statement.
\n
Other assets are tested for impairment whenever events or changes
\n
in circumstances indicate that the carrying amount may not be
\n
recoverable. If there is any indication that an asset may be impaired,
\n
a\u00a0recoverable amount is estimated for the individual asset. If it is not
\n
possible to estimate the recoverable amount of the individual asset,
\n
the recoverable amount is determined according to the CGU to
\n
which the asset belongs.
\n
For impairment testing, assets are grouped together into the
\n
smallest group of assets that generate cash in\ufb02ows from continuing
\n
use that are largely independent of the cash in\ufb02ows of other assets or
\n
CGUs. Goodwill arising from a business combination is allocated to
\n
CGUs, or groups of CGUs that are expected to bene\ufb01t from the
\n
synergies of the combination.
\n
The recoverable amount is calculated as the higher of fair value less
\n
costs to sell, and value-in-use. In assessing value-in-use, where
\n
appropriate, estimated future cash \ufb02ows are discounted to their
\n
present value using a pre-tax discount rate that re\ufb02ects current
\n
market assessments of the time value of money and the risks speci\ufb01c
\n
to the asset. In determining fair value less costs of disposal, recent
\n
market transactions are taken into\u00a0account. If no such transactions
\n
can be identi\ufb01ed, an appropriate valuation model is used. These
\n
calculations are corroborated by\u00a0valuation multiples, quoted share
\n
prices for publicly traded companies or other available fair value
\n
indicators. The Group bases its value-in-use calculations on detailed
\n
budgets, plans and long-term growth assumptions, which are
\n
prepared separately for each of the Group\u2019s CGUs to which individual
\n
assets are allocated.
\n
i. Property, plant and equipment
\n
Property, plant and equipment is stated at cost, net of accumulated
\n
depreciation and impairment losses. Where an item of property, plant
\n
and equipment comprises major components having di\ufb00erent useful
\n
lives, they are accounted for separately.
\n
Assets in the course of construction at the statement of \ufb01nancial
\n
position date are classi\ufb01ed separately. These assets are transferred
\n
to other asset categories when they become available for their
\n
intended use.
\n
Depreciation is charged to the income statement on a straight-line
\n
basis so as to write-o\ufb00 the depreciable amount of property, plant and
\n
equipment over their estimated useful lives. The depreciable amount
\n
is the cost of an asset less its residual value. Land and assets in the
\n
course of construction are not depreciated. Estimated useful lives
\n
are\u00a0as follows:
\n
Buildings, properties and related \ufb01xtures:
\n
Buildings
50 years
\n
Fixtures and \ufb01ttings
3-20 years
\n
Ocean cruise ships
30 years
\n
Computers
3-6 years
\n
Plant, vehicles and other equipment
3-10 years
\n
Costs relating to ocean cruise ship mandatory dry-dockings are
\n
capitalised and depreciated over the period up to the next
\n
dry-docking, where appropriate. The International Convention for
\n
the\u00a0Safety of Life at Sea regulations stipulate that ships have to be
\n
dry-docked twice in an interval of \ufb01ve years, with the interval between
\n
consecutive dry-dockings being not less than two years and not more
\n
than three years. All other repairs and maintenance costs are
\n
recognised in the income statement as incurred.
\n
An item of property, plant and equipment is derecognised upon
\n
disposal, or when no future economic bene\ufb01ts are expected from its
\n
use or disposal. Any gain or loss arising on derecognition of an asset
\n
(calculated as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset) is included in the income statement
\n
when the asset is derecognised.
\n
Estimated residual values and useful lives are reviewed annually.
\n
In\u00a0relation to the annual review of estimated residual values and
\n
useful\u00a0lives of ocean cruise ships, potential environmental regulatory
\n
changes are also considered. The shipping industry has made a
\n
commitment to reduce CO
\n
2
\n
emissions by 40% by 2030 (from a
\n
2008 baseline), and the UK Government has made commitments to
\n
reach net zero emissions by 2050. The EEXI (carbon design/technical
\n
e\ufb03ciency indicator) and CII (in-service/operational carbon intensity
\n
e\ufb03ciency indicator) regulations were introduced internationally
\n
during the year to enable the industry to meet the 2030 target, and
\n
the Group\u2019s ocean cruise ships meet the requirements of these
\n
regulations. The end of their useful economic lives of 30 years will have
\n
been reached by 2049 in the case of Spirit of Discovery and 2051 in
\n
the case of Spirit of Adventure.
\n
j. Non-current assets held for sale
\n
The Group classi\ufb01es non-current assets as held for sale if their
\n
carrying amount will be recovered principally through a sale
\n
transaction rather than through continuing use. To be classi\ufb01ed as
\n
held for sale, an asset must be available for immediate sale in its
\n
present condition subject only to terms that are usual and customary
\n
for the sale of such assets, and the sale must be highly probable. A sale
\n
is considered to be highly probable when management is committed
\n
to a plan to sell an asset and an active programme to locate a buyer
\n
and complete the plan has been initiated at a price that is reasonable
\n
in relation to its current fair value, and there is an expectation that the
\n
sale will be completed within one year from the date of classi\ufb01cation.
\n
Non-current assets classi\ufb01ed as held for sale are carried on the
\n
Group\u2019s statement of \ufb01nancial position at the lower of their carrying
\n
amount and fair value less costs to sell.
\n
Property, plant and equipment and intangible assets, once classi\ufb01ed
\n
as held for sale, are not depreciated or amortised.
Saga plc
Annual Report and Accounts 2023
149
Strategic report
Financial statements
Additional information
Governance
\n
k. Financial instruments
\n
i) Financial assets
\n
On initial recognition, a \ufb01nancial asset is classi\ufb01ed as either amortised cost, FVOCI or FVTPL. The classi\ufb01cation of \ufb01nancial assets is based
\n
on\u00a0the business model in which a \ufb01nancial asset is managed, and its contractual cash \ufb02ow characteristics. Derivatives embedded in contracts
\n
where the host is a \ufb01nancial asset in the scope of the standard are never separated. Instead, the hybrid \ufb01nancial instrument as a whole is
\n
assessed for classi\ufb01cation.
\n
Initial recognition
Subsequent measurement
\n
Amortised cost
A \ufb01nancial asset is measured at amortised cost (plus any
\n
directly attributable transaction costs) if it meets both of
\n
the following conditions and is not elected to be designated
\n
as FVTPL:
\n
\u2022
It is held within a business model whose objective is to
\n
hold assets to collect contractual cash flows.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
The Group classi\ufb01es trade receivables, other receivables and
\n
deposits with \ufb01nancial institutions as held at amortised cost.
\n
These assets are subsequently measured at amortised
\n
cost using the EIR method. The amortised cost is reduced
\n
by any impairment losses (see (ii) below). Interest income,
\n
foreign exchange gains and losses and impairments
\n
are\u00a0recognised in pro\ufb01t or loss as they are incurred.
\n
Any\u00a0gain\u00a0or\u00a0loss on derecognition is recognised in pro\ufb01t
\n
or\u00a0loss immediately.
\n
FVOCI
A debt investment is measured at FVOCI (plus any directly
\n
attributable transaction costs) if it meets both of the
\n
following conditions and is not elected to be designated
\n
as\u00a0FVTPL:
\n
\u2022
It is held within a business model whose objective is
\n
achieved by both collecting contractual cash flows and
\n
selling financial assets.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
On initial recognition of an equity investment that is not held
\n
for trading, the Group may irrevocably elect to present
\n
subsequent changes in the investment\u2019s fair value in OCI.
\n
This election is made on an investment-by-investment basis.
\n
The Group classi\ufb01es debt securities as FVOCI.
\n
Debt instruments are subsequently measured at fair value.
\n
Interest income calculated using the EIR method, foreign
\n
exchange gains and losses and impairments are recognised
\n
in pro\ufb01t or loss. Other net gains and losses are recognised
\n
in\u00a0OCI. On derecognition, gains and losses accumulated in
\n
OCI are recycled to pro\ufb01t or loss.
\n
Equity investments are measured at fair value. Dividends
\n
are recognised as income in pro\ufb01t or loss unless the
\n
dividend clearly represents a recovery of part of the cost of
\n
the investment. Other net gains and losses are recognised
\n
in OCI and are never reclassi\ufb01ed to pro\ufb01t or loss.
\n
FVTPL
All \ufb01nancial assets not classi\ufb01ed as amortised cost or
\n
FVOCI\u00a0as described above are classi\ufb01ed as FVTPL and
\n
held\u00a0at fair value. This includes all derivative \ufb01nancial assets.
\n
On initial recognition, the Group may irrevocably elect
\n
to\u00a0designate a \ufb01nancial asset that otherwise meets the
\n
requirements to be measured at amortised cost or
\n
FVOCI\u00a0as FVTPL if doing so eliminates, or signi\ufb01cantly
\n
reduces, an accounting mismatch that would otherwise
\n
arise. This election is made on an individual instrument basis.
\n
The Group classi\ufb01es loan funds, money market funds and
\n
foreign exchange forward contracts not designated in a
\n
hedging relationship, as FVTPL.
\n
These assets are subsequently measured at fair value.
\n
Net\u00a0gains and losses, including any interest or dividend
\n
income, are recognised in pro\ufb01t or loss, unless such
\n
instrument is designated in a hedging relationship
\n
(see (vi) overleaf).
\n
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash \ufb02ows from the asset have expired or when the Group has transferred
\n
substantially all the risks and rewards relating to the asset to a third party.
Notes to the consolidated \ufb01nancial statements continued
\n
150
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
ii) Impairment of financial assets
\n
The expected credit loss (
ECL
) impairment model applies to \ufb01nancial
\n
assets measured at amortised cost and debt investments at FVOCI.
\n
The Group measures loss allowances at an amount equal to 12-month
\n
ECLs, except for the following, which are measured as lifetime ECLs:
\n
\u2022
Debt securities that are determined to have high credit risk at
\n
the\u00a0reporting date.
\n
\u2022
Other debt securities and bank balances for which credit risk
\n
has\u00a0increased significantly since initial recognition.
\n
\u2022
Trade receivables and contract assets that result from
\n
transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Group considers reasonable and supportable information
\n
that is relevant and available without undue cost or e\ufb00ort. This
\n
includes both quantitative and qualitative information and analysis,
\n
based on the Group\u2019s historical experience and informed credit
\n
assessment, including forward-looking information.
\n
The Group considers a debt security to have low credit risk when its
\n
credit risk rating is equivalent to the de\ufb01nition of \u2018investment grade\u2019.
\n
The Group considers this to be BBB- or higher as per credit
\n
rating\u00a0scales.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised
\n
cost\u00a0are deducted from the gross carrying amount of the assets,
\n
with\u00a0a corresponding charge to the income statement. For debt
\n
instruments measured at FVOCI, the loss allowance for debt
\n
investments at FVOCI is recognised in pro\ufb01t or loss and reduces
\n
the\u00a0fair value loss, or increases the fair value gain, otherwise
\n
recognised in\u00a0the statement of other comprehensive income.
\n
iii) Financial liabilities
\n
Initial recognition and measurement
\n
All \ufb01nancial liabilities are classi\ufb01ed as \ufb01nancial liabilities at amortised
\n
cost on initial recognition except for derivatives, which are classi\ufb01ed
\n
at\u00a0FVTPL, the gains or losses for which are recognised through OCI
\n
if\u00a0the instrument is designated as a hedging instrument in an e\ufb00ective
\n
cash \ufb02ow hedge.
\n
With the exception of lease liabilities, all \ufb01nancial liabilities are
\n
recognised initially at fair value and, in the case of loans and
\n
borrowings, net of directly attributable transaction costs.
\n
The Group\u2019s \ufb01nancial liabilities include trade and other payables, loans
\n
and borrowings, derivative \ufb01nancial instruments and lease liabilities.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\n
costs in the income statement.
\n
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged, cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability
\n
and\u00a0the recognition of a new liability. The di\ufb00erence in the respective
\n
carrying amounts is recognised in the income statement.
\n
iv) Derivatives
\n
Derivatives are measured at fair value both initially and subsequently
\n
to initial recognition. All changes in fair value of non-designated
\n
derivatives are recognised in the income statement immediately.
\n
Changes in fair value of derivatives designated as cash \ufb02ow hedges are
\n
initially recognised in OCI until such a point that they are recycled to
\n
pro\ufb01t or loss in the same period as the hedged item is recognised in
\n
pro\ufb01t or loss, or immediately if the hedged item is no longer expected
\n
to occur.
\n
Derivatives are presented as assets when the fair values are positive
\n
and as liabilities when the fair values are negative. A derivative is
\n
presented as a non-current asset or a non-current liability if the
\n
remaining maturity of the instrument is more than 12 months and
\n
it\u00a0is\u00a0not expected to be realised or settled within 12 months.
\n
v) Fair values
\n
The Group measures all \ufb01nancial instruments at fair value at each
\n
reporting date, other than those instruments measured at
\n
amortised\u00a0cost.
\n
Fair value is the price that would be required to sell an asset or
\n
to\u00a0transfer a liability in an orderly transaction between market
\n
participants at the measurement date. The fair value measurement
\n
is\u00a0based on the presumption that the transaction to sell the asset
\n
or\u00a0transfer the liability takes place either in the principal market
\n
accessible by the Group for the asset or liability or, in the absence
\n
of\u00a0a\u00a0principal market, in the most advantageous market accessible
\n
by\u00a0the Group for the asset or liability.
\n
The fair values are quoted market bid prices where there is an active
\n
market, or are based on valuation techniques when there is no active
\n
market or the instruments are unlisted. Valuation techniques include
\n
the use of recent arm\u2019s-length market transactions, discounted cash
\n
\ufb02ow analysis and other commonly used valuation techniques.
\n
For assets and liabilities that are recognised in the \ufb01nancial
\n
statements on a recurring basis, the Group determines whether
\n
transfers have occurred between levels in the hierarchy by
\n
reassessing categorisation at the end of each reporting period.
\n
vi) Hedge accounting
\n
The Group designates certain derivative \ufb01nancial instruments as
\n
cash \ufb02ow hedges of certain forecast transactions. These transactions
\n
are highly probable to occur and present an exposure to variations
\n
in\u00a0cash \ufb02ows that could ultimately a\ufb00ect amounts determined in
\n
pro\ufb01t\u00a0or loss.
\n
The Group has elected to adopt the general hedge accounting model
\n
in IFRS 9. This requires the Group to ensure that hedge accounting
\n
relationships are aligned with its risk management objectives and
\n
strategy and to apply a qualitative and forward-looking approach
\n
to\u00a0assessing hedge e\ufb00ectiveness.
Saga plc
Annual Report and Accounts 2023
151
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses forward foreign exchange and commodity swap
\n
contracts to hedge the variability in cash \ufb02ows arising from changes
\n
in\u00a0foreign currency rates and oil prices respectively. For foreign
\n
exchange contracts, the Group designates the fair value change of
\n
the full forward price as the hedging instrument in cash \ufb02ow hedging
\n
relationships. For commodity hedging, the Group designates the fair
\n
value change of the benchmark oil price. The e\ufb00ective portion of
\n
changes in fair value of hedging instruments is accumulated in a cash
\n
\ufb02ow hedge reserve as a separate component of equity. Any ine\ufb00ective
\n
portion of the fair value gain or loss is recognised immediately within
\n
the income statement.
\n
When a hedging instrument no longer meets the criteria for hedge
\n
accounting (through maturity, sale, or other termination), hedge
\n
accounting is discontinued prospectively. If the hedged forecast
\n
transaction is still expected to occur, the associated cumulative
\n
gain\u00a0or loss remains in the hedging reserve and is recognised in
\n
accordance with the above policy when the hedged forecast
\n
transaction occurs. If the hedged forecast transaction is no longer
\n
expected to occur, the cumulative unrealised gain or loss is
\n
recognised in the income statement immediately.
\n
l. Leases
\n
The Group leases various river cruise ships, buildings, equipment
\n
and\u00a0vehicles. The contract length of the lease varies considerably and
\n
may include extension or termination options as described below.
\n
At the inception of a contract, the Group assesses whether a
\n
contract is, or contains, a lease. A contract is, or contains, a lease if the
\n
contract conveys the right to control the use of an identi\ufb01ed asset for
\n
a period of time in exchange for consideration. To assess whether a
\n
contract conveys the right to control the use of an identi\ufb01ed asset,
\n
the\u00a0Group assesses whether: the contract involves the use of an
\n
identi\ufb01ed asset; the Group has the right to obtain substantially all of
\n
the economic bene\ufb01ts from use of the asset throughout the period
\n
of\u00a0use and the Group has the right to direct the use of the asset.
\n
Leases are initially recognised as a right-of-use asset and a
\n
corresponding lease liability at the date at which the leased asset is
\n
available for use by the Group. The lease liability is initially measured
\n
at\u00a0the present value of the lease payments that are not paid at the
\n
commencement date. Where it is reasonably certain that an
\n
extension option will be triggered in a contract, lease payments to
\n
be\u00a0made in respect of the option will be included in the measurement
\n
of the lease liability.
\n
The lease payments are discounted using the interest rate implicit in
\n
the lease. If that rate cannot be readily determined, which is generally
\n
the case for leases in the Group, the Group\u2019s incremental borrowing
\n
rate is used. This is the rate that the Group would have to pay to
\n
borrow the funds necessary to obtain an asset of similar value to the
\n
right-of-use asset, in a similar economic environment, with similar
\n
terms, security and conditions.
\n
Lease payments are allocated between principal and \ufb01nance cost.
\n
The \ufb01nance cost is charged to the income statement over the lease
\n
period using the EIR method and the lease liability is measured at
\n
amortised cost using the EIR method.
\n
Right-of-use assets are initially measured at cost, comprising the
\n
present value of future lease payments plus any initial direct costs and
\n
restoration costs. Right-of-use assets are depreciated over the lease
\n
term on a straight-line basis except for the Group\u2019s river cruise ships.
\n
The unit of production method is used to depreciate river cruise ships
\n
in order to accurately re\ufb02ect the usage of the asset, which is seasonal.
\n
Payments associated with short-term leases of equipment and all
\n
leases of low-value assets are expensed in pro\ufb01t or loss as incurred
\n
in\u00a0line with the exemption allowed under paragraph 6 of IFRS 16.
\n
Short-term leases are leases with a lease term of 12 months or less
\n
without a purchase option. Low-value assets comprise IT equipment
\n
and small items of o\ufb03ce furniture.
\n
Extension and termination options are included in a number of
\n
property and river cruise ship leases across the Group. These are
\n
used to maximise operational \ufb02exibility in terms of managing the
\n
assets used in the Group\u2019s operations. The majority of extension and
\n
termination options held are exercisable only by the Group and not by
\n
the respective lessor.
\n
The Group remeasures the lease liability (and makes a corresponding
\n
adjustment to the related right-of-use asset) whenever:
\n
\u2022
the lease term has changed or there is a significant event or
\n
change in circumstances resulting in a change in the assessment
\n
of exercise of a purchase option, in which case the lease liability is
\n
remeasured by discounting the revised lease payments using a
\n
revised discount rate; or
\n
\u2022
a lease contract is modified and the lease modification is not
\n
accounted for as a separate lease, in which case the lease liability
\n
is\u00a0remeasured based on the lease term of the modified lease by
\n
discounting the revised lease payments using a revised discount
\n
rate at the effective date of the modification.
\n
m. Borrowing costs
\n
Borrowing costs directly attributable to the acquisition, construction
\n
or production of an asset that necessarily takes a substantial period
\n
of time to get ready for its intended use or sale are capitalised as part
\n
of the cost of the respective asset. All other borrowing costs are
\n
expensed in the period in which they occur.
\n
Borrowing costs consist of interest and fees that an entity incurs in
\n
connection with the borrowing of funds.
\n
n. Cash and short-term deposits
\n
Cash and short-term deposits in the statement of \ufb01nancial position
\n
comprise cash at bank and in hand, and short-term deposits with a
\n
maturity of three months or less from their inception date.
\n
For the purpose of the consolidated statement of cash \ufb02ows, cash
\n
and cash equivalents consist of cash, short-term deposits as de\ufb01ned
\n
above and short-term highly liquid investments (including money
\n
market funds) with original maturities of three months or less that are
\n
subject to an insigni\ufb01cant risk of change in value, net of outstanding
\n
bank overdrafts.
\n
o. Trust accounts
\n
All customer monies received in advance in relation to Air Travel
\n
Organiser\u2019s Licence (
ATOL
) licensable bookings are held in trust
\n
accounts until after the customer has travelled, when the Group
\n
has\u00a0ful\ufb01lled all its performance obligations with customers.
\n
The trust arrangement is governed by a deed between the Group,
\n
the\u00a0Civil Aviation Authority Air Travel Trustees and an independent
\n
Trustee, PT Trustees Limited, which determines the in\ufb02ows and
\n
out\ufb02ows from the accounts. The Group does not use advance
\n
receipts from customers in its Travel and River Cruise businesses
\n
to\u00a0fund its business operations.
\n
p. Trade and other receivables
\n
Trade and other receivables are initially recognised at fair value and
\n
subsequently measured at amortised cost. Loss allowances are
\n
measured as lifetime ECLs.
Notes to the consolidated \ufb01nancial statements continued
\n
152
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
q. Inventories
\n
Inventories are stated at the lower of cost and net realisable value.
\n
Costs include all costs incurred in bringing each product to its
\n
present location and condition. Net realisable value is based on
\n
estimated selling price less any further costs expected to be
\n
incurred\u00a0prior to completion and disposal.
\n
r. Insurance contract liabilities
\n
Insurance contract liabilities include an outstanding claims provision,
\n
a provision for unearned premiums and, if required, a provision for
\n
premium de\ufb01ciency.
\n
Outstanding claims provision
\n
The provision for outstanding claims is set on an individual claim basis
\n
and is based on the ultimate cost of all claims noti\ufb01ed but not settled,
\n
less amounts already paid by the reporting date, together with a
\n
provision for related claims handling costs. The provision also includes
\n
the estimated cost of claims incurred but not reported (
IBNR
) at the
\n
statement of \ufb01nancial position date, which is estimated using actuarial
\n
methods. The outstanding claims provision is not discounted for the
\n
time value of money, with the exception of claims settled as periodical
\n
payment orders (
PPOs
).
\n
The amount of any anticipated reinsurance, salvage or subrogation
\n
recoveries is separately identi\ufb01ed and reported within reinsurance
\n
assets and insurance contract liabilities respectively.
\n
Di\ufb00erences between the provisions at the reporting date and
\n
settlements and provisions in the following year (known as
run-o\ufb00
\n
deviations
) are recognised in the income statement as they arise.
\n
Provision for unearned premiums
\n
The provision for unearned premiums represents the portion of
\n
premiums received, or receivable, that relates to risks that have not
\n
yet expired at the reporting date. The provision is recognised when
\n
contracts are entered into and premiums are charged, and is
\n
recognised in the income statement as premium income over the
\n
term of the contract on a straight-line basis.
\n
Provision for premium deficiency
\n
At each reporting date, the Group reviews its unexpired risks and a
\n
liability adequacy test is performed to determine whether there is
\n
any\u00a0overall excess of expected claims and deferred acquisition costs
\n
over unearned premiums. This calculation uses current estimates of
\n
future contractual cash \ufb02ows after taking account of the investment
\n
return expected to arise on assets relating to the relevant insurance
\n
technical provisions. If these estimates show that the carrying
\n
amount of the unearned premiums (less related deferred acquisition
\n
costs) is inadequate, the de\ufb01ciency is recognised in the income
\n
statement by setting up a provision for premium de\ufb01ciency.
\n
The\u00a0deferred acquisition costs are written o\ufb00 before any provision
\n
is\u00a0made.
\n
s. Reinsurance assets
\n
Contracts entered into by the Group with reinsurers under which the
\n
Group is compensated for losses on insurance contracts issued, are
\n
classi\ufb01ed as reinsurance contracts. A contract is only accounted for
\n
as a reinsurance contract where there is signi\ufb01cant insurance risk
\n
transfer between the insurer and reinsurer.
\n
Reinsurance assets include balances due from reinsurance
\n
companies for ceded insurance liabilities under excess of loss cover.
\n
Amounts recoverable from reinsurers are estimated in a consistent
\n
manner with the outstanding claims provisions in accordance with
\n
the relevant reinsurance contract.
\n
The Group assesses its reinsurance assets for impairment at each
\n
statement of \ufb01nancial position date. For assets that are directly
\n
exposed to long-tail PPO liabilities, a general provision for impairment
\n
is provided, calculated on a wholesale basis by reference to published
\n
credit rating default curves. For all other reinsurance assets, the
\n
carrying value is written down to its recoverable amount only if there
\n
is objective evidence of impairment.
\n
For the funds-withheld quota share agreement in motor insurance,
\n
the obligation to pay funds and the right to receive reimbursement for
\n
incurred claims are presented on a net basis because there is a legally
\n
enforceable right to o\ufb00set these amounts and there is an intention to
\n
settle on a net basis or realise both the asset and settle the liability
\n
simultaneously. The reinsurance assets recognised under these
\n
agreements are therefore recognised as an o\ufb00set against premium
\n
ceded under the same agreement, within trade and other payables.
\n
t. Share-based payments
\n
The Group provides bene\ufb01ts to employees (including Executive
\n
Directors) in the form of share-based payment transactions, whereby
\n
employees render services as consideration for equity instruments
\n
(
equity-settled transactions
). The cost of equity-settled
\n
transactions is measured by reference to the fair value on the grant
\n
date and is recognised as an expense over the relevant vesting period,
\n
ending on the date on which the employee becomes fully entitled to
\n
the award.
\n
Fair values of share-based payment transactions are calculated using
\n
Black-Scholes and Monte-Carlo modelling techniques. In valuing
\n
equity-settled transactions, assessment is made of any vesting
\n
conditions to categorise these into market performance conditions,
\n
non-market performance conditions and service conditions.
\n
Where the equity-settled transactions have market performance
\n
conditions (that is, performance which is directly or indirectly linked
\n
to\u00a0the share price), the fair value of the award is assessed at the time
\n
of\u00a0grant and is not changed, regardless of the actual level of vesting
\n
achieved, except where the employee ceases to be employed prior
\n
to\u00a0the vesting date.
\n
For service conditions and non-market performance conditions, the
\n
fair value of the award is assessed at the time of grant and is
\n
reassessed at each reporting date to re\ufb02ect updated expectations
\n
for the level of vesting. No expense is recognised for awards that
\n
ultimately do not vest.
\n
At each reporting date prior to vesting, the cumulative expense is
\n
calculated, representing the extent to which the vesting period has
\n
expired and, in the case of non-market conditions, the best estimate
\n
of the number of equity instruments that will ultimately vest or, in the
\n
case of instruments subject to market conditions, the fair value on
\n
grant adjusted only for leavers. The movement in the cumulative
\n
expense since the previous reporting date is recognised in the
\n
income statement, with the corresponding increase being
\n
recognised in the share-based payments reserve.
\n
Upon vesting of an equity instrument, the cumulative cost in the
\n
share-based payments reserve is reclassi\ufb01ed to retained earnings
\n
in\u00a0equity.
\n
The dilutive e\ufb00ect of outstanding options is re\ufb02ected as additional
\n
share dilution in the computation of diluted (loss)/earnings per share.
\n
u. Retirement benefit schemes
\n
During the year, the Group operated a de\ufb01ned bene\ufb01t pension plan
\n
that requires contributions to be made to separately administered
\n
funds. The cost of providing bene\ufb01ts under the de\ufb01ned bene\ufb01t plan
\n
is\u00a0determined separately using the projected unit credit valuation
\n
method. The de\ufb01ned plan was closed to future accrual on
\n
31\u00a0October\u00a02021. From 1 November 2021, members moved from
\n
active to deferred status.
Saga plc
Annual Report and Accounts 2023
153
Strategic report
Financial statements
Additional information
Governance
\n
Actuarial gains and losses arising in the year are credited/charged
\n
to\u00a0OCI and comprise the e\ufb00ects of changes in actuarial assumptions
\n
and experience adjustments due to di\ufb00erences between the previous
\n
actuarial assumptions and what has actually occurred. In particular,
\n
the di\ufb00erence between the interest income and the actual return
\n
on\u00a0plan assets is recognised in OCI.
\n
Other movements in the net surplus or de\ufb01cit, which include the
\n
current service cost, any past service cost and the e\ufb00ect of any
\n
curtailment or settlements, are recognised in the income statement.
\n
Past service costs are recognised in the income statement on the
\n
earlier of the date of plan curtailment and the date that the Group
\n
recognises restructuring-related costs. The Group no longer incurs
\n
any service costs or curtailment costs relating to the de\ufb01ned bene\ufb01t
\n
pension plan as the scheme is closed to future accrual. The interest
\n
cost, less interest income on assets held in the plans, is also charged
\n
to the income statement.
\n
The de\ufb01ned bene\ufb01t schemes are funded, with assets of the schemes
\n
held separately from those of the Group, in separate Trustee-
\n
administered funds. Scheme assets are measured using market
\n
values and scheme liabilities are measured using the projected unit
\n
actuarial method and are discounted at the current rate of return on
\n
a high-quality corporate bond of equivalent term and currency to the
\n
liability. Full actuarial valuations are obtained at least triennially and
\n
are\u00a0updated at each reporting date. The resulting de\ufb01ned bene\ufb01t
\n
asset or liability is presented separately on the face of the statement
\n
of \ufb01nancial position. The value of a pension bene\ufb01t asset is restricted
\n
to the amount that may be recovered, either through reduced
\n
contributions, or agreed refunds from the scheme.
\n
For de\ufb01ned contribution schemes, the amounts charged to the
\n
income statement are the contributions payable in the year.
\n
v. Provisions
\n
Provisions are recognised when the Group has a present obligation
\n
(legal or constructive) as a result of a past event, and it is probable
\n
that\u00a0an out\ufb02ow of resources embodying economic bene\ufb01ts will be
\n
required to settle the obligation and a reliable estimate can be made
\n
of the amount of the obligation. The expense relating to any provision
\n
is presented in the income statement net of any reimbursement.
\n
If\u00a0the e\ufb00ect of the time value of money is material, provisions are
\n
discounted using a current pre-tax rate that re\ufb02ects the risks speci\ufb01c
\n
to the liability. Where discounting is used, the increase in the provision
\n
due to the passage of time is recognised as a \ufb01nance cost.
\n
A provision is recognised for onerous contracts in which the
\n
unavoidable costs of meeting the obligations under the contract
\n
exceed the economic bene\ufb01ts expected to be received under it.
\n
The unavoidable costs re\ufb02ect the least net cost of exiting the
\n
contract, which is the lower of the cost of ful\ufb01lling it and any
\n
compensation or penalties arising from failure to ful\ufb01l it. The costs
\n
of ful\ufb01lling a contract comprise both the incremental costs and an
\n
allocation of other direct costs.
\n
w. Trade and other payables
\n
Trade and other payables are initially recognised at fair value and
\n
subsequently measured at amortised cost. They represent liabilities
\n
to pay for goods or services that have been received or supplied in
\n
the\u00a0normal course of business, invoiced by the supplier before the
\n
year end, but for which payment has not yet been made.
\n
x. Equity
\n
The Group has ordinary shares that are classi\ufb01ed as equity.
\n
Incremental external costs that are directly attributable to the
\nissue\u00a0of these shares are recognised in equity, net of tax.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20054": { "value": "a. Revenue recognition
Revenue represents amounts receivable from the sale or supply
\n
of\u00a0goods and services provided to customers in the ordinary course
\n
of business and is recognised to the extent that it is probable that
\n
the\u00a0future economic bene\ufb01ts will \ufb02ow to the Group and the revenue
\n
can be reliably measured, regardless of when payment is received.
\n
The recognition policies for the Group\u2019s various revenue streams
\n
by\u00a0segment are as follows:
\n
i) Insurance
\n
The amounts received from customers for insurance policies
\n
comprise three main elements: the premium charged to the
\n
customer in respect of the insurance cover (
gross premium
);
\n
insurance premium tax (
IPT
); and an arrangement fee where
\n
applicable (only applied to policies that are brokered via a panel).
\n
The\u00a0gross premium itself comprises two elements: the premium
\n
charged by the underwriter of each policy (
net premium
), which
\n
may\u00a0be provided by the Group\u2019s in-house underwriter or by a
\n
third-party underwriter, plus any adjustment to the net premium
\n
that\u00a0is applied by the Group\u2019s broker during the broking service
\n
(
street pricing adjustment
).
\n
In addition, where the customer pays in instalments, the Group
\n
may\u00a0charge interest on the outstanding balance. The Group may
\n
also\u00a0charge additional fee income for mid-term cancellations and
\n
adjustments made to policies mid-term.
\n
IPT is excluded from all revenue recognised by the Group.
\n
For 12-month insurance policies with no option to \ufb01x the
\n
premium at renewal (
annual policies
):
\n
For insurance policies underwritten by the Group, the gross
\n
insurance premium is recognised on a straight-line time-apportioned
\n
basis over the period of cover. The portion of the premium ceded to
\n
reinsurers is also recognised on a straight-line time-apportioned
\n
basis over the period of cover as a reduction to revenue. This
\n
recognition basis is in line with the requirements of International
\n
Financial Reporting Standard (
IFRS
) 4.
\n
For insurance policies not underwritten by the Group, the portion of
\n
the gross premium that is retained by the Group, otherwise referred
\n
to as the street pricing adjustment, is recognised on the cover start
\n
date of each policy. The portion of the gross premium charged by the
\n
third-party underwriter, otherwise referred to as the net premium, is
\n
not recognised as revenue in the income statement. This recognition
\n
basis is in line with the requirements of IFRS 15.
\n
For 12-month insurance policies with the option to \ufb01x the
\n
premium over three years (
three-year \ufb01xed-price policies
):
\n
For three-year \ufb01xed-price policies, the option to \ufb01x the premium
\n
at\u00a0the \ufb01rst and second renewal points is deemed to be a separate
\n
performance obligation as de\ufb01ned by IFRS 15. The Group therefore
\n
defers a portion of the gross premium received in the \ufb01rst year of
\n
cover into years two and three, and a portion of the gross premium
\n
received in the second year of cover into year three, to coincide
\n
with\u00a0when the option has been exercised by the customer and so
\n
deemed to be ful\ufb01lled by the Group. The carrying value of the revenue
\n
deferred is recognised within contract liabilities in the statement of
\n
\ufb01nancial position.
\n
If a customer cancels a three-year \ufb01xed-price policy mid-term or
\n
chooses not to renew in the second or third years, any brought
\n
forward income deferral is recognised in the income statement at
\n
the\u00a0point the cover ends, being the point that the Group is released
\n
from the obligation to \ufb01x the price at renewal.
Saga plc
Annual Report and Accounts 2023
145
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses a cost-plus methodology to approximate a
\n
standalone selling price of the option to \ufb01x the customer price at
\n
renewal, by reference to an actuarial estimate of the premium that it
\n
would cost the Group to transfer the obligation to \ufb01x to a third party,
\n
plus an appropriate pro\ufb01t margin.
\n
The gross premium that is allocated to each of the three policy years
\n
is then measured as the gross premium charged in each year, less any
\n
income deferred to subsequent policy years for the option to \ufb01x, plus
\n
any brought forward income deferred from earlier policy years. The
\n
accounting in each policy year then follows the same principles as
\n
described above for annual policies.
\n
Where there is a switch of underwriter between the Group and a
\n
third-party underwriter at either of the renewal points within the
\n
three-year price-\ufb01x, the Group applies the relevant accounting policy
\n
for the subsequent policy year in line with either of the two methods
\n
as\u00a0described for annual policies.
\n
Management considers the de\ufb01nition of performance obligations for
\n
three-year \ufb01xed-price policies to be a signi\ufb01cant area of judgement.
\n
All insurance policies (both three-year \ufb01xed-price policies and
\n
annual policies):
\n
For all insurance policies, the arrangement fee that is charged in
\n
respect of the broking service is recognised on, or before, the cover
\n
start date of each policy on the date that each policy is arranged,
\n
being the point at which the performance obligation to broker the
\n
policy is ful\ufb01lled. It is measured by reference to the explicit price
\n
charged to customers for this service. Management considers the
\n
revenue recognition treatment of the arrangement fee to be a
\n
signi\ufb01cant area of judgement.
\n
Gross premiums received in advance of the cover start date of a
\n
policy are treated as advance receipts and included as contract
\n
liabilities in the statement of \ufb01nancial position.
\n
Premiums in respect of insurance policies underwritten by the Group
\n
that have a period of unexpired risk at the reporting date, and which
\n
relate to the period after the reporting date, are treated as unearned
\n
and included in gross insurance contract liabilities in the statement of
\n
\ufb01nancial position. The portion of those unearned premiums ceded to
\n
excess of loss reinsurers is recognised as a reinsurance asset on
\n
the\u00a0face of the statement of \ufb01nancial position. The portion of those
\n
unearned premiums ceded to quota share reinsurers is recognised
\n
as an asset netted o\ufb00 against reinsurance premiums withheld within
\n
trade payables, since there is a right of set-o\ufb00 within the contract.
\n
Subsequent changes to premiums mid-term are recognised on
\n
the\u00a0e\ufb00ective date of the mid-term adjustment. For those policies
\n
that\u00a0are underwritten by the Group, these changes are recognised
\n
on\u00a0a straight-line time-apportioned basis over the period of cover
\n
remaining on the policy. Reduction in premiums from mid-term
\n
cancellations are recognised on the e\ufb00ective date of the cancellation.
\n
Any fee income charged for a mid-term cancellation or adjustment is
\n
recognised on the date the adjustment is made, being the point that
\n
the mid-term service is ful\ufb01lled.
\n
Income from credit provided to customers to facilitate payment of
\n
their insurance premiums by instalments over the life of their policy
\n
is\u00a0treated as part of the revenue from insurance operations and
\n
recognised over the period of the policy in proportion to the
\n
outstanding premium balance.
\n
Pro\ufb01t commissions due under coinsurance or reinsurance
\n
arrangements are recognised and valued in accordance with the
\n
contractual terms to which they are subject, when it is highly probable
\n
that a signi\ufb01cant reversal of revenue will not occur, and on the same
\n
basis, where appropriate, as the related reinsured liabilities.
\n
For revenue earned from credit hire and repair services for non-fault
\n
claims (
credit hire and
credit repair
), the Group initially recognises
\n
the revenue at fair value, which is based on a historical assessment of
\n
debt recovery and discount levels. Credit hire revenue is recognised
\n
from the date that a vehicle is placed on hire equally over the duration
\n
of the hire. Credit repair revenue represents income from the
\n
recovery of the costs of repair of customers\u2019 vehicles. Credit repair
\n
revenue is recognised when the work has been completed. Late
\n
payment penalties a\ufb00orded under the terms of the Association of
\n
British Insurers General Terms of Agreement are recognised as they
\n
become payable by the insurance company.
\n
ii) Cruise and Travel
\n
Revenue from Cruise and Travel, where the Group does not operate
\n
the cruise ship, is recognised in line with the performance obligations
\n
that are included in a package holiday, namely the provision of \ufb02ights,
\n
accommodation, transfers and travel insurance. Revenue is
\n
recognised as and when each performance obligation is satis\ufb01ed,
\n
which is deemed to be when each service to the customer takes
\n
place. The standalone selling price of each performance obligation is
\n
estimated as the cost to provide each obligation plus a pro\ufb01t margin
\n
appropriate to the nature of each service. The price charged to each
\n
customer is then apportioned to each performance obligation based
\n
on the relative estimated standalone selling prices, in line with the
\n
requirements of IFRS 15.
\n
For Travel, revenue in relation to \ufb02ights and \ufb02ight upgrades is
\n
recognised on the date of each \ufb02ight; revenue in relation to
\n
accommodation is recognised over the duration of the holiday;
\n
revenue in relation to transfers is recognised on the date that the
\n
transfers occur before and after each holiday; and revenue in respect
\n
of travel insurance (which is underwritten by a third-party
\n
underwriter) is recognised on the cover start date of the insurance.
\n
Revenue in respect of Cruise holidays where the Group operates the
\n
cruise ship is also recognised in line with the performance obligations,
\n
being the cruise itself, \ufb02ights and/or rail journeys (where applicable),
\n
travel insurance and transfers. The portion of revenue allocated to
\n
the cruise itself is recognised on a per diem basis over the duration
\n
of\u00a0the cruise in line with when the performance obligation is satis\ufb01ed.
\n
The portion of revenue allocated to \ufb02ights and \ufb02ight upgrades
\n
(where\u00a0applicable) and transfers is recognised on the date that each
\n
trip is ful\ufb01lled, which is consistent with the approach adopted by the
\n
Travel business.
\n
Revenue from travel insurance for cruising holidays is recognised at
\n
the cover start date of the policy, which is usually at the point the
\n
customer makes a booking.
\n
An element of revenue which represents the non-refundable deposit
\n
received at the time of booking is recognised in the income statement
\n
immediately in line with the prevailing rate of cancellations.
\n
Revenue from sales in resort, for example for optional excursions, or
\n
on board a cruise ship operated by the Group, for example bar sales
\n
or optional excursions, is recognised as it is earned.
\n
Revenue from Cruise and Travel received in advance of when each
\n
performance obligation is satis\ufb01ed is included as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
Notes to the consolidated \ufb01nancial statements continued
\n
146
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
iii) Other Businesses and Central Costs
\n
Saga Money
\n
Revenue from personal \ufb01nance products is recognised when the
\n
customer contracts with the provider of the relevant personal
\n
\ufb01nance product where the revenue comprises a one-o\ufb00 payment
\n
by\u00a0the provider of the product.
\n
Where the personal \ufb01nance product is one that delivers a recurring
\n
income stream, the present value of the future expected revenue
\n
to\u00a0be received is recognised when the customer contracts with the
\n
provider of the relevant personal \ufb01nance product, and it is highly
\n
probable that a signi\ufb01cant reversal of revenue recognised will
\n
not\u00a0occur.
\n
For the Saga savings product, commissions are earned over the
\n
duration of the contract in line with the contractual amount due
\n
to\u00a0the\u00a0Group.
\n
For Saga equity release products, commissions are earned initially
\n
and over the lifetime of the product. Additionally, further
\n
commissions, where applicable are earned at each subsequent stage
\n
of the drawdown if any more of the advance is taken by the customer.
\n
Initial\u00a0commission relating to new business is recognised as revenue
\n
at the point the performance obligation with the Group\u2019s contracted
\n
business partners is satis\ufb01ed, and the customer has taken out the
\n
product. Where applicable, trail commission is recognised as the
\n
discounted future cash \ufb02ows expected to be received over the
\n
estimated life of the product and likewise for further commissions
\n
on\u00a0additional drawdowns undertaken by the customer.
\n
Saga Media
\n
Magazine subscription revenue is recognised on a straight-line
\n
basis\u00a0over the period of the subscription. Revenue generated from
\n
advertising within the magazine is recognised when the magazine
\n
is\u00a0provided to the customer.
\n
The element of subscriptions and advertising revenue relating to the
\n
period after the reporting date is recognised as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
\n
Printing and mailing
\n
Revenue from printing and mailing services is recognised in line
\n
with\u00a0the performance obligations within customer contracts.
\n
Market research
\n
Revenue from market research services is recognised when a
\n
performance obligation is satis\ufb01ed. Revenue recognised over time
\nis\u00a0based on the proportion of the level of service performed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20055": { "value": "a. Revenue recognition
Revenue represents amounts receivable from the sale or supply
\n
of\u00a0goods and services provided to customers in the ordinary course
\n
of business and is recognised to the extent that it is probable that
\n
the\u00a0future economic bene\ufb01ts will \ufb02ow to the Group and the revenue
\n
can be reliably measured, regardless of when payment is received.
\n
The recognition policies for the Group\u2019s various revenue streams
\n
by\u00a0segment are as follows:
\n
i) Insurance
\n
The amounts received from customers for insurance policies
\n
comprise three main elements: the premium charged to the
\n
customer in respect of the insurance cover (
gross premium
);
\n
insurance premium tax (
IPT
); and an arrangement fee where
\n
applicable (only applied to policies that are brokered via a panel).
\n
The\u00a0gross premium itself comprises two elements: the premium
\n
charged by the underwriter of each policy (
net premium
), which
\n
may\u00a0be provided by the Group\u2019s in-house underwriter or by a
\n
third-party underwriter, plus any adjustment to the net premium
\n
that\u00a0is applied by the Group\u2019s broker during the broking service
\n
(
street pricing adjustment
).
\n
In addition, where the customer pays in instalments, the Group
\n
may\u00a0charge interest on the outstanding balance. The Group may
\n
also\u00a0charge additional fee income for mid-term cancellations and
\n
adjustments made to policies mid-term.
\n
IPT is excluded from all revenue recognised by the Group.
\n
For 12-month insurance policies with no option to \ufb01x the
\n
premium at renewal (
annual policies
):
\n
For insurance policies underwritten by the Group, the gross
\n
insurance premium is recognised on a straight-line time-apportioned
\n
basis over the period of cover. The portion of the premium ceded to
\n
reinsurers is also recognised on a straight-line time-apportioned
\n
basis over the period of cover as a reduction to revenue. This
\n
recognition basis is in line with the requirements of International
\n
Financial Reporting Standard (
IFRS
) 4.
\n
For insurance policies not underwritten by the Group, the portion of
\n
the gross premium that is retained by the Group, otherwise referred
\n
to as the street pricing adjustment, is recognised on the cover start
\n
date of each policy. The portion of the gross premium charged by the
\n
third-party underwriter, otherwise referred to as the net premium, is
\n
not recognised as revenue in the income statement. This recognition
\n
basis is in line with the requirements of IFRS 15.
\n
For 12-month insurance policies with the option to \ufb01x the
\n
premium over three years (
three-year \ufb01xed-price policies
):
\n
For three-year \ufb01xed-price policies, the option to \ufb01x the premium
\n
at\u00a0the \ufb01rst and second renewal points is deemed to be a separate
\n
performance obligation as de\ufb01ned by IFRS 15. The Group therefore
\n
defers a portion of the gross premium received in the \ufb01rst year of
\n
cover into years two and three, and a portion of the gross premium
\n
received in the second year of cover into year three, to coincide
\n
with\u00a0when the option has been exercised by the customer and so
\n
deemed to be ful\ufb01lled by the Group. The carrying value of the revenue
\n
deferred is recognised within contract liabilities in the statement of
\n
\ufb01nancial position.
\n
If a customer cancels a three-year \ufb01xed-price policy mid-term or
\n
chooses not to renew in the second or third years, any brought
\n
forward income deferral is recognised in the income statement at
\n
the\u00a0point the cover ends, being the point that the Group is released
\n
from the obligation to \ufb01x the price at renewal.
Saga plc
Annual Report and Accounts 2023
145
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses a cost-plus methodology to approximate a
\n
standalone selling price of the option to \ufb01x the customer price at
\n
renewal, by reference to an actuarial estimate of the premium that it
\n
would cost the Group to transfer the obligation to \ufb01x to a third party,
\n
plus an appropriate pro\ufb01t margin.
\n
The gross premium that is allocated to each of the three policy years
\n
is then measured as the gross premium charged in each year, less any
\n
income deferred to subsequent policy years for the option to \ufb01x, plus
\n
any brought forward income deferred from earlier policy years. The
\n
accounting in each policy year then follows the same principles as
\n
described above for annual policies.
\n
Where there is a switch of underwriter between the Group and a
\n
third-party underwriter at either of the renewal points within the
\n
three-year price-\ufb01x, the Group applies the relevant accounting policy
\n
for the subsequent policy year in line with either of the two methods
\n
as\u00a0described for annual policies.
\n
Management considers the de\ufb01nition of performance obligations for
\n
three-year \ufb01xed-price policies to be a signi\ufb01cant area of judgement.
\n
All insurance policies (both three-year \ufb01xed-price policies and
\n
annual policies):
\n
For all insurance policies, the arrangement fee that is charged in
\n
respect of the broking service is recognised on, or before, the cover
\n
start date of each policy on the date that each policy is arranged,
\n
being the point at which the performance obligation to broker the
\n
policy is ful\ufb01lled. It is measured by reference to the explicit price
\n
charged to customers for this service. Management considers the
\n
revenue recognition treatment of the arrangement fee to be a
\n
signi\ufb01cant area of judgement.
\n
Gross premiums received in advance of the cover start date of a
\n
policy are treated as advance receipts and included as contract
\n
liabilities in the statement of \ufb01nancial position.
\n
Premiums in respect of insurance policies underwritten by the Group
\n
that have a period of unexpired risk at the reporting date, and which
\n
relate to the period after the reporting date, are treated as unearned
\n
and included in gross insurance contract liabilities in the statement of
\n
\ufb01nancial position. The portion of those unearned premiums ceded to
\n
excess of loss reinsurers is recognised as a reinsurance asset on
\n
the\u00a0face of the statement of \ufb01nancial position. The portion of those
\n
unearned premiums ceded to quota share reinsurers is recognised
\n
as an asset netted o\ufb00 against reinsurance premiums withheld within
\n
trade payables, since there is a right of set-o\ufb00 within the contract.
\n
Subsequent changes to premiums mid-term are recognised on
\n
the\u00a0e\ufb00ective date of the mid-term adjustment. For those policies
\n
that\u00a0are underwritten by the Group, these changes are recognised
\n
on\u00a0a straight-line time-apportioned basis over the period of cover
\n
remaining on the policy. Reduction in premiums from mid-term
\n
cancellations are recognised on the e\ufb00ective date of the cancellation.
\n
Any fee income charged for a mid-term cancellation or adjustment is
\n
recognised on the date the adjustment is made, being the point that
\n
the mid-term service is ful\ufb01lled.
\n
Income from credit provided to customers to facilitate payment of
\n
their insurance premiums by instalments over the life of their policy
\n
is\u00a0treated as part of the revenue from insurance operations and
\n
recognised over the period of the policy in proportion to the
\n
outstanding premium balance.
\n
Pro\ufb01t commissions due under coinsurance or reinsurance
\n
arrangements are recognised and valued in accordance with the
\n
contractual terms to which they are subject, when it is highly probable
\n
that a signi\ufb01cant reversal of revenue will not occur, and on the same
\n
basis, where appropriate, as the related reinsured liabilities.
\n
For revenue earned from credit hire and repair services for non-fault
\n
claims (
credit hire and
credit repair
), the Group initially recognises
\n
the revenue at fair value, which is based on a historical assessment of
\n
debt recovery and discount levels. Credit hire revenue is recognised
\n
from the date that a vehicle is placed on hire equally over the duration
\n
of the hire. Credit repair revenue represents income from the
\n
recovery of the costs of repair of customers\u2019 vehicles. Credit repair
\n
revenue is recognised when the work has been completed. Late
\n
payment penalties a\ufb00orded under the terms of the Association of
\n
British Insurers General Terms of Agreement are recognised as they
\n
become payable by the insurance company.
\n
ii) Cruise and Travel
\n
Revenue from Cruise and Travel, where the Group does not operate
\n
the cruise ship, is recognised in line with the performance obligations
\n
that are included in a package holiday, namely the provision of \ufb02ights,
\n
accommodation, transfers and travel insurance. Revenue is
\n
recognised as and when each performance obligation is satis\ufb01ed,
\n
which is deemed to be when each service to the customer takes
\n
place. The standalone selling price of each performance obligation is
\n
estimated as the cost to provide each obligation plus a pro\ufb01t margin
\n
appropriate to the nature of each service. The price charged to each
\n
customer is then apportioned to each performance obligation based
\n
on the relative estimated standalone selling prices, in line with the
\n
requirements of IFRS 15.
\n
For Travel, revenue in relation to \ufb02ights and \ufb02ight upgrades is
\n
recognised on the date of each \ufb02ight; revenue in relation to
\n
accommodation is recognised over the duration of the holiday;
\n
revenue in relation to transfers is recognised on the date that the
\n
transfers occur before and after each holiday; and revenue in respect
\n
of travel insurance (which is underwritten by a third-party
\n
underwriter) is recognised on the cover start date of the insurance.
\n
Revenue in respect of Cruise holidays where the Group operates the
\n
cruise ship is also recognised in line with the performance obligations,
\n
being the cruise itself, \ufb02ights and/or rail journeys (where applicable),
\n
travel insurance and transfers. The portion of revenue allocated to
\n
the cruise itself is recognised on a per diem basis over the duration
\n
of\u00a0the cruise in line with when the performance obligation is satis\ufb01ed.
\n
The portion of revenue allocated to \ufb02ights and \ufb02ight upgrades
\n
(where\u00a0applicable) and transfers is recognised on the date that each
\n
trip is ful\ufb01lled, which is consistent with the approach adopted by the
\n
Travel business.
\n
Revenue from travel insurance for cruising holidays is recognised at
\n
the cover start date of the policy, which is usually at the point the
\n
customer makes a booking.
\n
An element of revenue which represents the non-refundable deposit
\n
received at the time of booking is recognised in the income statement
\n
immediately in line with the prevailing rate of cancellations.
\n
Revenue from sales in resort, for example for optional excursions, or
\n
on board a cruise ship operated by the Group, for example bar sales
\n
or optional excursions, is recognised as it is earned.
\n
Revenue from Cruise and Travel received in advance of when each
\n
performance obligation is satis\ufb01ed is included as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
Notes to the consolidated \ufb01nancial statements continued
\n
146
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
iii) Other Businesses and Central Costs
\n
Saga Money
\n
Revenue from personal \ufb01nance products is recognised when the
\n
customer contracts with the provider of the relevant personal
\n
\ufb01nance product where the revenue comprises a one-o\ufb00 payment
\n
by\u00a0the provider of the product.
\n
Where the personal \ufb01nance product is one that delivers a recurring
\n
income stream, the present value of the future expected revenue
\n
to\u00a0be received is recognised when the customer contracts with the
\n
provider of the relevant personal \ufb01nance product, and it is highly
\n
probable that a signi\ufb01cant reversal of revenue recognised will
\n
not\u00a0occur.
\n
For the Saga savings product, commissions are earned over the
\n
duration of the contract in line with the contractual amount due
\n
to\u00a0the\u00a0Group.
\n
For Saga equity release products, commissions are earned initially
\n
and over the lifetime of the product. Additionally, further
\n
commissions, where applicable are earned at each subsequent stage
\n
of the drawdown if any more of the advance is taken by the customer.
\n
Initial\u00a0commission relating to new business is recognised as revenue
\n
at the point the performance obligation with the Group\u2019s contracted
\n
business partners is satis\ufb01ed, and the customer has taken out the
\n
product. Where applicable, trail commission is recognised as the
\n
discounted future cash \ufb02ows expected to be received over the
\n
estimated life of the product and likewise for further commissions
\n
on\u00a0additional drawdowns undertaken by the customer.
\n
Saga Media
\n
Magazine subscription revenue is recognised on a straight-line
\n
basis\u00a0over the period of the subscription. Revenue generated from
\n
advertising within the magazine is recognised when the magazine
\n
is\u00a0provided to the customer.
\n
The element of subscriptions and advertising revenue relating to the
\n
period after the reporting date is recognised as deferred revenue
\n
within contract liabilities in the statement of \ufb01nancial position.
\n
Printing and mailing
\n
Revenue from printing and mailing services is recognised in line
\n
with\u00a0the performance obligations within customer contracts.
\n
Market research
\n
Revenue from market research services is recognised when a
\n
performance obligation is satis\ufb01ed. Revenue recognised over time
\n
is\u00a0based on the proportion of the level of service performed.
\n
b. Cost recognition
\n
i) Insurance acquisition costs
\n
Acquisition costs arising from the selling or renewing of insurance
\n
policies underwritten by the Group are recognised on a straight-line
\n
time-apportioned basis over the period of the policy in which the
\n
related revenues are earned. The proportion of acquisition costs
\n
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\n
of\u00a0\ufb01nancial position.
\n
Incremental costs of obtaining an insurance contract not underwritten
\n
by the Group, namely fees charged by price-comparison websites,
\n
are recognised as an asset within trade and other receivables on the
\n
face of the statement of \ufb01nancial position. Such costs are amortised
\n
in line with the pattern of revenue for the related insurance contract,
\n
which incorporates the propensity for that contract to renew in
\n
future periods based on the prevailing rate of renewal for these types
\n
of contract. If the expected amortisation period is one year or less,
\n
then incremental costs are expensed when incurred.
\n
ii) Claims costs
\n
Claims costs incurred in respect of insurance policies underwritten
\n
by the Group include estimates for claims made for losses reported
\n
as occurring during the period together with the related handling
\n
costs, any adjustments to claims outstanding from previous periods,
\n
and an estimate for the cost of claims incurred during the period but
\n
not reported as at the reporting date. The portion of costs recovered
\n
from reinsurance is recognised as a reduction to those costs in the
\n
same period in which the costs are recognised. Further detail is
\n
provided in Note 28.
\n
iii) Finance costs
\n
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
\n
iv) All other expenses
\n
All other expenses are recognised in the income statement as they
\nare incurred.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradingIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20333": { "value": "b. Cost recognition
i) Insurance acquisition costs
\n
Acquisition costs arising from the selling or renewing of insurance
\n
policies underwritten by the Group are recognised on a straight-line
\n
time-apportioned basis over the period of the policy in which the
\n
related revenues are earned. The proportion of acquisition costs
\n
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\n
of\u00a0\ufb01nancial position.
\n
Incremental costs of obtaining an insurance contract not underwritten
\n
by the Group, namely fees charged by price-comparison websites,
\n
are recognised as an asset within trade and other receivables on the
\n
face of the statement of \ufb01nancial position. Such costs are amortised
\n
in line with the pattern of revenue for the related insurance contract,
\n
which incorporates the propensity for that contract to renew in
\n
future periods based on the prevailing rate of renewal for these types
\n
of contract. If the expected amortisation period is one year or less,
\n
then incremental costs are expensed when incurred.
\n
ii) Claims costs
\n
Claims costs incurred in respect of insurance policies underwritten
\n
by the Group include estimates for claims made for losses reported
\n
as occurring during the period together with the related handling
\n
costs, any adjustments to claims outstanding from previous periods,
\n
and an estimate for the cost of claims incurred during the period but
\n
not reported as at the reporting date. The portion of costs recovered
\n
from reinsurance is recognised as a reduction to those costs in the
\n
same period in which the costs are recognised. Further detail is
\n
provided in Note 28.
\n
iii) Finance costs
\n
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
iv) All other expenses
\n
All other expenses are recognised in the income statement as they
\nare incurred.", "dimensions": { "concept": "saga:DescriptionOfAccountingPolicyForCostRecognitionExplanatoryPolicyTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20336": { "value": "i) Insurance acquisition costs
Acquisition costs arising from the selling or renewing of insurance
\n
policies underwritten by the Group are recognised on a straight-line
\n
time-apportioned basis over the period of the policy in which the
\n
related revenues are earned. The proportion of acquisition costs
\n
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\n
of\u00a0\ufb01nancial position.
\n
Incremental costs of obtaining an insurance contract not underwritten
\n
by the Group, namely fees charged by price-comparison websites,
\n
are recognised as an asset within trade and other receivables on the
\n
face of the statement of \ufb01nancial position. Such costs are amortised
\n
in line with the pattern of revenue for the related insurance contract,
\n
which incorporates the propensity for that contract to renew in
\n
future periods based on the prevailing rate of renewal for these types
\n
of contract. If the expected amortisation period is one year or less,
\nthen incremental costs are expensed when incurred. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerAcquisitionCostsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20342": { "value": "The proportion of acquisition costs
relating to premiums treated as unearned at the reporting date
\n
are\u00a0deferred and included as other receivables in the statement
\nof\u00a0\ufb01nancial position.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredAcquisitionCostsArisingFromInsuranceContractsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20369": { "value": "iii) Finance costs
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\nderivative \ufb01nancial instruments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20370": { "value": "iii) Finance costs
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
iii) Gains and losses on financial investments at fair value
\n
Realised and unrealised gains and losses on \ufb01nancial investments
\n
are\u00a0recorded as investment income in the income statement, and
\n
represent net fair value gains and losses arising from changes in
\n
fair\u00a0value during the year.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20371": { "value": "iii) Finance costs
Finance costs comprise interest paid and payable that is calculated
\n
using the e\ufb00ective interest rate (
EIR
) method, and it is recognised in
\n
the income statement as it accrues. Accrued interest is included
\n
within the carrying value of the interest-bearing \ufb01nancial liability in
\n
the\u00a0statement of \ufb01nancial position. Finance costs also include debt
\n
issue costs that were initially recognised in the statement of \ufb01nancial
\n
position and amortised over the life of the debt, debt issue costs
\n
in\u00a0respect of renegotiating existing facilities that are immediately
\n
recognised in the income statement and net fair value losses on
\n
derivative \ufb01nancial instruments.
i) Interest income
\n
Investment income in the form of interest is recognised in the income
\n
statement as it accrues and is calculated using the EIR method.
\n
Interest income is earned by the Group on both assets held at fair
\n
value through pro\ufb01t or loss (
FVTPL
), and assets held at fair value
\n
through other comprehensive income (
FVOCI
). Fees and
\n
commissions which are an integral part of the e\ufb00ective yield of the
\n
\ufb01nancial asset or liability are recognised as an adjustment to the EIR
\n
of\u00a0the instrument.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20388": { "value": "
iv) All other expenses
\n
All other expenses are recognised in the income statement as they
\n
are incurred.
4 Administrative and selling expenses
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
a. Auditors\u2019 remuneration
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1 5 Impairment of assets
a) Impairments during the year ended 31 January 2023
\n
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance CGU
\n
by\u00a0\u00a3269.0m.
\n
In addition, following the acquisition of The Big Window Consulting Limited (Note 13a), the goodwill arising on the transaction of \u00a30.5m was
\n
immediately impaired in full (Note 14).
\n
Following management\u2019s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
\n
equipment balance by \u00a30.5m (Note 17) and the carrying value of property assets classi\ufb01ed as held for sale by \u00a31.2m (Note 38).
\n
b) Impairments during the year ended 31 January 2022
\n
During the year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on the travel industry, management
\n
decided to restructure the Group\u2019s former Tour Operations CGU (now River Cruise and Travel CGUs). As a result of this restructuring,
\n
management performed an impairment review of software assets used by the Tour Operations business. The outcome of the review
\n
concluded that an impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022.
\n
Furthermore, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the Group\u2019s Central
\n
Costs business unit.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the\u00a0Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m (Note 17).
\n
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale by \u00a31.0m
\n
(Note 38).
7 Finance costs
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20397": { "value": "c. Recognition of other income statement items
i) Interest income
\n
Investment income in the form of interest is recognised in the income
\n
statement as it accrues and is calculated using the EIR method.
\n
Interest income is earned by the Group on both assets held at fair
\n
value through pro\ufb01t or loss (
FVTPL
), and assets held at fair value
\n
through other comprehensive income (
FVOCI
). Fees and
\n
commissions which are an integral part of the e\ufb00ective yield of the
\n
\ufb01nancial asset or liability are recognised as an adjustment to the EIR
\n
of\u00a0the instrument.
\n
ii) Dividend income
\n
Income in the form of dividends is recognised when the right to
\n
receive payment is established. For listed securities, this is the date
\n
that the security is listed as ex-dividend.
\n
iii) Gains and losses on financial investments at fair value
\n
Realised and unrealised gains and losses on \ufb01nancial investments
\n
are\u00a0recorded as investment income in the income statement, and
\n
represent net fair value gains and losses arising from changes in
\nfair\u00a0value during the year.", "dimensions": { "concept": "saga:DescriptionOfAccountingPolicyForRecognitionOfOtherIncomeStatementItemsExplanatoryPolicyTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20444": { "value": "d. Taxes
i) Current income tax
\n
Income tax assets and liabilities for the current period are measured
\n
at the amount expected to be recovered from, or paid to, taxation
\n
authorities. The tax rates and tax laws used to compute the amount
\n
are those that are enacted or substantively enacted at the reporting
\n
date. Current income tax assets and liabilities also include adjustments
\n
in respect of tax expected to be payable or recoverable in respect of
\n
previous periods. Current income tax relating to items recognised
\n
in\u00a0other comprehensive income (
OCI
) and directly in equity is
\n
recognised in OCI or equity and not in the income statement.
\n
ii) Deferred tax
\n
Deferred tax is provided on temporary di\ufb00erences between the tax
\n
bases of assets and liabilities and their carrying amounts for \ufb01nancial
\n
reporting purposes at the reporting date.
\n
Deferred tax liabilities are recognised for all taxable temporary
\n
di\ufb00erences and deferred tax assets are recognised to the extent
\n
that\u00a0it is probable that taxable pro\ufb01t will be available against which the
\n
deductible temporary di\ufb00erences and the carry forward of unused
\n
tax credits and unused tax losses can be utilised.
\n
The carrying amount of deferred tax assets is reviewed at each
\n
reporting date and reduced to the extent that it is no longer probable
\n
that su\ufb03cient taxable pro\ufb01t will be available to allow all, or part of, the
\n
deferred tax asset to be utilised. Unrecognised deferred tax assets
\n
are reassessed at each reporting date and are recognised to the
\n
extent that it has become probable that future taxable pro\ufb01ts will
\n
allow the deferred tax asset to be recovered.
\n
Deferred tax assets and liabilities are measured at the tax rates that
\n
are expected to apply in the year when the asset is realised or the
\n
liability is settled, based on tax rates (and tax laws) that have been
\n
enacted or substantively enacted at the reporting date. Deferred
\n
tax\u00a0is charged or credited in the income statement, except when it
\n
relates to items charged or credited in OCI or equity, in which case
\n
the deferred tax is recognised in OCI or equity as appropriate.
\n
Deferred tax assets and deferred tax liabilities are o\ufb00set if a legally
\n
enforceable right exists to set-o\ufb00 current tax assets against current
\n
tax liabilities and the deferred taxes relate to the same taxable entity
\nand the same taxation authority. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20459": { "value": "ii) Deferred tax
Deferred tax is provided on temporary di\ufb00erences between the tax
\n
bases of assets and liabilities and their carrying amounts for \ufb01nancial
\n
reporting purposes at the reporting date.
\n
Deferred tax liabilities are recognised for all taxable temporary
\n
di\ufb00erences and deferred tax assets are recognised to the extent
\n
that\u00a0it is probable that taxable pro\ufb01t will be available against which the
\n
deductible temporary di\ufb00erences and the carry forward of unused
\n
tax credits and unused tax losses can be utilised.
\n
The carrying amount of deferred tax assets is reviewed at each
\n
reporting date and reduced to the extent that it is no longer probable
\n
that su\ufb03cient taxable pro\ufb01t will be available to allow all, or part of, the
\n
deferred tax asset to be utilised. Unrecognised deferred tax assets
\n
are reassessed at each reporting date and are recognised to the
\n
extent that it has become probable that future taxable pro\ufb01ts will
\n
allow the deferred tax asset to be recovered.
\n
Deferred tax assets and liabilities are measured at the tax rates that
\n
are expected to apply in the year when the asset is realised or the
\n
liability is settled, based on tax rates (and tax laws) that have been
\n
enacted or substantively enacted at the reporting date. Deferred
\n
tax\u00a0is charged or credited in the income statement, except when it
\n
relates to items charged or credited in OCI or equity, in which case
\n
the deferred tax is recognised in OCI or equity as appropriate.
\n
Deferred tax assets and deferred tax liabilities are o\ufb00set if a legally
\n
enforceable right exists to set-o\ufb00 current tax assets against current
\n
tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20490": { "value": "e. Foreign currencies
Transactions in foreign currencies are initially recorded by the Group
\n
at their respective functional currency spot rate at the date that the
\n
transaction \ufb01rst quali\ufb01es for recognition. Monetary assets and
\n
liabilities denominated in foreign currencies are retranslated at
\n
the\u00a0functional currency spot rate of exchange prevalent at the
\nreporting date.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20495": { "value": "Monetary assets and
liabilities denominated in foreign currencies are retranslated at
\n
the\u00a0functional currency spot rate of exchange prevalent at the
reporting date.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20503": { "value": "f. Intangible assets
Intangible assets acquired are measured on initial recognition at
\n
cost\u00a0and subsequent to initial recognition, are carried at cost less
\n
any\u00a0accumulated amortisation and accumulated impairment losses.
\n
The\u00a0cost of intangible assets acquired in a business combination
\n
is\u00a0their fair value at the date of acquisition. Internally generated
\n
intangibles, excluding internally developed software, are not
\n
capitalised and the related expenditure is re\ufb02ected in the income
\n
statement in the period in which the expenditure is incurred.
\n
The useful lives of intangible assets and goodwill are assessed as
\n
either \ufb01nite or inde\ufb01nite. Estimated useful lives are as follows:
\n
Goodwill
Inde\ufb01nite
\n
Software
3-10 years
\n
Intangible assets with \ufb01nite lives are amortised over their useful
\n
economic life on a basis appropriate to the consumption of the asset
\n
and are assessed for impairment whenever there is an indication that
\n
the intangible asset may be impaired. The amortisation period and
\n
the amortisation method for an intangible asset with a \ufb01nite useful life
\n
are reviewed at least at the end of each reporting period. Changes in
\n
the expected useful life or the expected pattern of consumption of
\n
future economic bene\ufb01ts embodied in the asset are considered to
\n
modify the amortisation period or method, as appropriate, and are
\n
treated as changes in accounting estimates. The amortisation
\n
expense on intangible assets with \ufb01nite lives is recognised in the
\n
income statement in the expense category that is consistent with
\n
the\u00a0function of the intangible assets.
\n
Goodwill is not amortised but is tested for impairment at least
\n
annually, at the cash generating unit (
CGU
) level. Where the carrying
\n
value of the asset exceeds the recoverable amount, an impairment
\n
loss is recognised in the income statement immediately.
\n
Gains or losses arising from derecognition of an intangible asset are
\n
measured as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset and are recognised in the income
\nstatement when the asset is derecognised.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20504": { "value": "f. Intangible assets
Intangible assets acquired are measured on initial recognition at
\n
cost\u00a0and subsequent to initial recognition, are carried at cost less
\n
any\u00a0accumulated amortisation and accumulated impairment losses.
\n
The\u00a0cost of intangible assets acquired in a business combination
\n
is\u00a0their fair value at the date of acquisition. Internally generated
\n
intangibles, excluding internally developed software, are not
\n
capitalised and the related expenditure is re\ufb02ected in the income
\n
statement in the period in which the expenditure is incurred.
\n
The useful lives of intangible assets and goodwill are assessed as
\n
either \ufb01nite or inde\ufb01nite. Estimated useful lives are as follows:
\n
Goodwill
Inde\ufb01nite
\n
Software
3-10 years
\n
Intangible assets with \ufb01nite lives are amortised over their useful
\n
economic life on a basis appropriate to the consumption of the asset
\n
and are assessed for impairment whenever there is an indication that
\n
the intangible asset may be impaired. The amortisation period and
\n
the amortisation method for an intangible asset with a \ufb01nite useful life
\n
are reviewed at least at the end of each reporting period. Changes in
\n
the expected useful life or the expected pattern of consumption of
\n
future economic bene\ufb01ts embodied in the asset are considered to
\n
modify the amortisation period or method, as appropriate, and are
\n
treated as changes in accounting estimates. The amortisation
\n
expense on intangible assets with \ufb01nite lives is recognised in the
\n
income statement in the expense category that is consistent with
\n
the\u00a0function of the intangible assets.
\n
Goodwill is not amortised but is tested for impairment at least
\n
annually, at the cash generating unit (
CGU
) level. Where the carrying
\n
value of the asset exceeds the recoverable amount, an impairment
\n
loss is recognised in the income statement immediately.
\n
Gains or losses arising from derecognition of an intangible asset are
\n
measured as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset and are recognised in the income
\nstatement when the asset is derecognised.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20505": { "value": "f. Intangible assets
Intangible assets acquired are measured on initial recognition at
\n
cost\u00a0and subsequent to initial recognition, are carried at cost less
\n
any\u00a0accumulated amortisation and accumulated impairment losses.
\n
The\u00a0cost of intangible assets acquired in a business combination
\n
is\u00a0their fair value at the date of acquisition. Internally generated
\n
intangibles, excluding internally developed software, are not
\n
capitalised and the related expenditure is re\ufb02ected in the income
\n
statement in the period in which the expenditure is incurred.
\n
The useful lives of intangible assets and goodwill are assessed as
\n
either \ufb01nite or inde\ufb01nite. Estimated useful lives are as follows:
\n
Goodwill
Inde\ufb01nite
\n
Software
3-10 years
\n
Intangible assets with \ufb01nite lives are amortised over their useful
\n
economic life on a basis appropriate to the consumption of the asset
\n
and are assessed for impairment whenever there is an indication that
\n
the intangible asset may be impaired. The amortisation period and
\n
the amortisation method for an intangible asset with a \ufb01nite useful life
\n
are reviewed at least at the end of each reporting period. Changes in
\n
the expected useful life or the expected pattern of consumption of
\n
future economic bene\ufb01ts embodied in the asset are considered to
\n
modify the amortisation period or method, as appropriate, and are
\n
treated as changes in accounting estimates. The amortisation
\n
expense on intangible assets with \ufb01nite lives is recognised in the
\n
income statement in the expense category that is consistent with
\n
the\u00a0function of the intangible assets.
\n
Goodwill is not amortised but is tested for impairment at least
\n
annually, at the cash generating unit (
CGU
) level. Where the carrying
\n
value of the asset exceeds the recoverable amount, an impairment
\n
loss is recognised in the income statement immediately.
\n
Gains or losses arising from derecognition of an intangible asset are
\n
measured as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset and are recognised in the income
\n
statement when the asset is derecognised.
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest income recognised using the EIR method
4.7
4.4
\n
Gains on assets measured at FVTPL
0.7
0.2
\n
Amounts ceded under reinsurance contracts
(3.9)
(4.3)
\n
1.5
0.3
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20548": { "value": "
g. Business combinations and goodwill
\n
Business combinations are accounted for using the acquisition
\n
method. The cost of an acquisition is measured as the aggregate of
\n
the consideration transferred measured at acquisition date at fair
\n
value and the amount of any non-controlling interests in the acquiree.
\n
For each business combination, the Group elects whether to
\n
measure the non-controlling interests in the acquiree at fair value or
\n
at the proportionate share of the acquiree\u2019s identi\ufb01able net assets.
\n
When the Group acquires a business, it assesses the \ufb01nancial
\n
and\u00a0non-\ufb01nancial assets and liabilities assumed for appropriate
\n
classi\ufb01cation and designation in accordance with the contractual
\n
terms, economic circumstances and pertinent conditions as at
\n
the\u00a0acquisition date.
Any contingent consideration to be transferred by the acquirer will
\n
be\u00a0recognised at fair value at the acquisition date. Contingent
\n
consideration classi\ufb01ed as an asset or liability that is a \ufb01nancial
\n
instrument within the scope of IFRS 9 \u2018Financial Instruments\u2019 is
\n
measured at fair value with the changes in fair value recognised in
\n
the\u00a0income statement.
\n
Any excess of the cost of acquisition over the fair values of the
\n
identi\ufb01able assets and liabilities is recognised as goodwill. If the cost
\n
of\u00a0acquisition is less than the fair values of the identi\ufb01able assets
\n
and\u00a0liabilities of the acquired business, the di\ufb00erence is recognised
\n
directly in the income statement in the year of acquisition.
\n
Acquisition-related costs are expensed as incurred and included
\n
in\u00a0administrative expenses.
\n
After initial recognition, goodwill is measured at cost less any
\n
accumulated impairment losses. Goodwill is allocated to CGUs at the
\n
point of acquisition and is reviewed at least annually for impairment.
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest income recognised using the EIR method
4.7
4.4
\n
Gains on assets measured at FVTPL
0.7
0.2
\n
Amounts ceded under reinsurance contracts
(3.9)
(4.3)
\n
1.5
0.3
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20555": { "value": "For each business combination, the Group elects whether to
measure the non-controlling interests in the acquiree at fair value or
\nat the proportionate share of the acquiree\u2019s identi\ufb01able net assets. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20602": { "value": "h. Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for
\n
impairment, or more frequently if events or changes in circumstances
\n
indicate that it might be impaired. If such an indication exists, the
\n
recoverable amount is estimated and compared with the carrying
\n
amount. If the recoverable amount is less than the carrying amount,
\n
the asset is considered impaired and is written down to its
\n
recoverable amount and the impairment loss is recognised
\n
immediately in the income statement.
\n
Other assets are tested for impairment whenever events or changes
\n
in circumstances indicate that the carrying amount may not be
\n
recoverable. If there is any indication that an asset may be impaired,
\n
a\u00a0recoverable amount is estimated for the individual asset. If it is not
\n
possible to estimate the recoverable amount of the individual asset,
\n
the recoverable amount is determined according to the CGU to
\n
which the asset belongs.
\n
For impairment testing, assets are grouped together into the
\n
smallest group of assets that generate cash in\ufb02ows from continuing
\n
use that are largely independent of the cash in\ufb02ows of other assets or
\n
CGUs. Goodwill arising from a business combination is allocated to
\n
CGUs, or groups of CGUs that are expected to bene\ufb01t from the
\n
synergies of the combination.
\n
The recoverable amount is calculated as the higher of fair value less
\n
costs to sell, and value-in-use. In assessing value-in-use, where
\n
appropriate, estimated future cash \ufb02ows are discounted to their
\n
present value using a pre-tax discount rate that re\ufb02ects current
\n
market assessments of the time value of money and the risks speci\ufb01c
\n
to the asset. In determining fair value less costs of disposal, recent
\n
market transactions are taken into\u00a0account. If no such transactions
\n
can be identi\ufb01ed, an appropriate valuation model is used. These
\n
calculations are corroborated by\u00a0valuation multiples, quoted share
\n
prices for publicly traded companies or other available fair value
\n
indicators. The Group bases its value-in-use calculations on detailed
\n
budgets, plans and long-term growth assumptions, which are
\n
prepared separately for each of the Group\u2019s CGUs to which individual
\nassets are allocated.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20603": { "value": "h. Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for
\n
impairment, or more frequently if events or changes in circumstances
\n
indicate that it might be impaired. If such an indication exists, the
\n
recoverable amount is estimated and compared with the carrying
\n
amount. If the recoverable amount is less than the carrying amount,
\n
the asset is considered impaired and is written down to its
\n
recoverable amount and the impairment loss is recognised
\n
immediately in the income statement.
\n
Other assets are tested for impairment whenever events or changes
\n
in circumstances indicate that the carrying amount may not be
\n
recoverable. If there is any indication that an asset may be impaired,
\n
a\u00a0recoverable amount is estimated for the individual asset. If it is not
\n
possible to estimate the recoverable amount of the individual asset,
\n
the recoverable amount is determined according to the CGU to
\n
which the asset belongs.
\n
For impairment testing, assets are grouped together into the
\n
smallest group of assets that generate cash in\ufb02ows from continuing
\n
use that are largely independent of the cash in\ufb02ows of other assets or
\n
CGUs. Goodwill arising from a business combination is allocated to
\n
CGUs, or groups of CGUs that are expected to bene\ufb01t from the
\n
synergies of the combination.
\n
The recoverable amount is calculated as the higher of fair value less
\n
costs to sell, and value-in-use. In assessing value-in-use, where
\n
appropriate, estimated future cash \ufb02ows are discounted to their
\n
present value using a pre-tax discount rate that re\ufb02ects current
\n
market assessments of the time value of money and the risks speci\ufb01c
\n
to the asset. In determining fair value less costs of disposal, recent
\n
market transactions are taken into\u00a0account. If no such transactions
\n
can be identi\ufb01ed, an appropriate valuation model is used. These
\n
calculations are corroborated by\u00a0valuation multiples, quoted share
\n
prices for publicly traded companies or other available fair value
\n
indicators. The Group bases its value-in-use calculations on detailed
\n
budgets, plans and long-term growth assumptions, which are
\n
prepared separately for each of the Group\u2019s CGUs to which individual
\n
assets are allocated.
ii) Impairment of financial assets
The expected credit loss (
ECL
) impairment model applies to \ufb01nancial
\n
assets measured at amortised cost and debt investments at FVOCI.
\n
The Group measures loss allowances at an amount equal to 12-month
\n
ECLs, except for the following, which are measured as lifetime ECLs:
\n
\u2022
Debt securities that are determined to have high credit risk at
\n
the\u00a0reporting date.
\n
\u2022
Other debt securities and bank balances for which credit risk
\n
has\u00a0increased significantly since initial recognition.
\n
\u2022
Trade receivables and contract assets that result from
\n
transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Group considers reasonable and supportable information
\n
that is relevant and available without undue cost or e\ufb00ort. This
\n
includes both quantitative and qualitative information and analysis,
\n
based on the Group\u2019s historical experience and informed credit
\n
assessment, including forward-looking information.
\n
The Group considers a debt security to have low credit risk when its
\n
credit risk rating is equivalent to the de\ufb01nition of \u2018investment grade\u2019.
\n
The Group considers this to be BBB- or higher as per credit
\n
rating\u00a0scales.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised
\n
cost\u00a0are deducted from the gross carrying amount of the assets,
\n
with\u00a0a corresponding charge to the income statement. For debt
\n
instruments measured at FVOCI, the loss allowance for debt
\n
investments at FVOCI is recognised in pro\ufb01t or loss and reduces
\n
the\u00a0fair value loss, or increases the fair value gain, otherwise
\n
recognised in\u00a0the statement of other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20643": { "value": "i. Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated
\n
depreciation and impairment losses. Where an item of property, plant
\n
and equipment comprises major components having di\ufb00erent useful
\n
lives, they are accounted for separately.
\n
Assets in the course of construction at the statement of \ufb01nancial
\n
position date are classi\ufb01ed separately. These assets are transferred
\n
to other asset categories when they become available for their
\n
intended use.
\n
Depreciation is charged to the income statement on a straight-line
\n
basis so as to write-o\ufb00 the depreciable amount of property, plant and
\n
equipment over their estimated useful lives. The depreciable amount
\n
is the cost of an asset less its residual value. Land and assets in the
\n
course of construction are not depreciated. Estimated useful lives
\n
are\u00a0as follows:
\n
Buildings, properties and related \ufb01xtures:
\n
Buildings
50 years
\n
Fixtures and \ufb01ttings
3-20 years
\n
Ocean cruise ships
30 years
\n
Computers
3-6 years
\n
Plant, vehicles and other equipment
3-10 years
\n
Costs relating to ocean cruise ship mandatory dry-dockings are
\n
capitalised and depreciated over the period up to the next
\n
dry-docking, where appropriate. The International Convention for
\n
the\u00a0Safety of Life at Sea regulations stipulate that ships have to be
\n
dry-docked twice in an interval of \ufb01ve years, with the interval between
\n
consecutive dry-dockings being not less than two years and not more
\n
than three years. All other repairs and maintenance costs are
\n
recognised in the income statement as incurred.
\n
An item of property, plant and equipment is derecognised upon
\n
disposal, or when no future economic bene\ufb01ts are expected from its
\n
use or disposal. Any gain or loss arising on derecognition of an asset
\n
(calculated as the di\ufb00erence between the net disposal proceeds and
\n
the carrying amount of the asset) is included in the income statement
\n
when the asset is derecognised.
\n
Estimated residual values and useful lives are reviewed annually.
\n
In\u00a0relation to the annual review of estimated residual values and
\n
useful\u00a0lives of ocean cruise ships, potential environmental regulatory
\n
changes are also considered. The shipping industry has made a
\n
commitment to reduce CO
\n
2
\n
emissions by 40% by 2030 (from a
\n
2008 baseline), and the UK Government has made commitments to
\n
reach net zero emissions by 2050. The EEXI (carbon design/technical
\n
e\ufb03ciency indicator) and CII (in-service/operational carbon intensity
\n
e\ufb03ciency indicator) regulations were introduced internationally
\n
during the year to enable the industry to meet the 2030 target, and
\n
the Group\u2019s ocean cruise ships meet the requirements of these
\n
regulations. The end of their useful economic lives of 30 years will have
\n
been reached by 2049 in the case of Spirit of Discovery and 2051 in
\nthe case of Spirit of Adventure. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20649": { "value": "
Assets in the course of construction at the statement of \ufb01nancial
\n
position date are classi\ufb01ed separately. These assets are transferred
\n
to other asset categories when they become available for their
\n
intended use.
Land and assets in the course of construction are not depreciated. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForConstructionInProgressExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20655": { "value": "Depreciation is charged to the income statement on a straight-line
basis so as to write-o\ufb00 the depreciable amount of property, plant and
\n
equipment over their estimated useful lives. The depreciable amount
\n
is the cost of an asset less its residual value. Land and assets in the
\n
course of construction are not depreciated. Estimated useful lives
\n
are\u00a0as follows:
\n
Buildings, properties and related \ufb01xtures:
\n
Buildings
50 years
\n
Fixtures and \ufb01ttings
3-20 years
\n
Ocean cruise ships
30 years
\n
Computers
3-6 years
\n
Plant, vehicles and other equipment
3-10 years ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20683": { "value": "All other repairs and maintenance costs are recognised in the income statement as incurred. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepairsAndMaintenanceExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20710": { "value": "j. Non-current assets held for sale
The Group classi\ufb01es non-current assets as held for sale if their
\n
carrying amount will be recovered principally through a sale
\n
transaction rather than through continuing use. To be classi\ufb01ed as
\n
held for sale, an asset must be available for immediate sale in its
\n
present condition subject only to terms that are usual and customary
\n
for the sale of such assets, and the sale must be highly probable. A sale
\n
is considered to be highly probable when management is committed
\n
to a plan to sell an asset and an active programme to locate a buyer
\n
and complete the plan has been initiated at a price that is reasonable
\n
in relation to its current fair value, and there is an expectation that the
\n
sale will be completed within one year from the date of classi\ufb01cation.
\n
Non-current assets classi\ufb01ed as held for sale are carried on the
\n
Group\u2019s statement of \ufb01nancial position at the lower of their carrying
\n
amount and fair value less costs to sell.
\n
Property, plant and equipment and intangible assets, once classi\ufb01ed
\nas held for sale, are not depreciated or amortised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20711": { "value": "j. Non-current assets held for sale
The Group classi\ufb01es non-current assets as held for sale if their
\n
carrying amount will be recovered principally through a sale
\n
transaction rather than through continuing use. To be classi\ufb01ed as
\n
held for sale, an asset must be available for immediate sale in its
\n
present condition subject only to terms that are usual and customary
\n
for the sale of such assets, and the sale must be highly probable. A sale
\n
is considered to be highly probable when management is committed
\n
to a plan to sell an asset and an active programme to locate a buyer
\n
and complete the plan has been initiated at a price that is reasonable
\n
in relation to its current fair value, and there is an expectation that the
\n
sale will be completed within one year from the date of classi\ufb01cation.
\n
Non-current assets classi\ufb01ed as held for sale are carried on the
\n
Group\u2019s statement of \ufb01nancial position at the lower of their carrying
\n
amount and fair value less costs to sell.
\n
Property, plant and equipment and intangible assets, once classi\ufb01ed
\nas held for sale, are not depreciated or amortised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20751": { "value": "k. Financial instruments
i) Financial assets
\n
On initial recognition, a \ufb01nancial asset is classi\ufb01ed as either amortised cost, FVOCI or FVTPL. The classi\ufb01cation of \ufb01nancial assets is based
\n
on\u00a0the business model in which a \ufb01nancial asset is managed, and its contractual cash \ufb02ow characteristics. Derivatives embedded in contracts
\n
where the host is a \ufb01nancial asset in the scope of the standard are never separated. Instead, the hybrid \ufb01nancial instrument as a whole is
\n
assessed for classi\ufb01cation.
\n
Initial recognition
Subsequent measurement
\n
Amortised cost
A \ufb01nancial asset is measured at amortised cost (plus any
\n
directly attributable transaction costs) if it meets both of
\n
the following conditions and is not elected to be designated
\n
as FVTPL:
\n
\u2022
It is held within a business model whose objective is to
\n
hold assets to collect contractual cash flows.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
The Group classi\ufb01es trade receivables, other receivables and
\n
deposits with \ufb01nancial institutions as held at amortised cost.
\n
These assets are subsequently measured at amortised
\n
cost using the EIR method. The amortised cost is reduced
\n
by any impairment losses (see (ii) below). Interest income,
\n
foreign exchange gains and losses and impairments
\n
are\u00a0recognised in pro\ufb01t or loss as they are incurred.
\n
Any\u00a0gain\u00a0or\u00a0loss on derecognition is recognised in pro\ufb01t
\n
or\u00a0loss immediately.
\n
FVOCI
A debt investment is measured at FVOCI (plus any directly
\n
attributable transaction costs) if it meets both of the
\n
following conditions and is not elected to be designated
\n
as\u00a0FVTPL:
\n
\u2022
It is held within a business model whose objective is
\n
achieved by both collecting contractual cash flows and
\n
selling financial assets.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
On initial recognition of an equity investment that is not held
\n
for trading, the Group may irrevocably elect to present
\n
subsequent changes in the investment\u2019s fair value in OCI.
\n
This election is made on an investment-by-investment basis.
\n
The Group classi\ufb01es debt securities as FVOCI.
\n
Debt instruments are subsequently measured at fair value.
\n
Interest income calculated using the EIR method, foreign
\n
exchange gains and losses and impairments are recognised
\n
in pro\ufb01t or loss. Other net gains and losses are recognised
\n
in\u00a0OCI. On derecognition, gains and losses accumulated in
\n
OCI are recycled to pro\ufb01t or loss.
\n
Equity investments are measured at fair value. Dividends
\n
are recognised as income in pro\ufb01t or loss unless the
\n
dividend clearly represents a recovery of part of the cost of
\n
the investment. Other net gains and losses are recognised
\n
in OCI and are never reclassi\ufb01ed to pro\ufb01t or loss.
\n
FVTPL
All \ufb01nancial assets not classi\ufb01ed as amortised cost or
\n
FVOCI\u00a0as described above are classi\ufb01ed as FVTPL and
\n
held\u00a0at fair value. This includes all derivative \ufb01nancial assets.
\n
On initial recognition, the Group may irrevocably elect
\n
to\u00a0designate a \ufb01nancial asset that otherwise meets the
\n
requirements to be measured at amortised cost or
\n
FVOCI\u00a0as FVTPL if doing so eliminates, or signi\ufb01cantly
\n
reduces, an accounting mismatch that would otherwise
\n
arise. This election is made on an individual instrument basis.
\n
The Group classi\ufb01es loan funds, money market funds and
\n
foreign exchange forward contracts not designated in a
\n
hedging relationship, as FVTPL.
\n
These assets are subsequently measured at fair value.
\n
Net\u00a0gains and losses, including any interest or dividend
\n
income, are recognised in pro\ufb01t or loss, unless such
\n
instrument is designated in a hedging relationship
\n
(see (vi) overleaf).
\n
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash \ufb02ows from the asset have expired or when the Group has transferred
\n
substantially all the risks and rewards relating to the asset to a third party.
Notes to the consolidated \ufb01nancial statements continued
\n
150
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.3 Summary of significant accounting policies
\n
continued
\n
ii) Impairment of financial assets
\n
The expected credit loss (
ECL
) impairment model applies to \ufb01nancial
\n
assets measured at amortised cost and debt investments at FVOCI.
\n
The Group measures loss allowances at an amount equal to 12-month
\n
ECLs, except for the following, which are measured as lifetime ECLs:
\n
\u2022
Debt securities that are determined to have high credit risk at
\n
the\u00a0reporting date.
\n
\u2022
Other debt securities and bank balances for which credit risk
\n
has\u00a0increased significantly since initial recognition.
\n
\u2022
Trade receivables and contract assets that result from
\n
transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Group considers reasonable and supportable information
\n
that is relevant and available without undue cost or e\ufb00ort. This
\n
includes both quantitative and qualitative information and analysis,
\n
based on the Group\u2019s historical experience and informed credit
\n
assessment, including forward-looking information.
\n
The Group considers a debt security to have low credit risk when its
\n
credit risk rating is equivalent to the de\ufb01nition of \u2018investment grade\u2019.
\n
The Group considers this to be BBB- or higher as per credit
\n
rating\u00a0scales.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised
\n
cost\u00a0are deducted from the gross carrying amount of the assets,
\n
with\u00a0a corresponding charge to the income statement. For debt
\n
instruments measured at FVOCI, the loss allowance for debt
\n
investments at FVOCI is recognised in pro\ufb01t or loss and reduces
\n
the\u00a0fair value loss, or increases the fair value gain, otherwise
\n
recognised in\u00a0the statement of other comprehensive income.
\n
iii) Financial liabilities
\n
Initial recognition and measurement
\n
All \ufb01nancial liabilities are classi\ufb01ed as \ufb01nancial liabilities at amortised
\n
cost on initial recognition except for derivatives, which are classi\ufb01ed
\n
at\u00a0FVTPL, the gains or losses for which are recognised through OCI
\n
if\u00a0the instrument is designated as a hedging instrument in an e\ufb00ective
\n
cash \ufb02ow hedge.
\n
With the exception of lease liabilities, all \ufb01nancial liabilities are
\n
recognised initially at fair value and, in the case of loans and
\n
borrowings, net of directly attributable transaction costs.
\n
The Group\u2019s \ufb01nancial liabilities include trade and other payables, loans
\n
and borrowings, derivative \ufb01nancial instruments and lease liabilities.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\n
costs in the income statement.
\n
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged, cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability
\n
and\u00a0the recognition of a new liability. The di\ufb00erence in the respective
\n
carrying amounts is recognised in the income statement.
\n
iv) Derivatives
\n
Derivatives are measured at fair value both initially and subsequently
\n
to initial recognition. All changes in fair value of non-designated
\n
derivatives are recognised in the income statement immediately.
\n
Changes in fair value of derivatives designated as cash \ufb02ow hedges are
\n
initially recognised in OCI until such a point that they are recycled to
\n
pro\ufb01t or loss in the same period as the hedged item is recognised in
\n
pro\ufb01t or loss, or immediately if the hedged item is no longer expected
\n
to occur.
\n
Derivatives are presented as assets when the fair values are positive
\n
and as liabilities when the fair values are negative. A derivative is
\n
presented as a non-current asset or a non-current liability if the
\n
remaining maturity of the instrument is more than 12 months and
\n
it\u00a0is\u00a0not expected to be realised or settled within 12 months.
\n
v) Fair values
\n
The Group measures all \ufb01nancial instruments at fair value at each
\n
reporting date, other than those instruments measured at
\n
amortised\u00a0cost.
\n
Fair value is the price that would be required to sell an asset or
\n
to\u00a0transfer a liability in an orderly transaction between market
\n
participants at the measurement date. The fair value measurement
\n
is\u00a0based on the presumption that the transaction to sell the asset
\n
or\u00a0transfer the liability takes place either in the principal market
\n
accessible by the Group for the asset or liability or, in the absence
\n
of\u00a0a\u00a0principal market, in the most advantageous market accessible
\n
by\u00a0the Group for the asset or liability.
\n
The fair values are quoted market bid prices where there is an active
\n
market, or are based on valuation techniques when there is no active
\n
market or the instruments are unlisted. Valuation techniques include
\n
the use of recent arm\u2019s-length market transactions, discounted cash
\n
\ufb02ow analysis and other commonly used valuation techniques.
\n
For assets and liabilities that are recognised in the \ufb01nancial
\n
statements on a recurring basis, the Group determines whether
\n
transfers have occurred between levels in the hierarchy by
\n
reassessing categorisation at the end of each reporting period.
\n
vi) Hedge accounting
\n
The Group designates certain derivative \ufb01nancial instruments as
\n
cash \ufb02ow hedges of certain forecast transactions. These transactions
\n
are highly probable to occur and present an exposure to variations
\n
in\u00a0cash \ufb02ows that could ultimately a\ufb00ect amounts determined in
\n
pro\ufb01t\u00a0or loss.
\n
The Group has elected to adopt the general hedge accounting model
\n
in IFRS 9. This requires the Group to ensure that hedge accounting
\n
relationships are aligned with its risk management objectives and
\n
strategy and to apply a qualitative and forward-looking approach
\n
to\u00a0assessing hedge e\ufb00ectiveness.
Saga plc
Annual Report and Accounts 2023
151
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses forward foreign exchange and commodity swap
\n
contracts to hedge the variability in cash \ufb02ows arising from changes
\n
in\u00a0foreign currency rates and oil prices respectively. For foreign
\n
exchange contracts, the Group designates the fair value change of
\n
the full forward price as the hedging instrument in cash \ufb02ow hedging
\n
relationships. For commodity hedging, the Group designates the fair
\n
value change of the benchmark oil price. The e\ufb00ective portion of
\n
changes in fair value of hedging instruments is accumulated in a cash
\n
\ufb02ow hedge reserve as a separate component of equity. Any ine\ufb00ective
\n
portion of the fair value gain or loss is recognised immediately within
\n
the income statement.
\n
When a hedging instrument no longer meets the criteria for hedge
\n
accounting (through maturity, sale, or other termination), hedge
\n
accounting is discontinued prospectively. If the hedged forecast
\n
transaction is still expected to occur, the associated cumulative
\n
gain\u00a0or loss remains in the hedging reserve and is recognised in
\n
accordance with the above policy when the hedged forecast
\n
transaction occurs. If the hedged forecast transaction is no longer
\n
expected to occur, the cumulative unrealised gain or loss is
\nrecognised in the income statement immediately.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20754": { "value": "i) Financial assets
On initial recognition, a \ufb01nancial asset is classi\ufb01ed as either amortised cost, FVOCI or FVTPL. The classi\ufb01cation of \ufb01nancial assets is based
\n
on\u00a0the business model in which a \ufb01nancial asset is managed, and its contractual cash \ufb02ow characteristics. Derivatives embedded in contracts
\n
where the host is a \ufb01nancial asset in the scope of the standard are never separated. Instead, the hybrid \ufb01nancial instrument as a whole is
\n
assessed for classi\ufb01cation.
\n
Initial recognition
Subsequent measurement
\n
Amortised cost
A \ufb01nancial asset is measured at amortised cost (plus any
\n
directly attributable transaction costs) if it meets both of
\n
the following conditions and is not elected to be designated
\n
as FVTPL:
\n
\u2022
It is held within a business model whose objective is to
\n
hold assets to collect contractual cash flows.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
The Group classi\ufb01es trade receivables, other receivables and
\n
deposits with \ufb01nancial institutions as held at amortised cost.
\n
These assets are subsequently measured at amortised
\n
cost using the EIR method. The amortised cost is reduced
\n
by any impairment losses (see (ii) below). Interest income,
\n
foreign exchange gains and losses and impairments
\n
are\u00a0recognised in pro\ufb01t or loss as they are incurred.
\n
Any\u00a0gain\u00a0or\u00a0loss on derecognition is recognised in pro\ufb01t
\n
or\u00a0loss immediately.
\n
FVOCI
A debt investment is measured at FVOCI (plus any directly
\n
attributable transaction costs) if it meets both of the
\n
following conditions and is not elected to be designated
\n
as\u00a0FVTPL:
\n
\u2022
It is held within a business model whose objective is
\n
achieved by both collecting contractual cash flows and
\n
selling financial assets.
\n
\u2022
Its contractual terms give rise on specified dates to
\n
cash\u00a0flows that are solely payments of principal and
\n
interest on the principal amount outstanding.
\n
On initial recognition of an equity investment that is not held
\n
for trading, the Group may irrevocably elect to present
\n
subsequent changes in the investment\u2019s fair value in OCI.
\n
This election is made on an investment-by-investment basis.
\n
The Group classi\ufb01es debt securities as FVOCI.
\n
Debt instruments are subsequently measured at fair value.
\n
Interest income calculated using the EIR method, foreign
\n
exchange gains and losses and impairments are recognised
\n
in pro\ufb01t or loss. Other net gains and losses are recognised
\n
in\u00a0OCI. On derecognition, gains and losses accumulated in
\n
OCI are recycled to pro\ufb01t or loss.
\n
Equity investments are measured at fair value. Dividends
\n
are recognised as income in pro\ufb01t or loss unless the
\n
dividend clearly represents a recovery of part of the cost of
\n
the investment. Other net gains and losses are recognised
\n
in OCI and are never reclassi\ufb01ed to pro\ufb01t or loss.
\n
FVTPL
All \ufb01nancial assets not classi\ufb01ed as amortised cost or
\n
FVOCI\u00a0as described above are classi\ufb01ed as FVTPL and
\n
held\u00a0at fair value. This includes all derivative \ufb01nancial assets.
\n
On initial recognition, the Group may irrevocably elect
\n
to\u00a0designate a \ufb01nancial asset that otherwise meets the
\n
requirements to be measured at amortised cost or
\n
FVOCI\u00a0as FVTPL if doing so eliminates, or signi\ufb01cantly
\n
reduces, an accounting mismatch that would otherwise
\n
arise. This election is made on an individual instrument basis.
\n
The Group classi\ufb01es loan funds, money market funds and
\n
foreign exchange forward contracts not designated in a
\n
hedging relationship, as FVTPL.
\n
These assets are subsequently measured at fair value.
\n
Net\u00a0gains and losses, including any interest or dividend
\n
income, are recognised in pro\ufb01t or loss, unless such
\n
instrument is designated in a hedging relationship
\n
(see (vi) overleaf).
\n
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash \ufb02ows from the asset have expired or when the Group has transferred
\nsubstantially all the risks and rewards relating to the asset to a third party.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20813": { "value": "FVTPL
All \ufb01nancial assets not classi\ufb01ed as amortised cost or
\n
FVOCI\u00a0as described above are classi\ufb01ed as FVTPL and
\n
held\u00a0at fair value. This includes all derivative \ufb01nancial assets.
\n
On initial recognition, the Group may irrevocably elect
\n
to\u00a0designate a \ufb01nancial asset that otherwise meets the
\n
requirements to be measured at amortised cost or
\n
FVOCI\u00a0as FVTPL if doing so eliminates, or signi\ufb01cantly
\n
reduces, an accounting mismatch that would otherwise
\n
arise. This election is made on an individual instrument basis.
\n
The Group classi\ufb01es loan funds, money market funds and
\n
foreign exchange forward contracts not designated in a
\n
hedging relationship, as FVTPL.
\n
These assets are subsequently measured at fair value.
\n
Net\u00a0gains and losses, including any interest or dividend
\n
income, are recognised in pro\ufb01t or loss, unless such
\n
instrument is designated in a hedging relationship
\n(see (vi) overleaf).", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20833": { "value": "
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash \ufb02ows from the asset have expired or when the Group has transferred
\n
substantially all the risks and rewards relating to the asset to a third party.
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged, cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability
\n
and\u00a0the recognition of a new liability. The di\ufb00erence in the respective
\n
carrying amounts is recognised in the income statement.
a) Financial assets
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20861": { "value": "ii) Impairment of financial assets
The expected credit loss (
ECL
) impairment model applies to \ufb01nancial
\n
assets measured at amortised cost and debt investments at FVOCI.
\n
The Group measures loss allowances at an amount equal to 12-month
\n
ECLs, except for the following, which are measured as lifetime ECLs:
\n
\u2022
Debt securities that are determined to have high credit risk at
\n
the\u00a0reporting date.
\n
\u2022
Other debt securities and bank balances for which credit risk
\n
has\u00a0increased significantly since initial recognition.
\n
\u2022
Trade receivables and contract assets that result from
\n
transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Group considers reasonable and supportable information
\n
that is relevant and available without undue cost or e\ufb00ort. This
\n
includes both quantitative and qualitative information and analysis,
\n
based on the Group\u2019s historical experience and informed credit
\n
assessment, including forward-looking information.
\n
The Group considers a debt security to have low credit risk when its
\n
credit risk rating is equivalent to the de\ufb01nition of \u2018investment grade\u2019.
\n
The Group considers this to be BBB- or higher as per credit
\n
rating\u00a0scales.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised
\n
cost\u00a0are deducted from the gross carrying amount of the assets,
\n
with\u00a0a corresponding charge to the income statement. For debt
\n
instruments measured at FVOCI, the loss allowance for debt
\n
investments at FVOCI is recognised in pro\ufb01t or loss and reduces
\n
the\u00a0fair value loss, or increases the fair value gain, otherwise
\nrecognised in\u00a0the statement of other comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20904": { "value": "iii) Financial liabilities
Initial recognition and measurement
\n
All \ufb01nancial liabilities are classi\ufb01ed as \ufb01nancial liabilities at amortised
\n
cost on initial recognition except for derivatives, which are classi\ufb01ed
\n
at\u00a0FVTPL, the gains or losses for which are recognised through OCI
\n
if\u00a0the instrument is designated as a hedging instrument in an e\ufb00ective
\n
cash \ufb02ow hedge.
\n
With the exception of lease liabilities, all \ufb01nancial liabilities are
\n
recognised initially at fair value and, in the case of loans and
\n
borrowings, net of directly attributable transaction costs.
\n
The Group\u2019s \ufb01nancial liabilities include trade and other payables, loans
\n
and borrowings, derivative \ufb01nancial instruments and lease liabilities.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\n
costs in the income statement.
\n
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged, cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability
\n
and\u00a0the recognition of a new liability. The di\ufb00erence in the respective
\ncarrying amounts is recognised in the income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20913": { "value": "With the exception of lease liabilities, all \ufb01nancial liabilities are
recognised initially at fair value and, in the case of loans and
\n
borrowings, net of directly attributable transaction costs.
\n
The Group\u2019s \ufb01nancial liabilities include trade and other payables, loans
\n
and borrowings, derivative \ufb01nancial instruments and lease liabilities.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\ncosts in the income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20940": { "value": "iv) Derivatives
Derivatives are measured at fair value both initially and subsequently
\n
to initial recognition. All changes in fair value of non-designated
\n
derivatives are recognised in the income statement immediately.
\n
Changes in fair value of derivatives designated as cash \ufb02ow hedges are
\n
initially recognised in OCI until such a point that they are recycled to
\n
pro\ufb01t or loss in the same period as the hedged item is recognised in
\n
pro\ufb01t or loss, or immediately if the hedged item is no longer expected
\n
to occur.
\n
Derivatives are presented as assets when the fair values are positive
\n
and as liabilities when the fair values are negative. A derivative is
\n
presented as a non-current asset or a non-current liability if the
\n
remaining maturity of the instrument is more than 12 months and
\nit\u00a0is\u00a0not expected to be realised or settled within 12 months.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20941": { "value": "iv) Derivatives
Derivatives are measured at fair value both initially and subsequently
\n
to initial recognition. All changes in fair value of non-designated
\n
derivatives are recognised in the income statement immediately.
\n
Changes in fair value of derivatives designated as cash \ufb02ow hedges are
\n
initially recognised in OCI until such a point that they are recycled to
\n
pro\ufb01t or loss in the same period as the hedged item is recognised in
\n
pro\ufb01t or loss, or immediately if the hedged item is no longer expected
\n
to occur.
\n
Derivatives are presented as assets when the fair values are positive
\n
and as liabilities when the fair values are negative. A derivative is
\n
presented as a non-current asset or a non-current liability if the
\n
remaining maturity of the instrument is more than 12 months and
\n
it\u00a0is\u00a0not expected to be realised or settled within 12 months.
vi) Hedge accounting
The Group designates certain derivative \ufb01nancial instruments as
\n
cash \ufb02ow hedges of certain forecast transactions. These transactions
\n
are highly probable to occur and present an exposure to variations
\n
in\u00a0cash \ufb02ows that could ultimately a\ufb00ect amounts determined in
\n
pro\ufb01t\u00a0or loss.
\n
The Group has elected to adopt the general hedge accounting model
\n
in IFRS 9. This requires the Group to ensure that hedge accounting
\n
relationships are aligned with its risk management objectives and
\n
strategy and to apply a qualitative and forward-looking approach
\n
to\u00a0assessing hedge e\ufb00ectiveness.
The Group uses forward foreign exchange and commodity swap
\n
contracts to hedge the variability in cash \ufb02ows arising from changes
\n
in\u00a0foreign currency rates and oil prices respectively. For foreign
\n
exchange contracts, the Group designates the fair value change of
\n
the full forward price as the hedging instrument in cash \ufb02ow hedging
\n
relationships. For commodity hedging, the Group designates the fair
\n
value change of the benchmark oil price. The e\ufb00ective portion of
\n
changes in fair value of hedging instruments is accumulated in a cash
\n
\ufb02ow hedge reserve as a separate component of equity. Any ine\ufb00ective
\n
portion of the fair value gain or loss is recognised immediately within
\n
the income statement.
\n
When a hedging instrument no longer meets the criteria for hedge
\n
accounting (through maturity, sale, or other termination), hedge
\n
accounting is discontinued prospectively. If the hedged forecast
\n
transaction is still expected to occur, the associated cumulative
\n
gain\u00a0or loss remains in the hedging reserve and is recognised in
\n
accordance with the above policy when the hedged forecast
\n
transaction occurs. If the hedged forecast transaction is no longer
\n
expected to occur, the cumulative unrealised gain or loss is
\n
recognised in the income statement immediately.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20959": { "value": "v) Fair values
The Group measures all \ufb01nancial instruments at fair value at each
\n
reporting date, other than those instruments measured at
\n
amortised\u00a0cost.
\n
Fair value is the price that would be required to sell an asset or
\n
to\u00a0transfer a liability in an orderly transaction between market
\n
participants at the measurement date. The fair value measurement
\n
is\u00a0based on the presumption that the transaction to sell the asset
\n
or\u00a0transfer the liability takes place either in the principal market
\n
accessible by the Group for the asset or liability or, in the absence
\n
of\u00a0a\u00a0principal market, in the most advantageous market accessible
\n
by\u00a0the Group for the asset or liability.
\n
The fair values are quoted market bid prices where there is an active
\n
market, or are based on valuation techniques when there is no active
\n
market or the instruments are unlisted. Valuation techniques include
\n
the use of recent arm\u2019s-length market transactions, discounted cash
\n
\ufb02ow analysis and other commonly used valuation techniques.
\n
For assets and liabilities that are recognised in the \ufb01nancial
\n
statements on a recurring basis, the Group determines whether
\n
transfers have occurred between levels in the hierarchy by
\nreassessing categorisation at the end of each reporting period.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f20983": { "value": "vi) Hedge accounting
The Group designates certain derivative \ufb01nancial instruments as
\n
cash \ufb02ow hedges of certain forecast transactions. These transactions
\n
are highly probable to occur and present an exposure to variations
\n
in\u00a0cash \ufb02ows that could ultimately a\ufb00ect amounts determined in
\n
pro\ufb01t\u00a0or loss.
\n
The Group has elected to adopt the general hedge accounting model
\n
in IFRS 9. This requires the Group to ensure that hedge accounting
\n
relationships are aligned with its risk management objectives and
\n
strategy and to apply a qualitative and forward-looking approach
\n
to\u00a0assessing hedge e\ufb00ectiveness.
Saga plc
Annual Report and Accounts 2023
151
Strategic report
Financial statements
Additional information
Governance
\n
The Group uses forward foreign exchange and commodity swap
\n
contracts to hedge the variability in cash \ufb02ows arising from changes
\n
in\u00a0foreign currency rates and oil prices respectively. For foreign
\n
exchange contracts, the Group designates the fair value change of
\n
the full forward price as the hedging instrument in cash \ufb02ow hedging
\n
relationships. For commodity hedging, the Group designates the fair
\n
value change of the benchmark oil price. The e\ufb00ective portion of
\n
changes in fair value of hedging instruments is accumulated in a cash
\n
\ufb02ow hedge reserve as a separate component of equity. Any ine\ufb00ective
\n
portion of the fair value gain or loss is recognised immediately within
\n
the income statement.
\n
When a hedging instrument no longer meets the criteria for hedge
\n
accounting (through maturity, sale, or other termination), hedge
\n
accounting is discontinued prospectively. If the hedged forecast
\n
transaction is still expected to occur, the associated cumulative
\n
gain\u00a0or loss remains in the hedging reserve and is recognised in
\n
accordance with the above policy when the hedged forecast
\n
transaction occurs. If the hedged forecast transaction is no longer
\n
expected to occur, the cumulative unrealised gain or loss is
\nrecognised in the income statement immediately.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21045": { "value": "l. Leases
The Group leases various river cruise ships, buildings, equipment
\n
and\u00a0vehicles. The contract length of the lease varies considerably and
\n
may include extension or termination options as described below.
\n
At the inception of a contract, the Group assesses whether a
\n
contract is, or contains, a lease. A contract is, or contains, a lease if the
\n
contract conveys the right to control the use of an identi\ufb01ed asset for
\n
a period of time in exchange for consideration. To assess whether a
\n
contract conveys the right to control the use of an identi\ufb01ed asset,
\n
the\u00a0Group assesses whether: the contract involves the use of an
\n
identi\ufb01ed asset; the Group has the right to obtain substantially all of
\n
the economic bene\ufb01ts from use of the asset throughout the period
\n
of\u00a0use and the Group has the right to direct the use of the asset.
\n
Leases are initially recognised as a right-of-use asset and a
\n
corresponding lease liability at the date at which the leased asset is
\n
available for use by the Group. The lease liability is initially measured
\n
at\u00a0the present value of the lease payments that are not paid at the
\n
commencement date. Where it is reasonably certain that an
\n
extension option will be triggered in a contract, lease payments to
\n
be\u00a0made in respect of the option will be included in the measurement
\n
of the lease liability.
\n
The lease payments are discounted using the interest rate implicit in
\n
the lease. If that rate cannot be readily determined, which is generally
\n
the case for leases in the Group, the Group\u2019s incremental borrowing
\n
rate is used. This is the rate that the Group would have to pay to
\n
borrow the funds necessary to obtain an asset of similar value to the
\n
right-of-use asset, in a similar economic environment, with similar
\n
terms, security and conditions.
\n
Lease payments are allocated between principal and \ufb01nance cost.
\n
The \ufb01nance cost is charged to the income statement over the lease
\n
period using the EIR method and the lease liability is measured at
\n
amortised cost using the EIR method.
\n
Right-of-use assets are initially measured at cost, comprising the
\n
present value of future lease payments plus any initial direct costs and
\n
restoration costs. Right-of-use assets are depreciated over the lease
\n
term on a straight-line basis except for the Group\u2019s river cruise ships.
\n
The unit of production method is used to depreciate river cruise ships
\n
in order to accurately re\ufb02ect the usage of the asset, which is seasonal.
\n
Payments associated with short-term leases of equipment and all
\n
leases of low-value assets are expensed in pro\ufb01t or loss as incurred
\n
in\u00a0line with the exemption allowed under paragraph 6 of IFRS 16.
\n
Short-term leases are leases with a lease term of 12 months or less
\n
without a purchase option. Low-value assets comprise IT equipment
\n
and small items of o\ufb03ce furniture.
\n
Extension and termination options are included in a number of
\n
property and river cruise ship leases across the Group. These are
\n
used to maximise operational \ufb02exibility in terms of managing the
\n
assets used in the Group\u2019s operations. The majority of extension and
\n
termination options held are exercisable only by the Group and not by
\n
the respective lessor.
\n
The Group remeasures the lease liability (and makes a corresponding
\n
adjustment to the related right-of-use asset) whenever:
\n
\u2022
the lease term has changed or there is a significant event or
\n
change in circumstances resulting in a change in the assessment
\n
of exercise of a purchase option, in which case the lease liability is
\n
remeasured by discounting the revised lease payments using a
\n
revised discount rate; or
\n
\u2022
a lease contract is modified and the lease modification is not
\n
accounted for as a separate lease, in which case the lease liability
\n
is\u00a0remeasured based on the lease term of the modified lease by
\n
discounting the revised lease payments using a revised discount
\nrate at the effective date of the modification.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21112": { "value": "m. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
\n
or production of an asset that necessarily takes a substantial period
\n
of time to get ready for its intended use or sale are capitalised as part
\n
of the cost of the respective asset. All other borrowing costs are
\n
expensed in the period in which they occur.
\n
Borrowing costs consist of interest and fees that an entity incurs in
\nconnection with the borrowing of funds.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21123": { "value": "n. Cash and short-term deposits
Cash and short-term deposits in the statement of \ufb01nancial position
\n
comprise cash at bank and in hand, and short-term deposits with a
\n
maturity of three months or less from their inception date.
\n
For the purpose of the consolidated statement of cash \ufb02ows, cash
\n
and cash equivalents consist of cash, short-term deposits as de\ufb01ned
\n
above and short-term highly liquid investments (including money
\n
market funds) with original maturities of three months or less that are
\n
subject to an insigni\ufb01cant risk of change in value, net of outstanding
\nbank overdrafts.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21129": { "value": "For the purpose of the consolidated statement of cash \ufb02ows, cash
and cash equivalents consist of cash, short-term deposits as de\ufb01ned
\n
above and short-term highly liquid investments (including money
\n
market funds) with original maturities of three months or less that are
\n
subject to an insigni\ufb01cant risk of change in value, net of outstanding
bank overdrafts. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21139": { "value": "o. Trust accounts
All customer monies received in advance in relation to Air Travel
\n
Organiser\u2019s Licence (
ATOL
) licensable bookings are held in trust
\n
accounts until after the customer has travelled, when the Group
\n
has\u00a0ful\ufb01lled all its performance obligations with customers.
\n
The trust arrangement is governed by a deed between the Group,
\n
the\u00a0Civil Aviation Authority Air Travel Trustees and an independent
\n
Trustee, PT Trustees Limited, which determines the in\ufb02ows and
\n
out\ufb02ows from the accounts. The Group does not use advance
\n
receipts from customers in its Travel and River Cruise businesses
\nto\u00a0fund its business operations. ", "dimensions": { "concept": "saga:DescriptionOfAccountingPolicyForTrustAccountsExplanatoryPolicyTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21140": { "value": "o. Trust accounts
All customer monies received in advance in relation to Air Travel
\n
Organiser\u2019s Licence (
ATOL
) licensable bookings are held in trust
\n
accounts until after the customer has travelled, when the Group
\n
has\u00a0ful\ufb01lled all its performance obligations with customers.
\n
The trust arrangement is governed by a deed between the Group,
\n
the\u00a0Civil Aviation Authority Air Travel Trustees and an independent
\n
Trustee, PT Trustees Limited, which determines the in\ufb02ows and
\n
out\ufb02ows from the accounts. The Group does not use advance
\n
receipts from customers in its Travel and River Cruise businesses
\nto\u00a0fund its business operations.", "dimensions": { "concept": "ifrs-full:DescriptionOfOtherAccountingPoliciesRelevantToUnderstandingOfFinancialStatements", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21158": { "value": "p. Trade and other receivables
Trade and other receivables are initially recognised at fair value and
\n
subsequently measured at amortised cost. Loss allowances are
\nmeasured as lifetime ECLs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21184": { "value": "q. Inventories
Inventories are stated at the lower of cost and net realisable value.
\n
Costs include all costs incurred in bringing each product to its
\n
present location and condition. Net realisable value is based on
\n
estimated selling price less any further costs expected to be
\nincurred\u00a0prior to completion and disposal.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21193": { "value": "r. Insurance contract liabilities
Insurance contract liabilities include an outstanding claims provision,
\n
a provision for unearned premiums and, if required, a provision for
\n
premium de\ufb01ciency.
\n
Outstanding claims provision
\n
The provision for outstanding claims is set on an individual claim basis
\n
and is based on the ultimate cost of all claims noti\ufb01ed but not settled,
\n
less amounts already paid by the reporting date, together with a
\n
provision for related claims handling costs. The provision also includes
\n
the estimated cost of claims incurred but not reported (
IBNR
) at the
\n
statement of \ufb01nancial position date, which is estimated using actuarial
\n
methods. The outstanding claims provision is not discounted for the
\n
time value of money, with the exception of claims settled as periodical
\n
payment orders (
PPOs
).
\n
The amount of any anticipated reinsurance, salvage or subrogation
\n
recoveries is separately identi\ufb01ed and reported within reinsurance
\n
assets and insurance contract liabilities respectively.
\n
Di\ufb00erences between the provisions at the reporting date and
\n
settlements and provisions in the following year (known as
run-o\ufb00
\n
deviations
) are recognised in the income statement as they arise.
\n
Provision for unearned premiums
\n
The provision for unearned premiums represents the portion of
\n
premiums received, or receivable, that relates to risks that have not
\n
yet expired at the reporting date. The provision is recognised when
\n
contracts are entered into and premiums are charged, and is
\n
recognised in the income statement as premium income over the
\n
term of the contract on a straight-line basis.
\n
Provision for premium deficiency
\n
At each reporting date, the Group reviews its unexpired risks and a
\n
liability adequacy test is performed to determine whether there is
\n
any\u00a0overall excess of expected claims and deferred acquisition costs
\n
over unearned premiums. This calculation uses current estimates of
\n
future contractual cash \ufb02ows after taking account of the investment
\n
return expected to arise on assets relating to the relevant insurance
\n
technical provisions. If these estimates show that the carrying
\n
amount of the unearned premiums (less related deferred acquisition
\n
costs) is inadequate, the de\ufb01ciency is recognised in the income
\n
statement by setting up a provision for premium de\ufb01ciency.
\n
The\u00a0deferred acquisition costs are written o\ufb00 before any provision
\nis\u00a0made", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21242": { "value": "s. Reinsurance assets
Contracts entered into by the Group with reinsurers under which the
\n
Group is compensated for losses on insurance contracts issued, are
\n
classi\ufb01ed as reinsurance contracts. A contract is only accounted for
\n
as a reinsurance contract where there is signi\ufb01cant insurance risk
\n
transfer between the insurer and reinsurer.
\n
Reinsurance assets include balances due from reinsurance
\n
companies for ceded insurance liabilities under excess of loss cover.
\n
Amounts recoverable from reinsurers are estimated in a consistent
\n
manner with the outstanding claims provisions in accordance with
\n
the relevant reinsurance contract.
\n
The Group assesses its reinsurance assets for impairment at each
\n
statement of \ufb01nancial position date. For assets that are directly
\n
exposed to long-tail PPO liabilities, a general provision for impairment
\n
is provided, calculated on a wholesale basis by reference to published
\n
credit rating default curves. For all other reinsurance assets, the
\n
carrying value is written down to its recoverable amount only if there
\n
is objective evidence of impairment.
\n
For the funds-withheld quota share agreement in motor insurance,
\n
the obligation to pay funds and the right to receive reimbursement for
\n
incurred claims are presented on a net basis because there is a legally
\n
enforceable right to o\ufb00set these amounts and there is an intention to
\n
settle on a net basis or realise both the asset and settle the liability
\n
simultaneously. The reinsurance assets recognised under these
\n
agreements are therefore recognised as an o\ufb00set against premium
\nceded under the same agreement, within trade and other payables.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21271": { "value": "t. Share-based payments
The Group provides bene\ufb01ts to employees (including Executive
\n
Directors) in the form of share-based payment transactions, whereby
\n
employees render services as consideration for equity instruments
\n
(
equity-settled transactions
). The cost of equity-settled
\n
transactions is measured by reference to the fair value on the grant
\n
date and is recognised as an expense over the relevant vesting period,
\n
ending on the date on which the employee becomes fully entitled to
\n
the award.
\n
Fair values of share-based payment transactions are calculated using
\n
Black-Scholes and Monte-Carlo modelling techniques. In valuing
\n
equity-settled transactions, assessment is made of any vesting
\n
conditions to categorise these into market performance conditions,
\n
non-market performance conditions and service conditions.
\n
Where the equity-settled transactions have market performance
\n
conditions (that is, performance which is directly or indirectly linked
\n
to\u00a0the share price), the fair value of the award is assessed at the time
\n
of\u00a0grant and is not changed, regardless of the actual level of vesting
\n
achieved, except where the employee ceases to be employed prior
\n
to\u00a0the vesting date.
\n
For service conditions and non-market performance conditions, the
\n
fair value of the award is assessed at the time of grant and is
\n
reassessed at each reporting date to re\ufb02ect updated expectations
\n
for the level of vesting. No expense is recognised for awards that
\n
ultimately do not vest.
\n
At each reporting date prior to vesting, the cumulative expense is
\n
calculated, representing the extent to which the vesting period has
\n
expired and, in the case of non-market conditions, the best estimate
\n
of the number of equity instruments that will ultimately vest or, in the
\n
case of instruments subject to market conditions, the fair value on
\n
grant adjusted only for leavers. The movement in the cumulative
\n
expense since the previous reporting date is recognised in the
\n
income statement, with the corresponding increase being
\n
recognised in the share-based payments reserve.
\n
Upon vesting of an equity instrument, the cumulative cost in the
\n
share-based payments reserve is reclassi\ufb01ed to retained earnings
\n
in\u00a0equity.
\n
The dilutive e\ufb00ect of outstanding options is re\ufb02ected as additional
\nshare dilution in the computation of diluted (loss)/earnings per share.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21315": { "value": "u. Retirement benefit schemes
During the year, the Group operated a de\ufb01ned bene\ufb01t pension plan
\n
that requires contributions to be made to separately administered
\n
funds. The cost of providing bene\ufb01ts under the de\ufb01ned bene\ufb01t plan
\n
is\u00a0determined separately using the projected unit credit valuation
\n
method. The de\ufb01ned plan was closed to future accrual on
\n
31\u00a0October\u00a02021. From 1 November 2021, members moved from
\n
active to deferred status.
Saga plc
Annual Report and Accounts 2023
153
Strategic report
Financial statements
Additional information
Governance
\n
Actuarial gains and losses arising in the year are credited/charged
\n
to\u00a0OCI and comprise the e\ufb00ects of changes in actuarial assumptions
\n
and experience adjustments due to di\ufb00erences between the previous
\n
actuarial assumptions and what has actually occurred. In particular,
\n
the di\ufb00erence between the interest income and the actual return
\n
on\u00a0plan assets is recognised in OCI.
\n
Other movements in the net surplus or de\ufb01cit, which include the
\n
current service cost, any past service cost and the e\ufb00ect of any
\n
curtailment or settlements, are recognised in the income statement.
\n
Past service costs are recognised in the income statement on the
\n
earlier of the date of plan curtailment and the date that the Group
\n
recognises restructuring-related costs. The Group no longer incurs
\n
any service costs or curtailment costs relating to the de\ufb01ned bene\ufb01t
\n
pension plan as the scheme is closed to future accrual. The interest
\n
cost, less interest income on assets held in the plans, is also charged
\n
to the income statement.
\n
The de\ufb01ned bene\ufb01t schemes are funded, with assets of the schemes
\n
held separately from those of the Group, in separate Trustee-
\n
administered funds. Scheme assets are measured using market
\n
values and scheme liabilities are measured using the projected unit
\n
actuarial method and are discounted at the current rate of return on
\n
a high-quality corporate bond of equivalent term and currency to the
\n
liability. Full actuarial valuations are obtained at least triennially and
\n
are\u00a0updated at each reporting date. The resulting de\ufb01ned bene\ufb01t
\n
asset or liability is presented separately on the face of the statement
\n
of \ufb01nancial position. The value of a pension bene\ufb01t asset is restricted
\n
to the amount that may be recovered, either through reduced
\n
contributions, or agreed refunds from the scheme.
\n
For de\ufb01ned contribution schemes, the amounts charged to the
\nincome statement are the contributions payable in the year.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21376": { "value": "v. Provisions
Provisions are recognised when the Group has a present obligation
\n
(legal or constructive) as a result of a past event, and it is probable
\n
that\u00a0an out\ufb02ow of resources embodying economic bene\ufb01ts will be
\n
required to settle the obligation and a reliable estimate can be made
\n
of the amount of the obligation. The expense relating to any provision
\n
is presented in the income statement net of any reimbursement.
\n
If\u00a0the e\ufb00ect of the time value of money is material, provisions are
\n
discounted using a current pre-tax rate that re\ufb02ects the risks speci\ufb01c
\n
to the liability. Where discounting is used, the increase in the provision
\n
due to the passage of time is recognised as a \ufb01nance cost.
\n
A provision is recognised for onerous contracts in which the
\n
unavoidable costs of meeting the obligations under the contract
\n
exceed the economic bene\ufb01ts expected to be received under it.
\n
The unavoidable costs re\ufb02ect the least net cost of exiting the
\n
contract, which is the lower of the cost of ful\ufb01lling it and any
\n
compensation or penalties arising from failure to ful\ufb01l it. The costs
\n
of ful\ufb01lling a contract comprise both the incremental costs and an
\nallocation of other direct costs.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21398": { "value": "w. Trade and other payables
Trade and other payables are initially recognised at fair value and
\n
subsequently measured at amortised cost. They represent liabilities
\n
to pay for goods or services that have been received or supplied in
\n
the\u00a0normal course of business, invoiced by the supplier before the
\nyear end, but for which payment has not yet been made.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21407": { "value": "x. Equity
The Group has ordinary shares that are classi\ufb01ed as equity.
\n
Incremental external costs that are directly attributable to the
issue\u00a0of these shares are recognised in equity, net of tax.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21415": { "value": "2.4 Standards issued but not yet effective
The following is a list of standards, and amendments to standards,
\n
that are in issue but are not e\ufb00ective or adopted as at 31 January
\n
2023. Except where separately disclosed, these standards are
\n
endorsed by\u00a0the UK Endorsement Board.
\n
a. IFRS 17 \u2018Insurance Contracts\u2019
\n
IFRS 17 \u2018Insurance Contracts\u2019 is a comprehensive new accounting
\n
standard that applies to all insurance and reinsurance contracts
\n
covering the principles of recognition, measurement, presentation
\n
and disclosure.
\n
IFRS 17 only applies to insurance contracts that are underwritten by
\n
the Group and related reinsurance contracts held. It does not a\ufb00ect
\n
the accounting for the Group\u2019s Insurance Broking activities.
\n
IFRS 17 is e\ufb00ective for annual reporting periods beginning on, or after,
\n
1 January 2023. The Group will initially apply IFRS 17 in its consolidated
\n
\ufb01nancial statements for the year ending 31 January 2024, with the
\n
date of initial application being 1 February 2023 and the transition
\n
date being 1 February 2022. The Group\u2019s consolidated \ufb01nancial
\n
statements for the year ending 31 January 2024 will include
\n
comparatives for the year ending 31 January 2023 restated onto
\n
an\u00a0IFRS 17 basis.
\n
The Group expects to apply IFRS 17\u2019s simpli\ufb01ed premium allocation
\n
approach (
PAA
) to all insurance contracts issued and reinsurance
\n
contracts held. All insurance contracts issued by the Group are
\n
eligible for the PAA as they have a one-year coverage period. The
\n
Group has a small number of reinsurance contracts held that have
\n
a\u00a0coverage period of more than one year which are expected to be
\n
eligible for the PAA as, at inception, the PAA is expected to produce a
\n
measurement of the liability for remaining coverage of the relevant
\n
group of reinsurance contracts that would not di\ufb00er materially from
\n
the one that would be produced by applying the standard\u2019s more
\n
complex general measurement model.
\n
Applying the PAA simpli\ufb01es the measurement of the IFRS 17 liability
\n
for remaining coverage, which will continue to be based on a deferred
\n
premium approach as under current IFRS. However, the IFRS 17
\n
liability for remaining coverage will di\ufb00er from current IFRS in relation
\n
to the following:
\n
\u2022
The IFRS 17 requirement to identify any contracts that are
\n
expected to be onerous at initial recognition. The expected
\n
losses\u00a0are recognised immediately in profit or loss, with a liability
\n
established on the balance sheet. Under current IFRS, these
\n
losses would be recognised in profit or loss over the coverage
\n
period of the insurance contracts.
\n
\u2022
The Group intends to take the PAA option to expense insurance
\n
acquisition costs immediately in profit or loss, meaning the IFRS 4
\n
deferred insurance acquisition cost asset will effectively be
\n
written\u00a0off.
\n
The measurement of insurance contract liabilities in relation to
\n
coverage provided before the statement of \ufb01nancial position date,
\n
referred to as the liability for incurred claims under IFRS 17,
\n
and\u00a0reinsurance contract assets will change.
\n
The IFRS 17 liability for incurred claims will be measured as the sum
\n
of\u00a0the following components (collectively referred to as the ful\ufb01lment
\n
cash \ufb02ows):
\n
\u2022
The expected future cash flows, all of which will be discounted
\n
using the risk-free rate at the statement of financial position
\n
date,\u00a0adjusted to reflect the illiquid characteristics of the
\n
insurance contracts.
Notes to the consolidated \ufb01nancial statements continued
\n
154
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.4 Standards issued but not yet effective
\n
continued
\n
\u2022
A \u2018risk adjustment for non-financial risk\u2019 (
risk adjustment
), being
\n
an explicit margin above the expected future cash flows that
\n
represents the compensation required for bearing non-financial
\n
uncertainty. The Group will derive the risk adjustment by selecting
\n
an appropriate confidence interval using the expected loss
\n
distribution for incurred claims.
\n
This di\ufb00ers from current IFRS under which:
\n
\u2022
only certain long-tail claim liabilities are discounted. This discounting
\n
uses a discount rate that doesn\u2019t typically move in line with market
\n
interest rates; and
\n
\u2022
the reserve margin is not explicit or linked to a target
\n
confidence\u00a0level.
\n
The cumulative impact of adopting IFRS 17 on the Group\u2019s reported
\n
net assets at the 1 February 2022 transition date is currently
\n
expected to be in the range of a \u00a314m decrease to an \u00a38m increase.
\n
This estimated impact is preliminary and may change as the Group\u2019s
\n
implementation work is completed.
\n
The impact of IFRS 17 on pro\ufb01t or loss compared to current IFRS
\n
will\u00a0be driven by the statement of \ufb01nancial position measurement
\n
di\ufb00erences described above. The only exception will be if the Group
\n
takes the IFRS 17 option to present the impact of changes in the
\n
IFRS\u00a017 discount rate on the measurement of the liability for incurred
\n
claims within other comprehensive income rather than within pro\ufb01t
\n
or loss. The Group has not yet made a \ufb01nal decision on whether this
\n
option will be taken.
\n
b. Classification of liabilities as current or
\n
non-current (amendments to IAS 1)
\n
The amendments aim to promote consistency in applying the
\n
requirements by helping companies determine whether, in the
\n
statement of \ufb01nancial position, debt and other liabilities with an
\n
uncertain settlement date should be classi\ufb01ed as current (due,
\n
or\u00a0potentially due, to be settled within one year) or non-current.
\n
The\u00a0amendments are e\ufb00ective for annual periods beginning on,
\n
or\u00a0after, 1 January 2024 and are not likely to have a material e\ufb00ect
\n
on\u00a0the Group\u2019s \ufb01nancial statements. These amendments are not
\n
currently endorsed by the UK Endorsement Board.
\n
c. Deferred tax related to assets and liabilities arising
\n
from a single transaction (amendments to IAS 12)
\n
The amendments clarify that the initial recognition exemption does
\n
not apply to transactions in which equal amounts of deductible and
\n
taxable temporary di\ufb00erences arise on initial recognition. They will
\n
typically apply to transactions such as leases of lessees and will
\n
require the recognition of additional deferred tax assets and liabilities.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2023. The amendments are not expected to
\n
have a material impact on the Group\u2019s \ufb01nancial statements.
\n
d. Disclosure of accounting policies (amendments
\n
to\u00a0IAS 1 and IFRS Practice Statement 2)
\n
The amendments require that an entity discloses its material
\n
accounting policies, instead of its signi\ufb01cant accounting policies.
\n
Further amendments explain how an entity can identify a material
\n
accounting policy. The amendments are e\ufb00ective for annual
\n
reporting\u00a0periods beginning on, or after, 1 January 2023.
\n
The\u00a0amendments are\u00a0not expected to have a material impact
\n
on\u00a0the\u00a0Group\u2019s \ufb01nancial statements.
\n
e. Definition of accounting estimates
\n
(amendments\u00a0to\u00a0IAS 8)
\n
The amendments replace the de\ufb01nition of a change in accounting
\n
estimates with a de\ufb01nition of accounting estimates. Under the new
\n
de\ufb01nition, accounting estimates are \u201cmonetary amounts in \ufb01nancial
\n
statements that are subject to measurement uncertainty\u201d. The
\n
amendments clarify that a change in accounting estimate that results
\n
from new information, or new developments, is not the correction of
\n
an error. The amendments are e\ufb00ective for annual reporting periods
\n
beginning on, or after, 1 January 2023. The amendments are not
\n
expected to have a material impact on the Group\u2019s \ufb01nancial
\n
statements.
\n
f. Definition of lease liability in a sale and leaseback
\n
(amendment to IFRS 16)
\n
The amendment clari\ufb01es how a seller-lessee subsequently measures
\n
sale and leaseback transactions that satisfy the requirements in
\n
IFRS\u00a015 to be accounted for as a sale. The amendment is e\ufb00ective
\n
for\u00a0annual reporting periods beginning on, or after, 1 January 2024.
\n
The amendment is not expected to have a material impact on the
\n
Group\u2019s \ufb01nancial statements. This amendment is not currently
\nendorsed by the UK Endorsement Board. ", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21416": { "value": "2.4 Standards issued but not yet effective
The following is a list of standards, and amendments to standards,
\n
that are in issue but are not e\ufb00ective or adopted as at 31 January
\n
2023. Except where separately disclosed, these standards are
\n
endorsed by\u00a0the UK Endorsement Board.
\n
a. IFRS 17 \u2018Insurance Contracts\u2019
\n
IFRS 17 \u2018Insurance Contracts\u2019 is a comprehensive new accounting
\n
standard that applies to all insurance and reinsurance contracts
\n
covering the principles of recognition, measurement, presentation
\n
and disclosure.
\n
IFRS 17 only applies to insurance contracts that are underwritten by
\n
the Group and related reinsurance contracts held. It does not a\ufb00ect
\n
the accounting for the Group\u2019s Insurance Broking activities.
\n
IFRS 17 is e\ufb00ective for annual reporting periods beginning on, or after,
\n
1 January 2023. The Group will initially apply IFRS 17 in its consolidated
\n
\ufb01nancial statements for the year ending 31 January 2024, with the
\n
date of initial application being 1 February 2023 and the transition
\n
date being 1 February 2022. The Group\u2019s consolidated \ufb01nancial
\n
statements for the year ending 31 January 2024 will include
\n
comparatives for the year ending 31 January 2023 restated onto
\n
an\u00a0IFRS 17 basis.
\n
The Group expects to apply IFRS 17\u2019s simpli\ufb01ed premium allocation
\n
approach (
PAA
) to all insurance contracts issued and reinsurance
\n
contracts held. All insurance contracts issued by the Group are
\n
eligible for the PAA as they have a one-year coverage period. The
\n
Group has a small number of reinsurance contracts held that have
\n
a\u00a0coverage period of more than one year which are expected to be
\n
eligible for the PAA as, at inception, the PAA is expected to produce a
\n
measurement of the liability for remaining coverage of the relevant
\n
group of reinsurance contracts that would not di\ufb00er materially from
\n
the one that would be produced by applying the standard\u2019s more
\n
complex general measurement model.
\n
Applying the PAA simpli\ufb01es the measurement of the IFRS 17 liability
\n
for remaining coverage, which will continue to be based on a deferred
\n
premium approach as under current IFRS. However, the IFRS 17
\n
liability for remaining coverage will di\ufb00er from current IFRS in relation
\n
to the following:
\n
\u2022
The IFRS 17 requirement to identify any contracts that are
\n
expected to be onerous at initial recognition. The expected
\n
losses\u00a0are recognised immediately in profit or loss, with a liability
\n
established on the balance sheet. Under current IFRS, these
\n
losses would be recognised in profit or loss over the coverage
\n
period of the insurance contracts.
\n
\u2022
The Group intends to take the PAA option to expense insurance
\n
acquisition costs immediately in profit or loss, meaning the IFRS 4
\n
deferred insurance acquisition cost asset will effectively be
\n
written\u00a0off.
\n
The measurement of insurance contract liabilities in relation to
\n
coverage provided before the statement of \ufb01nancial position date,
\n
referred to as the liability for incurred claims under IFRS 17,
\n
and\u00a0reinsurance contract assets will change.
\n
The IFRS 17 liability for incurred claims will be measured as the sum
\n
of\u00a0the following components (collectively referred to as the ful\ufb01lment
\n
cash \ufb02ows):
\n
\u2022
The expected future cash flows, all of which will be discounted
\n
using the risk-free rate at the statement of financial position
\n
date,\u00a0adjusted to reflect the illiquid characteristics of the
\n
insurance contracts.
Notes to the consolidated \ufb01nancial statements continued
\n
154
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.4 Standards issued but not yet effective
\n
continued
\n
\u2022
A \u2018risk adjustment for non-financial risk\u2019 (
risk adjustment
), being
\n
an explicit margin above the expected future cash flows that
\n
represents the compensation required for bearing non-financial
\n
uncertainty. The Group will derive the risk adjustment by selecting
\n
an appropriate confidence interval using the expected loss
\n
distribution for incurred claims.
\n
This di\ufb00ers from current IFRS under which:
\n
\u2022
only certain long-tail claim liabilities are discounted. This discounting
\n
uses a discount rate that doesn\u2019t typically move in line with market
\n
interest rates; and
\n
\u2022
the reserve margin is not explicit or linked to a target
\n
confidence\u00a0level.
\n
The cumulative impact of adopting IFRS 17 on the Group\u2019s reported
\n
net assets at the 1 February 2022 transition date is currently
\n
expected to be in the range of a \u00a314m decrease to an \u00a38m increase.
\n
This estimated impact is preliminary and may change as the Group\u2019s
\n
implementation work is completed.
\n
The impact of IFRS 17 on pro\ufb01t or loss compared to current IFRS
\n
will\u00a0be driven by the statement of \ufb01nancial position measurement
\n
di\ufb00erences described above. The only exception will be if the Group
\n
takes the IFRS 17 option to present the impact of changes in the
\n
IFRS\u00a017 discount rate on the measurement of the liability for incurred
\n
claims within other comprehensive income rather than within pro\ufb01t
\n
or loss. The Group has not yet made a \ufb01nal decision on whether this
\n
option will be taken.
\n
b. Classification of liabilities as current or
\n
non-current (amendments to IAS 1)
\n
The amendments aim to promote consistency in applying the
\n
requirements by helping companies determine whether, in the
\n
statement of \ufb01nancial position, debt and other liabilities with an
\n
uncertain settlement date should be classi\ufb01ed as current (due,
\n
or\u00a0potentially due, to be settled within one year) or non-current.
\n
The\u00a0amendments are e\ufb00ective for annual periods beginning on,
\n
or\u00a0after, 1 January 2024 and are not likely to have a material e\ufb00ect
\n
on\u00a0the Group\u2019s \ufb01nancial statements. These amendments are not
\n
currently endorsed by the UK Endorsement Board.
\n
c. Deferred tax related to assets and liabilities arising
\n
from a single transaction (amendments to IAS 12)
\n
The amendments clarify that the initial recognition exemption does
\n
not apply to transactions in which equal amounts of deductible and
\n
taxable temporary di\ufb00erences arise on initial recognition. They will
\n
typically apply to transactions such as leases of lessees and will
\n
require the recognition of additional deferred tax assets and liabilities.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2023. The amendments are not expected to
\n
have a material impact on the Group\u2019s \ufb01nancial statements.
\n
d. Disclosure of accounting policies (amendments
\n
to\u00a0IAS 1 and IFRS Practice Statement 2)
\n
The amendments require that an entity discloses its material
\n
accounting policies, instead of its signi\ufb01cant accounting policies.
\n
Further amendments explain how an entity can identify a material
\n
accounting policy. The amendments are e\ufb00ective for annual
\n
reporting\u00a0periods beginning on, or after, 1 January 2023.
\n
The\u00a0amendments are\u00a0not expected to have a material impact
\n
on\u00a0the\u00a0Group\u2019s \ufb01nancial statements.
\n
e. Definition of accounting estimates
\n
(amendments\u00a0to\u00a0IAS 8)
\n
The amendments replace the de\ufb01nition of a change in accounting
\n
estimates with a de\ufb01nition of accounting estimates. Under the new
\n
de\ufb01nition, accounting estimates are \u201cmonetary amounts in \ufb01nancial
\n
statements that are subject to measurement uncertainty\u201d. The
\n
amendments clarify that a change in accounting estimate that results
\n
from new information, or new developments, is not the correction of
\n
an error. The amendments are e\ufb00ective for annual reporting periods
\n
beginning on, or after, 1 January 2023. The amendments are not
\n
expected to have a material impact on the Group\u2019s \ufb01nancial
\n
statements.
\n
f. Definition of lease liability in a sale and leaseback
\n
(amendment to IFRS 16)
\n
The amendment clari\ufb01es how a seller-lessee subsequently measures
\n
sale and leaseback transactions that satisfy the requirements in
\n
IFRS\u00a015 to be accounted for as a sale. The amendment is e\ufb00ective
\n
for\u00a0annual reporting periods beginning on, or after, 1 January 2024.
\n
The amendment is not expected to have a material impact on the
\n
Group\u2019s \ufb01nancial statements. This amendment is not currently
\n
endorsed by the UK Endorsement Board.
\n
2.5 First time adoption of new standards and
\n
amendments
\n
The following is a list of standards, and amendments to standards,
\n
that became e\ufb00ective, or were adopted, for the \ufb01rst time during the
\n
year ended 31 January 2023.
\n
a. COVID-19-related rent concessions beyond
\n
30\u00a0June 2021 (amendment to IFRS 16)
\n
The amendment extends, by one year, the May 2020 amendment
\n
that provides lessees with an exemption from assessing whether
\n
a\u00a0COVID-19-related rent concession is a lease modi\ufb01cation.
\n
The\u00a0amendment was e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 April 2021. The Group did not take advantage of the
\n
exemption available under this amendment. The amendment has had
\n
no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
b. Property, plant and equipment \u2013 proceeds before
\n
intended use (amendments to IAS 16)
\n
The amendments prohibit deducting from the cost of an item of
\n
property, plant and equipment, any proceeds from selling items
\n
produced while bringing that asset to the location and condition
\n
necessary for it to be capable of operating in the manner intended by
\n
management. Instead, an entity recognises the proceeds from selling
\n
such items, and the cost of producing those items, in pro\ufb01t or loss.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2022. The amendments have had no e\ufb00ect on
\n
the Group\u2019s \ufb01nancial statements.
Saga plc
Annual Report and Accounts 2023
155
Strategic report
Financial statements
Additional information
Governance
\n
c. Onerous contracts \u2013 cost of fulfilling a contract (amendments to IAS 37)
\n
The amendments specify that the \u201ccost of ful\ufb01lling\u201d a contract comprises the \u201ccosts that relate directly to the contract\u201d. Costs that relate
\n
directly to a contract can either be incremental costs of ful\ufb01lling that contract (examples would be direct labour and materials) or an allocation
\n
of other costs that relate directly to ful\ufb01lling contracts (an example would be the allocation of the depreciation charge for an item of property,
\n
plant and equipment used in ful\ufb01lling the contract). The amendments are e\ufb00ective for annual reporting periods beginning on, or after, 1 January
\n
2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
d. Annual improvements to IFRS 2018-2020
\n
The improvements make minor amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and IAS 41. The amendments are e\ufb00ective for
\n
annual reporting periods beginning on, or after, 1 January 2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
e. Reference to the Conceptual Framework (amendments to IFRS 3)
\n
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without signi\ufb01cantly changing the requirements
\n
in\u00a0the standard. The amendment is e\ufb00ective for annual reporting periods beginning on, or after, 1 January 2022 and apply prospectively.
\nThe\u00a0amendment has had no e\ufb00ect on the Group\u2019s \ufb01nancial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21417": { "value": "2.4 Standards issued but not yet effective
The following is a list of standards, and amendments to standards,
\n
that are in issue but are not e\ufb00ective or adopted as at 31 January
\n
2023. Except where separately disclosed, these standards are
\n
endorsed by\u00a0the UK Endorsement Board.
\n
a. IFRS 17 \u2018Insurance Contracts\u2019
\n
IFRS 17 \u2018Insurance Contracts\u2019 is a comprehensive new accounting
\n
standard that applies to all insurance and reinsurance contracts
\n
covering the principles of recognition, measurement, presentation
\n
and disclosure.
\n
IFRS 17 only applies to insurance contracts that are underwritten by
\n
the Group and related reinsurance contracts held. It does not a\ufb00ect
\n
the accounting for the Group\u2019s Insurance Broking activities.
\n
IFRS 17 is e\ufb00ective for annual reporting periods beginning on, or after,
\n
1 January 2023. The Group will initially apply IFRS 17 in its consolidated
\n
\ufb01nancial statements for the year ending 31 January 2024, with the
\n
date of initial application being 1 February 2023 and the transition
\n
date being 1 February 2022. The Group\u2019s consolidated \ufb01nancial
\n
statements for the year ending 31 January 2024 will include
\n
comparatives for the year ending 31 January 2023 restated onto
\n
an\u00a0IFRS 17 basis.
\n
The Group expects to apply IFRS 17\u2019s simpli\ufb01ed premium allocation
\n
approach (
PAA
) to all insurance contracts issued and reinsurance
\n
contracts held. All insurance contracts issued by the Group are
\n
eligible for the PAA as they have a one-year coverage period. The
\n
Group has a small number of reinsurance contracts held that have
\n
a\u00a0coverage period of more than one year which are expected to be
\n
eligible for the PAA as, at inception, the PAA is expected to produce a
\n
measurement of the liability for remaining coverage of the relevant
\n
group of reinsurance contracts that would not di\ufb00er materially from
\n
the one that would be produced by applying the standard\u2019s more
\n
complex general measurement model.
\n
Applying the PAA simpli\ufb01es the measurement of the IFRS 17 liability
\n
for remaining coverage, which will continue to be based on a deferred
\n
premium approach as under current IFRS. However, the IFRS 17
\n
liability for remaining coverage will di\ufb00er from current IFRS in relation
\n
to the following:
\n
\u2022
The IFRS 17 requirement to identify any contracts that are
\n
expected to be onerous at initial recognition. The expected
\n
losses\u00a0are recognised immediately in profit or loss, with a liability
\n
established on the balance sheet. Under current IFRS, these
\n
losses would be recognised in profit or loss over the coverage
\n
period of the insurance contracts.
\n
\u2022
The Group intends to take the PAA option to expense insurance
\n
acquisition costs immediately in profit or loss, meaning the IFRS 4
\n
deferred insurance acquisition cost asset will effectively be
\n
written\u00a0off.
\n
The measurement of insurance contract liabilities in relation to
\n
coverage provided before the statement of \ufb01nancial position date,
\n
referred to as the liability for incurred claims under IFRS 17,
\n
and\u00a0reinsurance contract assets will change.
\n
The IFRS 17 liability for incurred claims will be measured as the sum
\n
of\u00a0the following components (collectively referred to as the ful\ufb01lment
\n
cash \ufb02ows):
\n
\u2022
The expected future cash flows, all of which will be discounted
\n
using the risk-free rate at the statement of financial position
\n
date,\u00a0adjusted to reflect the illiquid characteristics of the
\n
insurance contracts.
Notes to the consolidated \ufb01nancial statements continued
\n
154
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
2.4 Standards issued but not yet effective
\n
continued
\n
\u2022
A \u2018risk adjustment for non-financial risk\u2019 (
risk adjustment
), being
\n
an explicit margin above the expected future cash flows that
\n
represents the compensation required for bearing non-financial
\n
uncertainty. The Group will derive the risk adjustment by selecting
\n
an appropriate confidence interval using the expected loss
\n
distribution for incurred claims.
\n
This di\ufb00ers from current IFRS under which:
\n
\u2022
only certain long-tail claim liabilities are discounted. This discounting
\n
uses a discount rate that doesn\u2019t typically move in line with market
\n
interest rates; and
\n
\u2022
the reserve margin is not explicit or linked to a target
\n
confidence\u00a0level.
\n
The cumulative impact of adopting IFRS 17 on the Group\u2019s reported
\n
net assets at the 1 February 2022 transition date is currently
\n
expected to be in the range of a \u00a314m decrease to an \u00a38m increase.
\n
This estimated impact is preliminary and may change as the Group\u2019s
\n
implementation work is completed.
\n
The impact of IFRS 17 on pro\ufb01t or loss compared to current IFRS
\n
will\u00a0be driven by the statement of \ufb01nancial position measurement
\n
di\ufb00erences described above. The only exception will be if the Group
\n
takes the IFRS 17 option to present the impact of changes in the
\n
IFRS\u00a017 discount rate on the measurement of the liability for incurred
\n
claims within other comprehensive income rather than within pro\ufb01t
\n
or loss. The Group has not yet made a \ufb01nal decision on whether this
\n
option will be taken.
\n
b. Classification of liabilities as current or
\n
non-current (amendments to IAS 1)
\n
The amendments aim to promote consistency in applying the
\n
requirements by helping companies determine whether, in the
\n
statement of \ufb01nancial position, debt and other liabilities with an
\n
uncertain settlement date should be classi\ufb01ed as current (due,
\n
or\u00a0potentially due, to be settled within one year) or non-current.
\n
The\u00a0amendments are e\ufb00ective for annual periods beginning on,
\n
or\u00a0after, 1 January 2024 and are not likely to have a material e\ufb00ect
\n
on\u00a0the Group\u2019s \ufb01nancial statements. These amendments are not
\n
currently endorsed by the UK Endorsement Board.
\n
c. Deferred tax related to assets and liabilities arising
\n
from a single transaction (amendments to IAS 12)
\n
The amendments clarify that the initial recognition exemption does
\n
not apply to transactions in which equal amounts of deductible and
\n
taxable temporary di\ufb00erences arise on initial recognition. They will
\n
typically apply to transactions such as leases of lessees and will
\n
require the recognition of additional deferred tax assets and liabilities.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2023. The amendments are not expected to
\n
have a material impact on the Group\u2019s \ufb01nancial statements.
\n
d. Disclosure of accounting policies (amendments
\n
to\u00a0IAS 1 and IFRS Practice Statement 2)
\n
The amendments require that an entity discloses its material
\n
accounting policies, instead of its signi\ufb01cant accounting policies.
\n
Further amendments explain how an entity can identify a material
\n
accounting policy. The amendments are e\ufb00ective for annual
\n
reporting\u00a0periods beginning on, or after, 1 January 2023.
\n
The\u00a0amendments are\u00a0not expected to have a material impact
\n
on\u00a0the\u00a0Group\u2019s \ufb01nancial statements.
\n
e. Definition of accounting estimates
\n
(amendments\u00a0to\u00a0IAS 8)
\n
The amendments replace the de\ufb01nition of a change in accounting
\n
estimates with a de\ufb01nition of accounting estimates. Under the new
\n
de\ufb01nition, accounting estimates are \u201cmonetary amounts in \ufb01nancial
\n
statements that are subject to measurement uncertainty\u201d. The
\n
amendments clarify that a change in accounting estimate that results
\n
from new information, or new developments, is not the correction of
\n
an error. The amendments are e\ufb00ective for annual reporting periods
\n
beginning on, or after, 1 January 2023. The amendments are not
\n
expected to have a material impact on the Group\u2019s \ufb01nancial
\n
statements.
\n
f. Definition of lease liability in a sale and leaseback
\n
(amendment to IFRS 16)
\n
The amendment clari\ufb01es how a seller-lessee subsequently measures
\n
sale and leaseback transactions that satisfy the requirements in
\n
IFRS\u00a015 to be accounted for as a sale. The amendment is e\ufb00ective
\n
for\u00a0annual reporting periods beginning on, or after, 1 January 2024.
\n
The amendment is not expected to have a material impact on the
\n
Group\u2019s \ufb01nancial statements. This amendment is not currently
\n
endorsed by the UK Endorsement Board.
\n
2.5 First time adoption of new standards and
\n
amendments
\n
The following is a list of standards, and amendments to standards,
\n
that became e\ufb00ective, or were adopted, for the \ufb01rst time during the
\n
year ended 31 January 2023.
\n
a. COVID-19-related rent concessions beyond
\n
30\u00a0June 2021 (amendment to IFRS 16)
\n
The amendment extends, by one year, the May 2020 amendment
\n
that provides lessees with an exemption from assessing whether
\n
a\u00a0COVID-19-related rent concession is a lease modi\ufb01cation.
\n
The\u00a0amendment was e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 April 2021. The Group did not take advantage of the
\n
exemption available under this amendment. The amendment has had
\n
no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
b. Property, plant and equipment \u2013 proceeds before
\n
intended use (amendments to IAS 16)
\n
The amendments prohibit deducting from the cost of an item of
\n
property, plant and equipment, any proceeds from selling items
\n
produced while bringing that asset to the location and condition
\n
necessary for it to be capable of operating in the manner intended by
\n
management. Instead, an entity recognises the proceeds from selling
\n
such items, and the cost of producing those items, in pro\ufb01t or loss.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2022. The amendments have had no e\ufb00ect on
\n
the Group\u2019s \ufb01nancial statements.
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155
Strategic report
Financial statements
Additional information
Governance
\n
c. Onerous contracts \u2013 cost of fulfilling a contract (amendments to IAS 37)
\n
The amendments specify that the \u201ccost of ful\ufb01lling\u201d a contract comprises the \u201ccosts that relate directly to the contract\u201d. Costs that relate
\n
directly to a contract can either be incremental costs of ful\ufb01lling that contract (examples would be direct labour and materials) or an allocation
\n
of other costs that relate directly to ful\ufb01lling contracts (an example would be the allocation of the depreciation charge for an item of property,
\n
plant and equipment used in ful\ufb01lling the contract). The amendments are e\ufb00ective for annual reporting periods beginning on, or after, 1 January
\n
2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
d. Annual improvements to IFRS 2018-2020
\n
The improvements make minor amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and IAS 41. The amendments are e\ufb00ective for
\n
annual reporting periods beginning on, or after, 1 January 2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
e. Reference to the Conceptual Framework (amendments to IFRS 3)
\n
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without signi\ufb01cantly changing the requirements
\n
in\u00a0the standard. The amendment is e\ufb00ective for annual reporting periods beginning on, or after, 1 January 2022 and apply prospectively.
\n
The\u00a0amendment has had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
2.6 Significant accounting judgements, estimates and assumptions
\n
The preparation of \ufb01nancial statements requires the Group to select accounting policies and make estimates and assumptions that a\ufb00ect
\n
items reported in the primary consolidated \ufb01nancial statements and Notes to the consolidated \ufb01nancial statements.
\n
The major areas of judgement used as part of accounting policy application are summarised below:
\n
Significant judgements
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3a
Revenue recognition \u2013
\n
identi\ufb01cation of performance
\n
obligations within insurance
\n
contracts not underwritten
\n
by\u00a0the Group
\n
Identi\ufb01cation of performance obligations within insurance contracts with customers. In
\n
particular, management has exercised judgement in de\ufb01ning separate performance obligations
\n
as part of the Group\u2019s Insurance Broking services, namely:
\n
\u2022
the option to fix the customer\u2019s premium at renewal for three-year fixed-price insurance
\n
policies, which results in the deferral of a portion of revenue from policy years one and two
\n
to\u00a0policy years two and three; and
\n
\u2022
the arrangement of each insurance policy at the point the insurance cover is arranged,
\n
as\u00a0separate from the premium charged in respect of the insurance cover, which occurs on,
\n
or\u00a0before, the cover start date of each policy and results in a portion of revenue being
\n
recognised a number of days in advance of the cover start date.
\n
Please refer to Note 2.3a for further information on the Group\u2019s performance obligations relating
\n
to revenue recognition.
\n
2.3ai, 2.3r
\n
and 2.3s
\n
Classi\ufb01cation of insurance
\n
contracts
\n
Management has exercised judgement in de\ufb01ning which insurance policies that it arranges and
\n
underwrites constitute an insurance policy that is subject to the accounting principles of IFRS 4.
\n
This assessment is based on whether signi\ufb01cant insurance risk is transferred under each
\n
insurance contract and also includes the assessment of reinsurance contracts that the Group
\n
enters into.
\n
Policies that are arranged, and not underwritten, by the Group, primarily a portion of the motor
\n
and home insurance panels, private medical insurance (
PMI
) and travel insurance, are not
\n
deemed to constitute insurance policies as de\ufb01ned by IFRS 4, and so they are accounted for in
\n
line with the principles of IFRS 15.
\n
Policies that are both arranged and underwritten by the Group, primarily a portion of the motor
\n
and home insurance panels, are deemed to constitute insurance policies as de\ufb01ned by IFRS 4 and
\n
so are accounted for in line with the requirements of that standard.
\n
The Group\u2019s excess of loss and funds-withheld quota share reinsurance arrangements relating
\n
to\u00a0its motor underwriting line of business are deemed to transfer signi\ufb01cant insurance risk to the
\n
reinsurer, and so they are also accounted for in line with the requirements of IFRS 4.
Notes to the consolidated \ufb01nancial statements continued
\n
156
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\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3h
Impairment testing of
\n
goodwill\u00a0and other major
\n
classes\u00a0of assets
\n
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required.
\n
New pricing rules set by the FCA came into e\ufb00ect on 1 January 2022, following the conclusion
\n
of\u00a0the General Insurance Pricing Practices market study (
GIPP
). As a result of the impact of the
\n
GIPP changes on customer pricing, especially in the highly competitive motor insurance market,
\n
there has been a fall in policy volumes in the period to 31 July 2022 and the year to 31 January
\n
2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management have considered this to be an indicator of impairment and have therefore
\n
conducted full impairment reviews of the Insurance CGU as at 31 July 2022 and 31 January
\n
2023. As a result of these reviews, management deemed it necessary to impair the goodwill
\n
allocated to the Insurance CGU by \u00a3269.0m at 31 July 2022. No further impairment was
\n
deemed necessary in the six months to 31 January 2023.
\n
In the year to 31 January 2022, management did not deem it necessary to impair goodwill. Please
\n
refer to Note 16a for further detail.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant
\n
value to all Saga business units, in line with pre-acquisition expectations. However, because these
\n
bene\ufb01ts are largely associated with the continued employment of a small number of individuals,
\n
which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts
\n
in question, the Group decided to write-o\ufb00 in full the \u00a30.5m goodwill arising on acquisition in the
\n
period to 31 July 2022.
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel
\n
operations, management concluded that potential indicators of impairment existed and
\n
conducted impairment reviews at 31 July 2022 and 31 January 2022 of the Group\u2019s two ocean
\n
cruise ships, Spirit of Discovery and Spirit of Adventure. Management considered a range of
\n
scenarios and used its judgement to conclude that no impairment was necessary.
\n
As at 31 January 2023, management did not consider it necessary to conduct an impairment
\n
review of the Group\u2019s two ocean cruise ships since no new indicators of impairment were
\n
identi\ufb01ed. Please refer to Note 17 for further detail.
\n
In the prior year, given the delay in taking delivery of the river cruise ship, Spirit of the Rhine,
\n
along with the ongoing adverse impacts of the COVID-19 pandemic on the wider travel industry,
\n
management concluded that indicators of impairment existed and deemed it necessary to
\n
conduct an impairment review of the vessel at 31 January 2022. Management considered a
\n
range of scenarios and used its judgement to conclude that no impairment was necessary.
\n
Please refer to Note 18a for further detail.
\n
In the year to 31 January 2023, management did not consider it necessary to conduct an
\n
impairment review of right-of-use river cruise ship assets, since no new indicators of impairment
\n
were identi\ufb01ed.
\n
In year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on
\n
the\u00a0travel industry, management decided to restructure the Group\u2019s Tour Operations CGU
\n
(now\u00a0River Cruise and Travel). In light of this exercise, management exercised its judgement in
\n
relation to the impairment of software assets and performed an impairment review of software
\n
assets used by the Tour Operations business. As a result of this review, management deemed
\n
it\u00a0necessary to impair these software assets by \u00a39.4m and the software assets in the Central
\n
Costs division by \u00a30.5m. No further impairment was deemed necessary in the period to
\n
31\u00a0January 2023. Please refer to Note 16b for further detail.
\n
In the years to 31 January 2023 and 31 January 2022, in light of the Group obtaining freehold
\n
property market valuation reports, management exercised judgement in relation to the
\n
impairment of property assets held for sale. A net impairment charge of \u00a31.2m (2022: \u00a31.0m)
\n
was accordingly recognised. Please refer to Note 38 for further detail.
\n
2.3r
Insurance contract liabilities
Judgement is required in relation to the areas of uncertainty that may give rise to claims costs in
\n
excess of the actuarial best estimate of claims incurred, and the level of additional reserve margin
\n
to recognise in the \ufb01nancial statements above that estimate.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost
\n
development caused by the impact of the COVID-19 pandemic and recognised an additional
\n
claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk provision
\n
in relation to the COVID-19 pandemic was released over the year to 31 January 2023, re\ufb02ective
\n
of the improvement in the COVID-19 outlook. Please refer to Note 20d for further detail.
\n
2.6 Significant accounting judgements, estimates and assumptions
continued
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157
Strategic report
Financial statements
Additional information
Governance
\n
Significant estimates
\n
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\nscheme obligation are set out in Note 27. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21589": { "value": "2.5 First time adoption of new standards and
amendments
\n
The following is a list of standards, and amendments to standards,
\n
that became e\ufb00ective, or were adopted, for the \ufb01rst time during the
\n
year ended 31 January 2023.
\n
a. COVID-19-related rent concessions beyond
\n
30\u00a0June 2021 (amendment to IFRS 16)
\n
The amendment extends, by one year, the May 2020 amendment
\n
that provides lessees with an exemption from assessing whether
\n
a\u00a0COVID-19-related rent concession is a lease modi\ufb01cation.
\n
The\u00a0amendment was e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 April 2021. The Group did not take advantage of the
\n
exemption available under this amendment. The amendment has had
\n
no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
b. Property, plant and equipment \u2013 proceeds before
\n
intended use (amendments to IAS 16)
\n
The amendments prohibit deducting from the cost of an item of
\n
property, plant and equipment, any proceeds from selling items
\n
produced while bringing that asset to the location and condition
\n
necessary for it to be capable of operating in the manner intended by
\n
management. Instead, an entity recognises the proceeds from selling
\n
such items, and the cost of producing those items, in pro\ufb01t or loss.
\n
The amendments are e\ufb00ective for annual reporting periods beginning
\n
on, or after, 1 January 2022. The amendments have had no e\ufb00ect on
\n
the Group\u2019s \ufb01nancial statements.
Saga plc
Annual Report and Accounts 2023
155
Strategic report
Financial statements
Additional information
Governance
\n
c. Onerous contracts \u2013 cost of fulfilling a contract (amendments to IAS 37)
\n
The amendments specify that the \u201ccost of ful\ufb01lling\u201d a contract comprises the \u201ccosts that relate directly to the contract\u201d. Costs that relate
\n
directly to a contract can either be incremental costs of ful\ufb01lling that contract (examples would be direct labour and materials) or an allocation
\n
of other costs that relate directly to ful\ufb01lling contracts (an example would be the allocation of the depreciation charge for an item of property,
\n
plant and equipment used in ful\ufb01lling the contract). The amendments are e\ufb00ective for annual reporting periods beginning on, or after, 1 January
\n
2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
d. Annual improvements to IFRS 2018-2020
\n
The improvements make minor amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and IAS 41. The amendments are e\ufb00ective for
\n
annual reporting periods beginning on, or after, 1 January 2022. The amendments have had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.
\n
e. Reference to the Conceptual Framework (amendments to IFRS 3)
\n
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without signi\ufb01cantly changing the requirements
\n
in\u00a0the standard. The amendment is e\ufb00ective for annual reporting periods beginning on, or after, 1 January 2022 and apply prospectively.
\nThe\u00a0amendment has had no e\ufb00ect on the Group\u2019s \ufb01nancial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfFirstTimeAdoptionExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21653": { "value": "2.6 Significant accounting judgements, estimates and assumptions
The preparation of \ufb01nancial statements requires the Group to select accounting policies and make estimates and assumptions that a\ufb00ect
\n
items reported in the primary consolidated \ufb01nancial statements and Notes to the consolidated \ufb01nancial statements.
\n
The major areas of judgement used as part of accounting policy application are summarised below:
\n
Significant judgements
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3a
Revenue recognition \u2013
\n
identi\ufb01cation of performance
\n
obligations within insurance
\n
contracts not underwritten
\n
by\u00a0the Group
\n
Identi\ufb01cation of performance obligations within insurance contracts with customers. In
\n
particular, management has exercised judgement in de\ufb01ning separate performance obligations
\n
as part of the Group\u2019s Insurance Broking services, namely:
\n
\u2022
the option to fix the customer\u2019s premium at renewal for three-year fixed-price insurance
\n
policies, which results in the deferral of a portion of revenue from policy years one and two
\n
to\u00a0policy years two and three; and
\n
\u2022
the arrangement of each insurance policy at the point the insurance cover is arranged,
\n
as\u00a0separate from the premium charged in respect of the insurance cover, which occurs on,
\n
or\u00a0before, the cover start date of each policy and results in a portion of revenue being
\n
recognised a number of days in advance of the cover start date.
\n
Please refer to Note 2.3a for further information on the Group\u2019s performance obligations relating
\n
to revenue recognition.
\n
2.3ai, 2.3r
\n
and 2.3s
\n
Classi\ufb01cation of insurance
\n
contracts
\n
Management has exercised judgement in de\ufb01ning which insurance policies that it arranges and
\n
underwrites constitute an insurance policy that is subject to the accounting principles of IFRS 4.
\n
This assessment is based on whether signi\ufb01cant insurance risk is transferred under each
\n
insurance contract and also includes the assessment of reinsurance contracts that the Group
\n
enters into.
\n
Policies that are arranged, and not underwritten, by the Group, primarily a portion of the motor
\n
and home insurance panels, private medical insurance (
PMI
) and travel insurance, are not
\n
deemed to constitute insurance policies as de\ufb01ned by IFRS 4, and so they are accounted for in
\n
line with the principles of IFRS 15.
\n
Policies that are both arranged and underwritten by the Group, primarily a portion of the motor
\n
and home insurance panels, are deemed to constitute insurance policies as de\ufb01ned by IFRS 4 and
\n
so are accounted for in line with the requirements of that standard.
\n
The Group\u2019s excess of loss and funds-withheld quota share reinsurance arrangements relating
\n
to\u00a0its motor underwriting line of business are deemed to transfer signi\ufb01cant insurance risk to the
\n
reinsurer, and so they are also accounted for in line with the requirements of IFRS 4.
Notes to the consolidated \ufb01nancial statements continued
\n
156
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3h
Impairment testing of
\n
goodwill\u00a0and other major
\n
classes\u00a0of assets
\n
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required.
\n
New pricing rules set by the FCA came into e\ufb00ect on 1 January 2022, following the conclusion
\n
of\u00a0the General Insurance Pricing Practices market study (
GIPP
). As a result of the impact of the
\n
GIPP changes on customer pricing, especially in the highly competitive motor insurance market,
\n
there has been a fall in policy volumes in the period to 31 July 2022 and the year to 31 January
\n
2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management have considered this to be an indicator of impairment and have therefore
\n
conducted full impairment reviews of the Insurance CGU as at 31 July 2022 and 31 January
\n
2023. As a result of these reviews, management deemed it necessary to impair the goodwill
\n
allocated to the Insurance CGU by \u00a3269.0m at 31 July 2022. No further impairment was
\n
deemed necessary in the six months to 31 January 2023.
\n
In the year to 31 January 2022, management did not deem it necessary to impair goodwill. Please
\n
refer to Note 16a for further detail.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant
\n
value to all Saga business units, in line with pre-acquisition expectations. However, because these
\n
bene\ufb01ts are largely associated with the continued employment of a small number of individuals,
\n
which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts
\n
in question, the Group decided to write-o\ufb00 in full the \u00a30.5m goodwill arising on acquisition in the
\n
period to 31 July 2022.
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel
\n
operations, management concluded that potential indicators of impairment existed and
\n
conducted impairment reviews at 31 July 2022 and 31 January 2022 of the Group\u2019s two ocean
\n
cruise ships, Spirit of Discovery and Spirit of Adventure. Management considered a range of
\n
scenarios and used its judgement to conclude that no impairment was necessary.
\n
As at 31 January 2023, management did not consider it necessary to conduct an impairment
\n
review of the Group\u2019s two ocean cruise ships since no new indicators of impairment were
\n
identi\ufb01ed. Please refer to Note 17 for further detail.
\n
In the prior year, given the delay in taking delivery of the river cruise ship, Spirit of the Rhine,
\n
along with the ongoing adverse impacts of the COVID-19 pandemic on the wider travel industry,
\n
management concluded that indicators of impairment existed and deemed it necessary to
\n
conduct an impairment review of the vessel at 31 January 2022. Management considered a
\n
range of scenarios and used its judgement to conclude that no impairment was necessary.
\n
Please refer to Note 18a for further detail.
\n
In the year to 31 January 2023, management did not consider it necessary to conduct an
\n
impairment review of right-of-use river cruise ship assets, since no new indicators of impairment
\n
were identi\ufb01ed.
\n
In year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on
\n
the\u00a0travel industry, management decided to restructure the Group\u2019s Tour Operations CGU
\n
(now\u00a0River Cruise and Travel). In light of this exercise, management exercised its judgement in
\n
relation to the impairment of software assets and performed an impairment review of software
\n
assets used by the Tour Operations business. As a result of this review, management deemed
\n
it\u00a0necessary to impair these software assets by \u00a39.4m and the software assets in the Central
\n
Costs division by \u00a30.5m. No further impairment was deemed necessary in the period to
\n
31\u00a0January 2023. Please refer to Note 16b for further detail.
\n
In the years to 31 January 2023 and 31 January 2022, in light of the Group obtaining freehold
\n
property market valuation reports, management exercised judgement in relation to the
\n
impairment of property assets held for sale. A net impairment charge of \u00a31.2m (2022: \u00a31.0m)
\n
was accordingly recognised. Please refer to Note 38 for further detail.
\n
2.3r
Insurance contract liabilities
Judgement is required in relation to the areas of uncertainty that may give rise to claims costs in
\n
excess of the actuarial best estimate of claims incurred, and the level of additional reserve margin
\n
to recognise in the \ufb01nancial statements above that estimate.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost
\n
development caused by the impact of the COVID-19 pandemic and recognised an additional
\n
claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk provision
\n
in relation to the COVID-19 pandemic was released over the year to 31 January 2023, re\ufb02ective
\n
of the improvement in the COVID-19 outlook. Please refer to Note 20d for further detail.
\n
2.6 Significant accounting judgements, estimates and assumptions
continued
Saga plc
Annual Report and Accounts 2023
157
Strategic report
Financial statements
Additional information
Governance
\n
Significant estimates
\n
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\nscheme obligation are set out in Note 27. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21654": { "value": "2.6 Significant accounting judgements, estimates and assumptions
The preparation of \ufb01nancial statements requires the Group to select accounting policies and make estimates and assumptions that a\ufb00ect
\n
items reported in the primary consolidated \ufb01nancial statements and Notes to the consolidated \ufb01nancial statements.
\n
The major areas of judgement used as part of accounting policy application are summarised below:
\n
Significant judgements
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3a
Revenue recognition \u2013
\n
identi\ufb01cation of performance
\n
obligations within insurance
\n
contracts not underwritten
\n
by\u00a0the Group
\n
Identi\ufb01cation of performance obligations within insurance contracts with customers. In
\n
particular, management has exercised judgement in de\ufb01ning separate performance obligations
\n
as part of the Group\u2019s Insurance Broking services, namely:
\n
\u2022
the option to fix the customer\u2019s premium at renewal for three-year fixed-price insurance
\n
policies, which results in the deferral of a portion of revenue from policy years one and two
\n
to\u00a0policy years two and three; and
\n
\u2022
the arrangement of each insurance policy at the point the insurance cover is arranged,
\n
as\u00a0separate from the premium charged in respect of the insurance cover, which occurs on,
\n
or\u00a0before, the cover start date of each policy and results in a portion of revenue being
\n
recognised a number of days in advance of the cover start date.
\n
Please refer to Note 2.3a for further information on the Group\u2019s performance obligations relating
\n
to revenue recognition.
\n
2.3ai, 2.3r
\n
and 2.3s
\n
Classi\ufb01cation of insurance
\n
contracts
\n
Management has exercised judgement in de\ufb01ning which insurance policies that it arranges and
\n
underwrites constitute an insurance policy that is subject to the accounting principles of IFRS 4.
\n
This assessment is based on whether signi\ufb01cant insurance risk is transferred under each
\n
insurance contract and also includes the assessment of reinsurance contracts that the Group
\n
enters into.
\n
Policies that are arranged, and not underwritten, by the Group, primarily a portion of the motor
\n
and home insurance panels, private medical insurance (
PMI
) and travel insurance, are not
\n
deemed to constitute insurance policies as de\ufb01ned by IFRS 4, and so they are accounted for in
\n
line with the principles of IFRS 15.
\n
Policies that are both arranged and underwritten by the Group, primarily a portion of the motor
\n
and home insurance panels, are deemed to constitute insurance policies as de\ufb01ned by IFRS 4 and
\n
so are accounted for in line with the requirements of that standard.
\n
The Group\u2019s excess of loss and funds-withheld quota share reinsurance arrangements relating
\n
to\u00a0its motor underwriting line of business are deemed to transfer signi\ufb01cant insurance risk to the
\n
reinsurer, and so they are also accounted for in line with the requirements of IFRS 4.
Notes to the consolidated \ufb01nancial statements continued
\n
156
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving judgement
Critical accounting judgement
\n
2.3h
Impairment testing of
\n
goodwill\u00a0and other major
\n
classes\u00a0of assets
\n
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required.
\n
New pricing rules set by the FCA came into e\ufb00ect on 1 January 2022, following the conclusion
\n
of\u00a0the General Insurance Pricing Practices market study (
GIPP
). As a result of the impact of the
\n
GIPP changes on customer pricing, especially in the highly competitive motor insurance market,
\n
there has been a fall in policy volumes in the period to 31 July 2022 and the year to 31 January
\n
2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management have considered this to be an indicator of impairment and have therefore
\n
conducted full impairment reviews of the Insurance CGU as at 31 July 2022 and 31 January
\n
2023. As a result of these reviews, management deemed it necessary to impair the goodwill
\n
allocated to the Insurance CGU by \u00a3269.0m at 31 July 2022. No further impairment was
\n
deemed necessary in the six months to 31 January 2023.
\n
In the year to 31 January 2022, management did not deem it necessary to impair goodwill. Please
\n
refer to Note 16a for further detail.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant
\n
value to all Saga business units, in line with pre-acquisition expectations. However, because these
\n
bene\ufb01ts are largely associated with the continued employment of a small number of individuals,
\n
which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts
\n
in question, the Group decided to write-o\ufb00 in full the \u00a30.5m goodwill arising on acquisition in the
\n
period to 31 July 2022.
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel
\n
operations, management concluded that potential indicators of impairment existed and
\n
conducted impairment reviews at 31 July 2022 and 31 January 2022 of the Group\u2019s two ocean
\n
cruise ships, Spirit of Discovery and Spirit of Adventure. Management considered a range of
\n
scenarios and used its judgement to conclude that no impairment was necessary.
\n
As at 31 January 2023, management did not consider it necessary to conduct an impairment
\n
review of the Group\u2019s two ocean cruise ships since no new indicators of impairment were
\n
identi\ufb01ed. Please refer to Note 17 for further detail.
\n
In the prior year, given the delay in taking delivery of the river cruise ship, Spirit of the Rhine,
\n
along with the ongoing adverse impacts of the COVID-19 pandemic on the wider travel industry,
\n
management concluded that indicators of impairment existed and deemed it necessary to
\n
conduct an impairment review of the vessel at 31 January 2022. Management considered a
\n
range of scenarios and used its judgement to conclude that no impairment was necessary.
\n
Please refer to Note 18a for further detail.
\n
In the year to 31 January 2023, management did not consider it necessary to conduct an
\n
impairment review of right-of-use river cruise ship assets, since no new indicators of impairment
\n
were identi\ufb01ed.
\n
In year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on
\n
the\u00a0travel industry, management decided to restructure the Group\u2019s Tour Operations CGU
\n
(now\u00a0River Cruise and Travel). In light of this exercise, management exercised its judgement in
\n
relation to the impairment of software assets and performed an impairment review of software
\n
assets used by the Tour Operations business. As a result of this review, management deemed
\n
it\u00a0necessary to impair these software assets by \u00a39.4m and the software assets in the Central
\n
Costs division by \u00a30.5m. No further impairment was deemed necessary in the period to
\n
31\u00a0January 2023. Please refer to Note 16b for further detail.
\n
In the years to 31 January 2023 and 31 January 2022, in light of the Group obtaining freehold
\n
property market valuation reports, management exercised judgement in relation to the
\n
impairment of property assets held for sale. A net impairment charge of \u00a31.2m (2022: \u00a31.0m)
\n
was accordingly recognised. Please refer to Note 38 for further detail.
\n
2.3r
Insurance contract liabilities
Judgement is required in relation to the areas of uncertainty that may give rise to claims costs in
\n
excess of the actuarial best estimate of claims incurred, and the level of additional reserve margin
\n
to recognise in the \ufb01nancial statements above that estimate.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost
\n
development caused by the impact of the COVID-19 pandemic and recognised an additional
\n
claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk provision
\n
in relation to the COVID-19 pandemic was released over the year to 31 January 2023, re\ufb02ective
\n
of the improvement in the COVID-19 outlook. Please refer to Note 20d for further detail.
\n
2.6 Significant accounting judgements, estimates and assumptions
continued
Saga plc
Annual Report and Accounts 2023
157
Strategic report
Financial statements
Additional information
Governance
\n
Significant estimates
\n
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\nscheme obligation are set out in Note 27.", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21819": { "value": "Significant estimates
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\nscheme obligation are set out in Note 27. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingEstimatesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21820": { "value": "Significant estimates
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3ai
Revenue recognition \u2013
\n
three-year \ufb01xed-price
\n
insurance\u00a0policies
\n
The standalone selling price of the option to \ufb01x within the Group\u2019s three-year \ufb01xed-price
\n
insurance policies has been estimated using the expected cost plus a margin approach as set
\n
out\u00a0in paragraph 79 (b) of IFRS 15.
\n
An allowance has also been made for the likelihood that the option will be exercised by factoring
\n
in\u00a0the expected rate of renewal at the \ufb01rst and second renewal dates. The amount of revenue
\n
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
\n
customers will not exercise the option because they either decide not to renew, or they make a
\n
claim that releases the Group from its obligation to \ufb01x the customer price.
\n
2.3f and
\n
2.3i
\n
Useful economic lives and
\n
residual values of software,
\n
intangible assets and ocean
\n
cruise ships
\n
The useful economic lives and residual values of software assets classi\ufb01ed as intangible assets
\n
(Note 15), and ocean cruise ship assets classi\ufb01ed as property, plant and equipment (Note 17) are
\n
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
\n
the expected consumption of future economic bene\ufb01ts of the asset.
\n
2.3h
Goodwill impairment testing
The Group determines whether goodwill needs to be impaired on an annual basis, or more
\n
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
\n
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
\n
\ufb02ows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
\n
present value.
\n
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
\n
market study, especially the highly competitive motor insurance market, and the adverse
\n
impact\u00a0on pro\ufb01t before tax for the current year, has increased the estimation uncertainty
\n
in\u00a0the\u00a0Insurance CGU. The outcome of the impairment reviews conducted concluded that
\n
an\u00a0impairment charge of \u00a3269.0m be recognised against the Group\u2019s Insurance CGU
\n
as\u00a0at\u00a031\u00a0July 2022. No further impairment was deemed necessary in the six months to
\n
31\u00a0January\u00a02023.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the discount rate,
\n
the\u00a0terminal value and future cash \ufb02ows on the present value calculation, as shown in Note 16a.
\n
2.3h
Impairment of ocean and river
\n
cruise ships
\n
Following the continued impact of the COVID-19 pandemic on the Group\u2019s operations,
\n
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
\n
Group\u2019s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
\n
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
\n
comfortable that there is headroom over and above the carrying value of the two ocean cruise
\n
ship assets, and therefore concluded that no impairment charges were necessary. No additional
\n
impairment indicators were identi\ufb01ed as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
\n
Sensitivity analysis was undertaken to determine the e\ufb00ect of changing the residual value, load
\n
factor and useful economic life on the present value calculation, as shown in Note 17.
\n
At 31 January 2022, management conducted an impairment review of its river cruise ship,
\n
Spirit\u00a0of the Rhine. Based on this review, the Group was comfortable that there was su\ufb03cient
\n
headroom over and above the carrying value of the river cruise ship asset, and therefore
\n
concluded that no impairment charge was necessary. No additional impairment indicators
\n
were\u00a0identi\ufb01ed in relation to river cruise ships as at 31 January 2023, and therefore no further
\n
impairment review was conducted at this date.
Notes to the consolidated \ufb01nancial statements continued
\n
158
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
2.3r
Valuation of insurance
\n
contract\u00a0liabilities
\n
For insurance contracts, estimates have to be made for the expected cost of claims known
\n
but\u00a0not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
\n
date. It can take a signi\ufb01cant period of time before the ultimate claims cost can be established
\n
with certainty.
\n
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
\n
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
\n
assumption underlying these techniques is that past claims development experience can be used
\n
to project future claims development and hence ultimate claims costs. As such, these methods
\n
extrapolate the development of paid and incurred losses, average costs per claim and claim
\n
numbers based on the observed development of earlier years. Historical claims development is
\n
primarily analysed by accident year, geographical area, signi\ufb01cant business line and peril.
\n
Additional qualitative judgement is used to assess the extent to which past trends may not apply
\n
in the future (e.g.\u00a0to re\ufb02ect one-o\ufb00 occurrences, changes in external or market factors such as
\n
public attitudes to claiming, economic conditions, levels of claims in\ufb02ation, judicial decisions and
\n
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
\n
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
\n
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
\n
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
\n
these claims involves making assumptions about the rate of in\ufb02ation and the expected rate of
\n
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
\n
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
\n
reporting date, and the sensitivity of this assumption is shown in Note 20d.
\n
In calculating the level of reserve margin to recognise above the actuarial best estimate of
\n
incurred claims, the Group considered an array of risks (including cost in\ufb02ation) to future
\n
claims\u00a0experience, and estimated the \ufb01nancial impact that those risks could have, to derive an
\n
appropriate level of margin to hold.
\n
2.3u
Valuation of pension
\n
bene\ufb01t\u00a0obligation
\n
The cost of de\ufb01ned bene\ufb01t pension plans and the present value of the pension obligation are
\n
determined using actuarial valuations. Actuarial valuations involve making assumptions about
\n
discount rates, expected rates of return on assets, future salary increases, mortality rates and
\n
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
\n
its long-term nature, a de\ufb01ned bene\ufb01t obligation is highly sensitive to changes in these
\n
assumptions. All assumptions are reviewed at each reporting date.
\n
All signi\ufb01cant assumptions and estimates involved in arriving at the valuation of the pension
\nscheme obligation are set out in Note 27.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21979": { "value": "3 Segmental information
For management purposes, the Group is organised into business units based on their products and services. The Group has three reportable
\n
operating segments as follows:
\n
\u2022
Cruise and Travel:
comprises the operation and delivery of ocean and river cruise holidays as well as package tour and other holiday
\n
products. The Group owns and operates two ocean cruise ships. All other holiday and river cruise products are packaged together with
\n
third-party supplied accommodation, flights and other transport arrangements.
\n
\u2022
Insurance:
comprises the provision of general insurance products. Revenue is derived primarily from insurance premiums and broking
\n
revenues. The segment is further analysed into four product sub-segments:
\n
\u2022
Insurance Broking, consisting of:
\n
\u2013
Motor broking
\n
\u2013
Home broking
\n
\u2013
Other broking
\n
\u2022
Insurance Underwriting
\n
\u2022
Other Businesses and Central Costs:
comprises the Group\u2019s other businesses and its central cost base. The other businesses include
\n
Saga Money (the personal finance product offering), Saga Media and the Group\u2019s mailing and printing business.
\n
Segment performance is evaluated using the Group\u2019s key performance measure of Underlying Pro\ufb01t /(Loss) Before Tax
\n
3
\n
. Items not included
\n
within a speci\ufb01c segment relate to transactions that do not form part of the ongoing segment performance or which are managed at a
\n
Group\u00a0level.
\n
Transfer prices between operating segments are set on an arm\u2019s-length basis in a manner similar to transactions with third parties.
\n
Segment\u00a0income, expenses and results include transfers between business segments which are then eliminated on consolidation.
\n
Goodwill, corporate bonds and bank loans are not included within segments as they are managed on a Group basis.
\n
3
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
160
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
3 Segmental information
continued
\n
Insurance
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
305.5
77.7
57.6
45.3
75.2
255.8
24.3
(4.5)
581.1
\n
Cost of sales
(242.5)
(2.7)
\u2013
3.2
(56.1)
(55.6)
(9.1)
\u2013
(307.2)
\n
Gross profit/(loss)
63.0
75.0
57.6
48.5
19.1
200.2
15.2
(4.5)
273.9
\n
Administrative and selling
\n
expenses
(57.5)
(55.6)
(35.1)
(21.4)
(3.1)
(115.2)
(49.6)
4.5
(217.8)
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
(1.2)
(1.2)
(0.5)
(269.5)
(271.2)
\n
Net profit on disposal
\n
of\u00a0software
\u2013
0.1
\u2013
\u2013
\u2013
0.1
\u2013
\u2013
0.1
\n
Investment income/(loss)
\u2013
\u2013
\u2013
\u2013
3.7
3.7
(2.2)
\u2013
1.5
\n
Finance costs
(20.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(22.0)
\u2013
(42.2)
\n
Finance income
1.4
\u2013
\u2013
\u2013
\u2013
\u2013
0.1
\u2013
1.5
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/Profit Before Tax
\n
4
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Net fair value gain on
\n
derivative financial
\n
instruments
(1.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.4)
\n
Impairment of goodwill
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
269.5
269.5
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
0.6
0.6
0.5
\u2013
1.1
\n
Restructuring costs
2.2
\u2013
\u2013
\u2013
\u2013
\u2013
1.5
\u2013
3.7
\n
Acquisition costs relating
\n
to the Big Window
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.2
\u2013
0.2
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
2.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\n
IFRS 16 adjustment on
\n
river cruise\u00a0vessels
0.6
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.6
\n
Underlying (Loss)/
\n
Profit Before Tax
\n
4
\n
(9.9)
19.5
22.5
27.1
19.1
88.2
(56.8)
\u2013
21.5
\n
Total assets less
\n
liabilities
93.7
57.7
167.9
50.2
369.5
\n
All revenue is generated solely in the UK.
\n
4
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc
Annual Report and Accounts 2023
161
Strategic report
Financial statements
Additional information
Governance
\n
Insurance
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
94.7
85.0
60.2
35.3
84.7
265.2
21.5
(4.2)
377.2
\n
Cost of sales
(102.9)
(2.6)
\u2013
0.3
(29.9)
(32.2)
(8.2)
\u2013
(143.3)
\n
Gross (loss)/profit
(8.2)
82.4
60.2
35.6
54.8
233.0
13.3
(4.2)
233.9
\n
Administrative and selling
\n
expenses
(54.9)
(52.4)
(35.0)
(24.3)
(4.2)
(115.9)
(46.2)
4.2
(212.8)
\n
Impairment of assets
(9.7)
\u2013
\u2013
\u2013
(1.0)
(1.0)
(0.5)
\u2013
(11.2)
\n
Gain on lease modification
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.3
\u2013
0.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7.2
\n
Net profit/(loss) on
\n
disposal of software and
\n
right-of-use assets
0.1
(0.1)
\u2013
\u2013
\u2013
(0.1)
(0.4)
\u2013
(0.4)
\n
Investment income/(loss)
0.1
\u2013
\u2013
\u2013
3.5
3.5
(3.3)
\u2013
0.3
\n
Finance costs
(22.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(18.6)
\u2013
(40.8)
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/ Profit
\n
Before Tax
\n
5
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Net fair value loss on
\n
derivative financial
\n
instruments
2.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.7
\n
Impairment/loss on
\n
disposal of assets
9.8
\u2013
\u2013
\u2013
1.0
1.0
0.7
\u2013
11.5
\n
Restructuring costs
3.9
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
6.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(7.2)
\u2013
(7.2)
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
\n
Costs incurred for ocean
\n
cruise ship loan holiday
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
2.4
\n
Charge on closure of
\n
defined benefit pension
\n
scheme
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\u2013
2.0
\n
Underlying (Loss)/
\n
(Profit) Before Tax
\n
5
\n
(79.3)
29.9
25.2
11.3
54.1
120.5
(47.9)
\u2013
(6.7)
\n
Total assets less
\n
liabilities
\n
(re-presented)
67.2
77.0
189.1
319.6
652.9
\n
Total assets less liabilities have been re-presented due to a revision in the way that inter-company debtors and creditors are reported
\n
between segments. Inter-company debtors and creditors are excluded from re-presented total assets less liabilities.
\n
All revenue is generated solely in the UK.
\n
Total assets less liabilities detailed as adjustments relates to the following unallocated items:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Goodwill (Note 14)
449.6
718.6
\n
Group bonds and bank loans (excluding ocean cruise ship loans)
(399.4)
(399.0)
\n
50.2
319.6
\n
5
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Notes to the consolidated \ufb01nancial statements continued
\n
162
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
3 Segmental information
continued
\n
a) Disaggregation of revenue
\n
Major product lines
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
168.3
168.3
\n
River Cruise and Travel
137.2
137.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
189.5
\n
Less: ceded to reinsurers
(111.3)
\n
Net revenue on:
\n
Motor broking
27.7
50.0
77.7
77.7
\n
Home broking
\u2013
57.6
57.6
57.6
\n
Other broking
0.9
44.4
45.3
45.3
\n
Insurance Underwriting
49.6
25.6
75.2
75.2
\n
Money
7.9
7.9
\n
Media
10.3
10.3
\n
Insight
0.6
0.6
\n
Other
1.0
1.0
\n
305.5
78.2
177.6
255.8
19.8
581.1
\n
Major product lines
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
82.5
82.5
\n
River Cruise and Travel
12.2
12.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
203.0
\n
Less: ceded to reinsurers
(123.8)
\n
Net revenue on:
\n
Motor broking
26.7
58.3
85.0
85.0
\n
Home broking
\u2013
60.2
60.2
60.2
\n
Other broking
1.0
34.3
35.3
35.3
\n
Insurance Underwriting
51.5
33.2
84.7
84.7
\n
Money
5.9
5.9
\n
Media
9.9
9.9
\n
Other
1.5
1.5
\n
94.7
79.2
186.0
265.2
17.3
377.2
\n
Included in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).
\n
b) Contract balances
\n
The following table provides information about contract assets and contract liabilities from contracts with customers as accounted for under
\n
IFRS 15 (the amounts stated here do not include amounts accounted for under IFRS 4):
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Contract cost assets (Note 23)
2.5
2.6
\n
Contract liabilities (Note 29)
122.2
114.6
Saga plc
Annual Report and Accounts 2023
163
Strategic report
Financial statements
Additional information
Governance
\n
b) Contract balances
continued
\n
The contract cost assets relate to commissions paid to price-comparison websites to acquire new business policies not underwritten
\n
by\u00a0the\u00a0Group.
\n
Management expects that incremental commission fees paid to price-comparison websites as a result of obtaining insurance contracts
\n
are\u00a0recoverable. The Group has therefore capitalised them as contract assets amounting to \u00a31.7m for the year ended 31 January 2023
\n
(2022:\u00a0\u00a31.7m). These fees are amortised over the period of the expected renewal cycle. In the year to 31 January 2023, the amount of
\n
amortisation was \u00a31.8m (2022: \u00a32.0m) and there was no impairment loss in relation to the costs capitalised.
\n
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an
\n
expense\u00a0when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
\n
The contract liabilities relate to the deferral of revenue for performance obligations not satis\ufb01ed as at 31 January 2023, and comprise the
\n
advance consideration received from customers for holidays or cruises booked, but not travelled; and insurance premiums received in
\n
advance of the cover start date. There was no revenue recognised in the current reporting year that related to performance obligations that
\n
were satis\ufb01ed in a prior year.
\n
Signi\ufb01cant changes in the contract cost assets and the contract liabilities during the year are as follows:
\n
2023
2022
\n
Contract
\n
cost assets
\n
\u00a3m
\n
Contract
\n
liabilities
\n
\u00a3m
\n
Contract
\n
cost assets
\n
\u00a3m
\n
Contract
\n
liabilities
\n
\u00a3m
\n
Balance as at 1 February
2.6
114.6
2.9
82.2
\n
Released to the income statement in the period
(1.8)
(245.5)
(2.0)
(66.6)
\n
Additional contract balances incurred during the period
1.7
267.8
1.7
148.6
\n
Amounts refunded to customers
\u2013
(14.7)
\u2013
(49.6)
\n
Balance as at 31 January
2.5
122.2
2.6
114.6
\n
c) Transaction price allocated to the remaining performance obligations
\n
The transaction price allocated to three-year \ufb01xed-price insurance policy renewal options, where the remaining performance obligations are
\n
not expected to be satis\ufb01ed within the next 12 months, is \u00a31.1m (2022: \u00a30.7m). This is expected to be recognised as revenue in the subsequent
\n
one to three years.
\n
The transaction price allocated to customer contracts within the Cruise and Travel segment, where the remaining performance obligations
\n
are not expected to be satis\ufb01ed within the next 12 months, is \u00a31.4m (2022: \u00a30.8m). This is expected to be recognised as revenue in the
\n
subsequent one to two years.
\n
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance
\nobligations that have original expected durations of one year or less.", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f21980": { "value": "3 Segmental information
For management purposes, the Group is organised into business units based on their products and services. The Group has three reportable
\n
operating segments as follows:
\n
\u2022
Cruise and Travel:
comprises the operation and delivery of ocean and river cruise holidays as well as package tour and other holiday
\n
products. The Group owns and operates two ocean cruise ships. All other holiday and river cruise products are packaged together with
\n
third-party supplied accommodation, flights and other transport arrangements.
\n
\u2022
Insurance:
comprises the provision of general insurance products. Revenue is derived primarily from insurance premiums and broking
\n
revenues. The segment is further analysed into four product sub-segments:
\n
\u2022
Insurance Broking, consisting of:
\n
\u2013
Motor broking
\n
\u2013
Home broking
\n
\u2013
Other broking
\n
\u2022
Insurance Underwriting
\n
\u2022
Other Businesses and Central Costs:
comprises the Group\u2019s other businesses and its central cost base. The other businesses include
\n
Saga Money (the personal finance product offering), Saga Media and the Group\u2019s mailing and printing business.
\n
Segment performance is evaluated using the Group\u2019s key performance measure of Underlying Pro\ufb01t /(Loss) Before Tax
\n
3
\n
. Items not included
\n
within a speci\ufb01c segment relate to transactions that do not form part of the ongoing segment performance or which are managed at a
\n
Group\u00a0level.
\n
Transfer prices between operating segments are set on an arm\u2019s-length basis in a manner similar to transactions with third parties.
\n
Segment\u00a0income, expenses and results include transfers between business segments which are then eliminated on consolidation.
\nGoodwill, corporate bonds and bank loans are not included within segments as they are managed on a Group basis.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22039": { "value": "Insurance
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
305.5
77.7
57.6
45.3
75.2
255.8
24.3
(4.5)
581.1
\n
Cost of sales
(242.5)
(2.7)
\u2013
3.2
(56.1)
(55.6)
(9.1)
\u2013
(307.2)
\n
Gross profit/(loss)
63.0
75.0
57.6
48.5
19.1
200.2
15.2
(4.5)
273.9
\n
Administrative and selling
\n
expenses
(57.5)
(55.6)
(35.1)
(21.4)
(3.1)
(115.2)
(49.6)
4.5
(217.8)
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
(1.2)
(1.2)
(0.5)
(269.5)
(271.2)
\n
Net profit on disposal
\n
of\u00a0software
\u2013
0.1
\u2013
\u2013
\u2013
0.1
\u2013
\u2013
0.1
\n
Investment income/(loss)
\u2013
\u2013
\u2013
\u2013
3.7
3.7
(2.2)
\u2013
1.5
\n
Finance costs
(20.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(22.0)
\u2013
(42.2)
\n
Finance income
1.4
\u2013
\u2013
\u2013
\u2013
\u2013
0.1
\u2013
1.5
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/Profit Before Tax
\n
4
\n
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
\n
Net fair value gain on
\n
derivative financial
\n
instruments
(1.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.4)
\n
Impairment of goodwill
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
269.5
269.5
\n
Impairment of assets
\u2013
\u2013
\u2013
\u2013
0.6
0.6
0.5
\u2013
1.1
\n
Restructuring costs
2.2
\u2013
\u2013
\u2013
\u2013
\u2013
1.5
\u2013
3.7
\n
Acquisition costs relating
\n
to the Big Window
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.2
\u2013
0.2
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
2.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\n
IFRS 16 adjustment on
\n
river cruise\u00a0vessels
0.6
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.6
\n
Underlying (Loss)/
\n
Profit Before Tax
\n
4
\n
(9.9)
19.5
22.5
27.1
19.1
88.2
(56.8)
\u2013
21.5
\n
Total assets less
\n
liabilities
93.7
57.7
167.9
50.2
369.5
\n
All revenue is generated solely in the UK.
\n
4
Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc
Annual Report and Accounts 2023
161
Strategic report
Financial statements
Additional information
Governance
\n
Insurance
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Motor
\n
broking
\n
\u00a3m
\n
Home
\n
broking
\n
\u00a3m
\n
Other
\n
broking
\n
\u00a3m
\n
Under-
\n
writing
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Adjustments
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Revenue
94.7
85.0
60.2
35.3
84.7
265.2
21.5
(4.2)
377.2
\n
Cost of sales
(102.9)
(2.6)
\u2013
0.3
(29.9)
(32.2)
(8.2)
\u2013
(143.3)
\n
Gross (loss)/profit
(8.2)
82.4
60.2
35.6
54.8
233.0
13.3
(4.2)
233.9
\n
Administrative and selling
\n
expenses
(54.9)
(52.4)
(35.0)
(24.3)
(4.2)
(115.9)
(46.2)
4.2
(212.8)
\n
Impairment of assets
(9.7)
\u2013
\u2013
\u2013
(1.0)
(1.0)
(0.5)
\u2013
(11.2)
\n
Gain on lease modification
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.3
\u2013
0.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7.2
\n
Net profit/(loss) on
\n
disposal of software and
\n
right-of-use assets
0.1
(0.1)
\u2013
\u2013
\u2013
(0.1)
(0.4)
\u2013
(0.4)
\n
Investment income/(loss)
0.1
\u2013
\u2013
\u2013
3.5
3.5
(3.3)
\u2013
0.3
\n
Finance costs
(22.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(18.6)
\u2013
(40.8)
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Reconciliation to
\n
Underlying
\n
(Loss)/ Profit
\n
Before Tax
\n
5
\n
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
\u2013
(23.5)
\n
Net fair value loss on
\n
derivative financial
\n
instruments
2.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.7
\n
Impairment/loss on
\n
disposal of assets
9.8
\u2013
\u2013
\u2013
1.0
1.0
0.7
\u2013
11.5
\n
Restructuring costs
3.9
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
6.3
\n
Net profit on disposal of
\n
assets held for\u00a0sale
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(7.2)
\u2013
(7.2)
\n
Foreign exchange
\n
movement on
\n
lease\u00a0liabilities
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
\n
Costs incurred for ocean
\n
cruise ship loan holiday
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.4
\u2013
2.4
\n
Charge on closure of
\n
defined benefit pension
\n
scheme
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.0
\u2013
2.0
\n
Underlying (Loss)/
\n
(Profit) Before Tax
\n
5
\n
(79.3)
29.9
25.2
11.3
54.1
120.5
(47.9)
\u2013
(6.7)
\n
Total assets less
\n
liabilities
\n
(re-presented)
67.2
77.0
189.1
319.6
652.9
\n
Total assets less liabilities have been re-presented due to a revision in the way that inter-company debtors and creditors are reported
\n
between segments. Inter-company debtors and creditors are excluded from re-presented total assets less liabilities.
\n
All revenue is generated solely in the UK.
\n
Total assets less liabilities detailed as adjustments relates to the following unallocated items:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Goodwill (Note 14)
449.6
718.6
\n
Group bonds and bank loans (excluding ocean cruise ship loans)
(399.4)
(399.0)
\n
50.2
319.6", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22597": { "value": "a) Disaggregation of revenue
Major product lines
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
168.3
168.3
\n
River Cruise and Travel
137.2
137.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
189.5
\n
Less: ceded to reinsurers
(111.3)
\n
Net revenue on:
\n
Motor broking
27.7
50.0
77.7
77.7
\n
Home broking
\u2013
57.6
57.6
57.6
\n
Other broking
0.9
44.4
45.3
45.3
\n
Insurance Underwriting
49.6
25.6
75.2
75.2
\n
Money
7.9
7.9
\n
Media
10.3
10.3
\n
Insight
0.6
0.6
\n
Other
1.0
1.0
\n
305.5
78.2
177.6
255.8
19.8
581.1
\n
Major product lines
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
82.5
82.5
\n
River Cruise and Travel
12.2
12.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
203.0
\n
Less: ceded to reinsurers
(123.8)
\n
Net revenue on:
\n
Motor broking
26.7
58.3
85.0
85.0
\n
Home broking
\u2013
60.2
60.2
60.2
\n
Other broking
1.0
34.3
35.3
35.3
\n
Insurance Underwriting
51.5
33.2
84.7
84.7
\n
Money
5.9
5.9
\n
Media
9.9
9.9
\n
Other
1.5
1.5
\n
94.7
79.2
186.0
265.2
17.3
377.2
\nIncluded in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22598": { "value": "a) Disaggregation of revenue
Major product lines
\n
2023
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
168.3
168.3
\n
River Cruise and Travel
137.2
137.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
189.5
\n
Less: ceded to reinsurers
(111.3)
\n
Net revenue on:
\n
Motor broking
27.7
50.0
77.7
77.7
\n
Home broking
\u2013
57.6
57.6
57.6
\n
Other broking
0.9
44.4
45.3
45.3
\n
Insurance Underwriting
49.6
25.6
75.2
75.2
\n
Money
7.9
7.9
\n
Media
10.3
10.3
\n
Insight
0.6
0.6
\n
Other
1.0
1.0
\n
305.5
78.2
177.6
255.8
19.8
581.1
\n
Major product lines
\n
2022
\n
Cruise and
\n
Travel
\n
\u00a3m
\n
Insurance
\n
Other
\n
Businesses
\n
and Central
\n
Costs
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Earned
\n
premium on
\n
insurance
\n
underwritten
\n
by the Group
\n
\u00a3m
\n
Other
\n
revenue
\n
\u00a3m
\n
Total
\n
Insurance
\n
\u00a3m
\n
Ocean Cruise
82.5
82.5
\n
River Cruise and Travel
12.2
12.2
\n
Gross earned premium on insurance underwritten
\n
by the Group
203.0
\n
Less: ceded to reinsurers
(123.8)
\n
Net revenue on:
\n
Motor broking
26.7
58.3
85.0
85.0
\n
Home broking
\u2013
60.2
60.2
60.2
\n
Other broking
1.0
34.3
35.3
35.3
\n
Insurance Underwriting
51.5
33.2
84.7
84.7
\n
Money
5.9
5.9
\n
Media
9.9
9.9
\n
Other
1.5
1.5
\n
94.7
79.2
186.0
265.2
17.3
377.2
\nIncluded in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22751": { "value": "Included in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22752": { "value": "Included in Insurance Broking other revenue is instalment interest income on premium \ufb01nancing of \u00a39.4m (2022: \u00a39.8m).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22849": { "value": "4 Administrative and selling expenses
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
\n
a. Auditors\u2019 remuneration
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1 ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22850": { "value": "4 Administrative and selling expenses
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
\n
a. Auditors\u2019 remuneration
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22851": { "value": "4 Administrative and selling expenses
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
\n
a. Auditors\u2019 remuneration
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22852": { "value": "4 Administrative and selling expenses
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Staff costs (excluding restructuring costs)
89.2
85.8
\n
Marketing and fulfilment costs
53.5
49.6
\n
Short-term lease rentals
0.1
0.1
\n
Auditors\u2019 remuneration
2.1
2.1
\n
Other administrative costs
65.2
64.0
\n
Amounts ceded under reinsurance contracts
(8.1)
(6.9)
\n
Depreciation \u2013 property, plant and equipment (Note 17)
2.0
2.2
\n
Depreciation \u2013 right-of-use assets (Note 18)
1.1
0.7
\n
Amortisation of intangible assets (Note 15)
8.1
9.7
\n
Restructuring costs
3.7
4.8
\n
216.9
212.1
\n
a. Auditors\u2019 remuneration
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1
Notes to the consolidated \ufb01nancial statements continued
\n
164
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
5 Impairment of assets
\n
a) Impairments during the year ended 31 January 2023
\n
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance CGU
\n
by\u00a0\u00a3269.0m.
\n
In addition, following the acquisition of The Big Window Consulting Limited (Note 13a), the goodwill arising on the transaction of \u00a30.5m was
\n
immediately impaired in full (Note 14).
\n
Following management\u2019s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
\n
equipment balance by \u00a30.5m (Note 17) and the carrying value of property assets classi\ufb01ed as held for sale by \u00a31.2m (Note 38).
\n
b) Impairments during the year ended 31 January 2022
\n
During the year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on the travel industry, management
\n
decided to restructure the Group\u2019s former Tour Operations CGU (now River Cruise and Travel CGUs). As a result of this restructuring,
\n
management performed an impairment review of software assets used by the Tour Operations business. The outcome of the review
\n
concluded that an impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022.
\n
Furthermore, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the Group\u2019s Central
\n
Costs business unit.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the\u00a0Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m (Note 17).
\n
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale by \u00a31.0m
\n
(Note 38).
\n
6 Investment income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest income recognised using the EIR method
4.7
4.4
\n
Gains on assets measured at FVTPL
0.7
0.2
\n
Amounts ceded under reinsurance contracts
(3.9)
(4.3)
\n
1.5
0.3
\n
7 Finance costs
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8
\n
8 Finance income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net fair value gain on derivative financial instruments
1.4
\u2013
\n
Net finance income on retirement benefit schemes
0.1
\u2013
\n
1.5
\u2013", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22896": { "value": "a. Auditors\u2019 remuneration
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Audit of the parent company and consolidated financial statements
0.6
0.8
\n
Audit of subsidiary financial statements
1.3
1.1
\n
Audit-related assurance services
0.2
0.2
\n
Total auditors\u2019 remuneration
2.1
2.1", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22939": { "value": "5 Impairment of assets
a) Impairments during the year ended 31 January 2023
\n
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance CGU
\n
by\u00a0\u00a3269.0m.
\n
In addition, following the acquisition of The Big Window Consulting Limited (Note 13a), the goodwill arising on the transaction of \u00a30.5m was
\n
immediately impaired in full (Note 14).
\n
Following management\u2019s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
\n
equipment balance by \u00a30.5m (Note 17) and the carrying value of property assets classi\ufb01ed as held for sale by \u00a31.2m (Note 38).
\n
b) Impairments during the year ended 31 January 2022
\n
During the year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on the travel industry, management
\n
decided to restructure the Group\u2019s former Tour Operations CGU (now River Cruise and Travel CGUs). As a result of this restructuring,
\n
management performed an impairment review of software assets used by the Tour Operations business. The outcome of the review
\n
concluded that an impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022.
\n
Furthermore, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the Group\u2019s Central
\n
Costs business unit.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the\u00a0Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m (Note 17).
\n
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale by \u00a31.0m
\n(Note 38).", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22962": { "value": "
6 Investment income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest income recognised using the EIR method
4.7
4.4
\n
Gains on assets measured at FVTPL
0.7
0.2
\n
Amounts ceded under reinsurance contracts
(3.9)
(4.3)
\n
1.5
0.3
8 Finance income
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net fair value gain on derivative financial instruments
1.4
\u2013
\n
Net finance income on retirement benefit schemes
0.1
\u2013
\n
1.5
\u2013", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22982": { "value": "7 Finance costs
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f22983": { "value": "7 Finance costs
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Interest and charges on debt and borrowings using the EIR method
41.0
37.4
\n
Net fair value loss on derivative financial instruments
\u2013
2.7
\n
Net interest and finance charges payable on lease liabilities
1.2
0.7
\n
42.2
40.8
\n
8 Finance income
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net fair value gain on derivative financial instruments
1.4
\u2013
\n
Net finance income on retirement benefit schemes
0.1
\u2013
\n
1.5
\u2013", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23006": { "value": "8 Finance income
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net fair value gain on derivative financial instruments
1.4
\u2013
\n
Net finance income on retirement benefit schemes
0.1
\u2013
\n
1.5
\u2013", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23043": { "value": "9 Directors and employees
Amounts charged to the income statement for the year are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Wages and salaries
112.1
97.0
\n
Social security costs
10.0
9.3
\n
Pension costs (Note 27)
9.9
12.0
\n
Total staff costs
132.0
118.3
\n
Sta\ufb00 costs (including restructuring and redundancy costs) of \u00a339.1m (2022: \u00a327.7m) and \u00a392.9m (2022: \u00a390.6m) have been allocated to
\n
cost of sales and to administrative and selling expenses respectively. Sta\ufb00 costs above exclude share-based payment charges of \u00a33.9m
\n
(2022: \u00a33.4m). Further detail on share-based payments can be found in Note 36.
\n
Average monthly number of employees:
\n
2023
\n
number
\n
2022
\n
number
\n
Cruise and Travel
2,261
1,705
\n
Insurance
1,704
1,519
\n
Other Businesses and Central Costs
554
552
\n
Total employee numbers
4,519
3,776
\n
Directors\u2019 remuneration
\n
The information required by the Companies Act 2006 and the Listing Rules of the FCA is contained on pages 92-123 in the Directors\u2019
\n
Remuneration Report.
\n
Compensation of key management personnel of the Group
\n
Key management personnel are de\ufb01ned as those persons having authority and responsibility for planning, directing and controlling the
\n
activities of the Group and comprise the Directors of the Company and the Executive Leadership Team.
\n
The amounts recognised as an expense during the \ufb01nancial year in respect of key management personnel are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Short-term benefits
6.4
6.0
\n
Termination costs
0.1
0.3
\n
Share-based payments
1.6
1.0
\n
8.1
7.3 ", "dimensions": { "concept": "saga:DisclosureOfDirectorsAndEmployeesExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23044": { "value": "9 Directors and employees
Amounts charged to the income statement for the year are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Wages and salaries
112.1
97.0
\n
Social security costs
10.0
9.3
\n
Pension costs (Note 27)
9.9
12.0
\n
Total staff costs
132.0
118.3
\n
Sta\ufb00 costs (including restructuring and redundancy costs) of \u00a339.1m (2022: \u00a327.7m) and \u00a392.9m (2022: \u00a390.6m) have been allocated to
\n
cost of sales and to administrative and selling expenses respectively. Sta\ufb00 costs above exclude share-based payment charges of \u00a33.9m
\n
(2022: \u00a33.4m). Further detail on share-based payments can be found in Note 36.
\n
Average monthly number of employees:
\n
2023
\n
number
\n
2022
\n
number
\n
Cruise and Travel
2,261
1,705
\n
Insurance
1,704
1,519
\n
Other Businesses and Central Costs
554
552
\n
Total employee numbers
4,519
3,776", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23065": { "value": "Sta\ufb00 costs (including restructuring and redundancy costs) of \u00a339.1m (2022: \u00a327.7m) and \u00a392.9m (2022: \u00a390.6m) have been allocated tocost of sales and to administrative and selling expenses respectively. Reconciliation of movements in claims outstanding
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross claims outstanding at 1 February
292.8
329.5
\n
Less: reinsurance claims outstanding
(192.1)
(212.3)
\n
Net claims outstanding at 1 February
100.7
117.2
\n
Gross claims incurred
157.2
94.6
\n
Less: reinsurance recoveries
(99.1)
(63.3)
\n
Net claims incurred
58.1
31.3
\n
Gross claims paid
(164.8)
(131.3)
\n
Less: received from reinsurance
106.0
83.5
\n
Net claims paid
(58.8)
(47.8)
\n
Gross claims outstanding at 31 January
285.2
292.8
\n
Less: reinsurance claims outstanding
(185.2)
(192.1)
\n
Net claims outstanding at 31 January
100.0
100.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23088": { "value": "Directors\u2019 remuneration
The information required by the Companies Act 2006 and the Listing Rules of the FCA is contained on pages 92-123 in the Directors\u2019
\n
Remuneration Report.
\n
Compensation of key management personnel of the Group
\n
Key management personnel are de\ufb01ned as those persons having authority and responsibility for planning, directing and controlling the
\n
activities of the Group and comprise the Directors of the Company and the Executive Leadership Team.
\n
The amounts recognised as an expense during the \ufb01nancial year in respect of key management personnel are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Short-term benefits
6.4
6.0
\n
Termination costs
0.1
0.3
\n
Share-based payments
1.6
1.0
\n
8.1
7.3", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23114": { "value": "10 Tax
The major components of the income tax expense are:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Consolidated income statement
\n
Current income tax
\n
Current income tax charge
1.1
3.4
\n
Adjustments in respect of previous years
(0.4)
(0.1)
\n
0.7
3.3
\n
Deferred tax
\n
Relating to origination and reversal of temporary differences
3.1
2.7
\n
Effect of tax rate change on opening balance
\u2013
(2.6)
\n
Adjustments in respect of previous years
1.2
1.1
\n
4.3
1.2
\n
Tax expense in the income statement
5.0
4.5
Notes to the consolidated \ufb01nancial statements continued
\n
166
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
10 Tax
continued
\n
Reconciliation of tax expense to loss before tax, multiplied by the UK corporation tax rate:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Loss before tax
(254.2)
(23.5)
\n
Tax at rate of 19.0% (2022: 19.0%)
(48.3)
(4.5)
\n
Adjustments in respect of previous years
0.8
1.0
\n
Effect of tax rate change on opening balance
\u2013
(2.6)
\n
Expenses not deductible for tax purposes:
\n
Impairment of goodwill
51.2
\u2013
\n
Other non-deductible expenses/non-taxed income
1.3
1.5
\n
Effect of Ocean Cruise business entering tonnage tax regime
\u2013
9.1
\n
Tax expense in the income statement
5.0
4.5
\n
The Group\u2019s tax expense for the year was \u00a35.0m (2022: \u00a34.5m) representing a tax e\ufb00ective rate of 32.7% before the impairment of goodwill
\n
(2022: negative 19.1%). In the prior year, the di\ufb00erence between the Group\u2019s tax e\ufb00ective rate and the standard rate of corporation tax of 19%
\n
is mainly due to the Group\u2019s Ocean Cruise business entering the tonnage tax regime on 1 February 2020.
\n
Adjustments in respect of previous years include a charge for the under-provision of tax in prior years of \u00a30.8m (2022: \u00a31.0m) and the impact
\n
of the change in the tax rate on opening deferred tax balances of \u00a3nil (2022: \u00a32.6m credit).
\n
Deferred tax
\n
Consolidated statement
\n
of financial position
\n
Consolidated income
\n
statement
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Excess of depreciation over capital allowances
3.2
4.4
1.2
(0.5)
\n
Retirement benefit scheme liabilities
3.0
(0.3)
1.5
(0.1)
\n
Short-term temporary differences:
\n
\u2013 Designated hedges recognised through OCI
(0.3)
0.5
\u2013
\u2013
\n
\u2013 Fair value reserve
4.1
0.3
\u2013
\u2013
\n
\u2013 Share-based payment reserve
2.0
1.6
(0.4)
(0.6)
\n
\u2013 General bad debt provision
0.6
1.6
1.0
1.2
\n
\u2013 Capitalised borrowing costs
(2.6)
(2.8)
(0.2)
0.6
\n
\u2013 IFRS 16 transition adjustments
1.2
1.4
0.2
0.3
\n
\u2013 Other
(1.0)
\u2013
1.0
0.3
\n
Deferred tax charge
4.3
1.2
\n
Net deferred tax assets
10.2
6.7
\n
Deferred tax is re\ufb02ected in the statement of \ufb01nancial position as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred tax assets
16.1
12.3
\n
Deferred tax liabilities
(5.9)
(5.6)
\n
Net deferred tax assets
10.2
6.7
\n
Reconciliation of net deferred tax assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
At 1 February
6.7
6.7
\n
Tax charge recognised in the income statement
(4.3)
(1.2)
\n
Tax credit recognised in OCI
7.8
1.2
\n
At 31 January
10.2
6.7
\n
On 3 March 2021, it was announced that the corporation tax rate would increase from 19% to 25% from 1 April 2023. This increase was
\n
substantively enacted on 24 May 2021. As a result, the closing deferred tax balances at the statement of \ufb01nancial position date have been
\nre\ufb02ected at 25%. Net deferred tax assets/(liabilities) are expected to be normally settled in more than 12 months.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23201": { "value": "Deferred tax
Consolidated statement
\n
of financial position
\n
Consolidated income
\n
statement
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Excess of depreciation over capital allowances
3.2
4.4
1.2
(0.5)
\n
Retirement benefit scheme liabilities
3.0
(0.3)
1.5
(0.1)
\n
Short-term temporary differences:
\n
\u2013 Designated hedges recognised through OCI
(0.3)
0.5
\u2013
\u2013
\n
\u2013 Fair value reserve
4.1
0.3
\u2013
\u2013
\n
\u2013 Share-based payment reserve
2.0
1.6
(0.4)
(0.6)
\n
\u2013 General bad debt provision
0.6
1.6
1.0
1.2
\n
\u2013 Capitalised borrowing costs
(2.6)
(2.8)
(0.2)
0.6
\n
\u2013 IFRS 16 transition adjustments
1.2
1.4
0.2
0.3
\n
\u2013 Other
(1.0)
\u2013
1.0
0.3
\n
Deferred tax charge
4.3
1.2
\n
Net deferred tax assets
10.2
6.7
\n
Deferred tax is re\ufb02ected in the statement of \ufb01nancial position as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred tax assets
16.1
12.3
\n
Deferred tax liabilities
(5.9)
(5.6)
\n
Net deferred tax assets
10.2
6.7
\n
Reconciliation of net deferred tax assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
At 1 February
6.7
6.7
\n
Tax charge recognised in the income statement
(4.3)
(1.2)
\n
Tax credit recognised in OCI
7.8
1.2
\n
At 31 January
10.2
6.7
\n
On 3 March 2021, it was announced that the corporation tax rate would increase from 19% to 25% from 1 April 2023. This increase was
\n
substantively enacted on 24 May 2021. As a result, the closing deferred tax balances at the statement of \ufb01nancial position date have been
re\ufb02ected at 25%. Net deferred tax assets/(liabilities) are expected to be normally settled in more than 12 months. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23268": { "value": "Deferred tax is re\ufb02ected in the statement of \ufb01nancial position as follows:
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred tax assets
16.1
12.3
\n
Deferred tax liabilities
(5.9)
(5.6)
\n
Net deferred tax assets
10.2
6.7", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23323": { "value": "11 Dividends
The Board of Directors does not recommend the payment of a \ufb01nal dividend for the 2022/23 \ufb01nancial year (2022: nil pence per share).
\n
For the current and prior year, no interim or \ufb01nal dividends were declared, or paid, during the year.
\n
The distributable reserves of Saga plc are \u00a3386.6m de\ufb01cit as at 31 January 2023, which are equal to the retained earnings reserve.
\n
If necessary, its subsidiary companies hold signi\ufb01cant reserves from which a dividend can be paid. Subsidiary distributable reserves are
\n
available immediately, with the exception of companies within the River Cruise, Travel and Insurance Underwriting businesses which require
\n
regulatory approval before any dividends can be declared and paid. Under the terms of the ship debt facilities, dividends remain restricted
\n
until the ship debt principal repayments that were deferred as part of the ship debt repayment holiday are fully repaid (Note 30). In addition,
\nunder the terms of the RCF, dividends also remain restricted while leverage is above 3.0x (excluding Ocean Cruise EBITDA and debt).", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23324": { "value": "11 Dividends
The Board of Directors does not recommend the payment of a \ufb01nal dividend for the 2022/23 \ufb01nancial year (2022: nil pence per share).
\n
For the current and prior year, no interim or \ufb01nal dividends were declared, or paid, during the year.
\n
The distributable reserves of Saga plc are \u00a3386.6m de\ufb01cit as at 31 January 2023, which are equal to the retained earnings reserve.
\n
If necessary, its subsidiary companies hold signi\ufb01cant reserves from which a dividend can be paid. Subsidiary distributable reserves are
\n
available immediately, with the exception of companies within the River Cruise, Travel and Insurance Underwriting businesses which require
\n
regulatory approval before any dividends can be declared and paid. Under the terms of the ship debt facilities, dividends remain restricted
\n
until the ship debt principal repayments that were deferred as part of the ship debt repayment holiday are fully repaid (Note 30). In addition,
\nunder the terms of the RCF, dividends also remain restricted while leverage is above 3.0x (excluding Ocean Cruise EBITDA and debt).", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23338": { "value": "12 Loss per share
Basic loss per share is calculated by dividing the loss after tax for the year attributable to ordinary equity holders of the parent by the weighted
\n
average number of ordinary shares outstanding during the period. Diluted loss per share is calculated by also including the weighted average
\n
number of ordinary shares that would be issued on conversion of all potentially dilutive options.
\n
There have been no other transactions involving ordinary shares, or potential ordinary shares, between the reporting date and the date of
\n
authorisation of these \ufb01nancial statements.
\n
The calculation of basic and diluted loss per share is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Loss attributable to ordinary equity holders
(259.2)
(28.0)
\n
Weighted average number of ordinary shares
\u2018m
\u2018m
\n
Ordinary shares as at 1 February
139.5
139.4
\n
Long-term Incentive Plan (
LTIP
) share options exercised
\u2013
0.1
\n
Ordinary shares as at 31 January
139.5
139.5
\n
Weighted average number of ordinary shares for basic loss per share and diluted loss per share
139.5
139.5
\n
Basic loss per share
(185.8p)
(20.1p)
\n
Diluted loss per share
(185.8p)
(20.1p)
\n
The table below reconciles between basic loss per share and Underlying Basic Earnings/(Loss) Per Share
\n
6
\n
:
\n
2023
2022
\n
Basic loss per share
\n
(185.8p)
(20.1p)
\n
Adjusted for:
\n
Derivative (gains)/losses
(1.1p)
1.4p
\n
Impairment, and net loss on disposal, of assets
0.8p
2.3p
\n
Impairment of Insurance goodwill
192.8p
\u2013
\n
Acquisition costs relating to the Big Window
0.5p
\u2013
\n
Charge on closure of defined benefit pension scheme
\u2013
1.1p
\n
Foreign exchange movement on lease liabilities
1.5p
(0.5p)
\n
Costs incurred for ocean cruise ship loan holiday
\u2013
1.3p
\n
Restructuring costs
2.7p
3.4p
\n
IFRS 16 lease accounting adjustment on river cruise vessels
0.5p
\u2013
\n
Underlying Basic Earnings/(Loss) Per Share
\n
6
\n
11.9p
(11.1p)", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23435": { "value": "13 Business combinations and disposals
a) Acquisitions during the year ended 31 January 2023
\n
On 16 February 2022, the Group acquired The Big Window Consulting Limited (the
Big Window
), a specialist research and insight business
\n
focusing on ageing.
\n
The fair values of the identi\ufb01able assets and liabilities of the Big Window acquired on the date of acquisition were:
\n
\u00a3m
\n
Assets
\n
Trade and other receivables
0.1
\n
Cash
1.3
\n
Total assets
1.4
\n
Liabilities
\n
Trade and other payables
0.1
\n
Corporation tax liability
0.1
\n
Total liabilities
0.2
\n
Total identifiable net assets at fair value
1.2
\n
Goodwill arising on acquisition
0.5
\n
Cash purchase consideration transferred
1.7
\n
The purchase consideration of \u00a31.7m was settled in cash. In addition to the \u00a31.7m cash purchase consideration transferred, as part of the
\n
purchase agreement the Group granted a \u00a30.5m share-based payment arrangement which vests over three years subject to a number of
\n
conditions being met. The \u00a30.5m was transferred in cash to the Group\u2019s share administrators on the date of completion. Cash of \u00a31.3m was
\n
acquired with the Big Window, resulting in a net cash out\ufb02ow of \u00a30.9m.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant value to all Saga business units, in line with
\n
pre-acquisition expectations. However, because these bene\ufb01ts are largely associated with the continued employment of a small number
\n
of\u00a0individuals, which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts in question, the Group has
\n
written-o\ufb00 the \u00a30.5m goodwill arising on acquisition in full in the year to 31 January 2023 (Note 16a).
\n
The Big Window contributed \u00a30.6m of revenue and a loss of \u00a31.0m to the Group loss before tax from the date of acquisition to
\n
31 January 2023.
\n
b) Acquisitions during the year ended 31 January 2022
\n
There were no business acquisitions in the year ended 31 January 2022.
\n
c) Disposals
\nThere were no business disposals in the years ended 31 January 2023 and 31 January 2022. ", "dimensions": { "concept": "saga:DisclosureOfBusinessCombinationsAndDisposalsExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23438": { "value": "a) Acquisitions during the year ended 31 January 2023
On 16 February 2022, the Group acquired The Big Window Consulting Limited (the
Big Window
), a specialist research and insight business
\n
focusing on ageing.
\n
The fair values of the identi\ufb01able assets and liabilities of the Big Window acquired on the date of acquisition were:
\n
\u00a3m
\n
Assets
\n
Trade and other receivables
0.1
\n
Cash
1.3
\n
Total assets
1.4
\n
Liabilities
\n
Trade and other payables
0.1
\n
Corporation tax liability
0.1
\n
Total liabilities
0.2
\n
Total identifiable net assets at fair value
1.2
\n
Goodwill arising on acquisition
0.5
\n
Cash purchase consideration transferred
1.7
\n
The purchase consideration of \u00a31.7m was settled in cash. In addition to the \u00a31.7m cash purchase consideration transferred, as part of the
\n
purchase agreement the Group granted a \u00a30.5m share-based payment arrangement which vests over three years subject to a number of
\n
conditions being met. The \u00a30.5m was transferred in cash to the Group\u2019s share administrators on the date of completion. Cash of \u00a31.3m was
\n
acquired with the Big Window, resulting in a net cash out\ufb02ow of \u00a30.9m.
\n
Since acquisition, the addition of the Big Window insights and capabilities has added signi\ufb01cant value to all Saga business units, in line with
\n
pre-acquisition expectations. However, because these bene\ufb01ts are largely associated with the continued employment of a small number
\n
of\u00a0individuals, which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts in question, the Group has
\n
written-o\ufb00 the \u00a30.5m goodwill arising on acquisition in full in the year to 31 January 2023 (Note 16a).
\n
The Big Window contributed \u00a30.6m of revenue and a loss of \u00a31.0m to the Group loss before tax from the date of acquisition to
\n
31 January 2023.
\n
b) Acquisitions during the year ended 31 January 2022
\nThere were no business acquisitions in the year ended 31 January 2022.", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23483": { "value": "14 Goodwill
Goodwill
\n
\u00a3m
\n
Cost
\n
At 1 February 2021 and 31 January 2022
1,471.4
\n
Acquisition of a subsidiary (Note 13a)
0.5
\n
At 31 January 2023
1,471.9
\n
Impairment
\n
At 1 February 2021 and 31 January 2022
752.8
\n
Charge for the year (Note 16a)
269.5
\n
At 31 January 2023
1,022.3
\n
Net book value
\n
At 31 January 2023
449.6
\n
At 31 January 2022
718.6
\n
Goodwill deductible for tax purposes amounts to \u00a3nil (2022: \u00a3nil).
Saga plc
Annual Report and Accounts 2023
169
Strategic report
Financial statements
Additional information
Governance
\n
15 Intangible assets
\n
Software
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
151.6
151.6
\n
Additions and internally developed software
11.2
11.2
\n
Disposals
(53.9)
(53.9)
\n
At 31 January 2022
108.9
108.9
\n
Additions and internally developed software
13.4
13.4
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
115.0
115.0
\n
Amortisation and impairment
\n
At 1 February 2021
95.0
95.0
\n
Amortisation
10.6
10.6
\n
Impairment of assets (Note 16b)
9.9
9.9
\n
Disposals
(53.7)
(53.7)
\n
At 31 January 2022
61.8
61.8
\n
Amortisation
9.2
9.2
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
63.7
63.7
\n
Net book value
\n
At 31 January 2023
51.3
51.3
\n
At 31 January 2022
47.1
47.1
\n
The net book value of software at 31 January 2023 includes internally generated software of \u00a326.2m (2022: \u00a326.0m) relating to Guidewire
\n
(the Group\u2019s Insurance Broking, policy administration and billing platform), including additions in the year of \u00a33.0m (2022: \u00a30.2m). The
\n
Guidewire platform has an expected useful economic life of 10 years, with \ufb01ve years of phase one expenditure remaining at 31 January 2023.
\n
Implementation and the commencement of amortisation of the Guidewire platform is on a phased basis, based on product re-platforming,
\n
and began in the year ended 31 January 2019.
\n
The net book value of software at 31 January 2023 also includes internally generated software of \u00a32.0m (2022: \u00a32.3m) relating to
\n
Tigerbay (the Group\u2019s travel booking reservation system) including additions in the year of \u00a3nil (2022: \u00a31.6m). The Tigerbay platform has an
\n
expected useful economic life of 10 years, with six years of phase one expenditure remaining at 31 January 2023. Implementation and the
\n
commencement of amortisation of the Tigerbay platform is on a phased basis, based on product re-platforming, and began in the year
\n
ended\u00a031 January 2020.
\n
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
\n
Group\u2019s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
\n
an\u00a0impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
\n
impairment charge of \u00a39.4m be recognised against the Group\u2019s software assets as at 31 January 2022, all of which related to the Tigerbay
\n
platform. In addition, the Group concluded that an impairment charge of \u00a30.5m to software assets was required in the Group\u2019s Central
\n
Costs division.
\n
The amortisation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
1.1
0.9
\n
Administrative and selling expenses (Note 4)
8.1
9.7
\n
9.2
10.6
\n
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.2m). The pro\ufb01t arising on disposal was \u00a30.1m
\n(2022: \u00a30.1m loss).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23484": { "value": "14 Goodwill
Goodwill
\n
\u00a3m
\n
Cost
\n
At 1 February 2021 and 31 January 2022
1,471.4
\n
Acquisition of a subsidiary (Note 13a)
0.5
\n
At 31 January 2023
1,471.9
\n
Impairment
\n
At 1 February 2021 and 31 January 2022
752.8
\n
Charge for the year (Note 16a)
269.5
\n
At 31 January 2023
1,022.3
\n
Net book value
\n
At 31 January 2023
449.6
\n
At 31 January 2022
718.6
\nGoodwill deductible for tax purposes amounts to \u00a3nil (2022: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23529": { "value": "15 Intangible assets
Software
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
151.6
151.6
\n
Additions and internally developed software
11.2
11.2
\n
Disposals
(53.9)
(53.9)
\n
At 31 January 2022
108.9
108.9
\n
Additions and internally developed software
13.4
13.4
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
115.0
115.0
\n
Amortisation and impairment
\n
At 1 February 2021
95.0
95.0
\n
Amortisation
10.6
10.6
\n
Impairment of assets (Note 16b)
9.9
9.9
\n
Disposals
(53.7)
(53.7)
\n
At 31 January 2022
61.8
61.8
\n
Amortisation
9.2
9.2
\n
Disposals
(7.3)
(7.3)
\n
At 31 January 2023
63.7
63.7
\n
Net book value
\n
At 31 January 2023
51.3
51.3
\n
At 31 January 2022
47.1
47.1
\n
The net book value of software at 31 January 2023 includes internally generated software of \u00a326.2m (2022: \u00a326.0m) relating to Guidewire
\n
(the Group\u2019s Insurance Broking, policy administration and billing platform), including additions in the year of \u00a33.0m (2022: \u00a30.2m). The
\n
Guidewire platform has an expected useful economic life of 10 years, with \ufb01ve years of phase one expenditure remaining at 31 January 2023.
\n
Implementation and the commencement of amortisation of the Guidewire platform is on a phased basis, based on product re-platforming,
\n
and began in the year ended 31 January 2019.
\n
The net book value of software at 31 January 2023 also includes internally generated software of \u00a32.0m (2022: \u00a32.3m) relating to
\n
Tigerbay (the Group\u2019s travel booking reservation system) including additions in the year of \u00a3nil (2022: \u00a31.6m). The Tigerbay platform has an
\n
expected useful economic life of 10 years, with six years of phase one expenditure remaining at 31 January 2023. Implementation and the
\n
commencement of amortisation of the Tigerbay platform is on a phased basis, based on product re-platforming, and began in the year
\n
ended\u00a031 January 2020.
\n
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
\n
Group\u2019s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
\n
an\u00a0impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
\n
impairment charge of \u00a39.4m be recognised against the Group\u2019s software assets as at 31 January 2022, all of which related to the Tigerbay
\n
platform. In addition, the Group concluded that an impairment charge of \u00a30.5m to software assets was required in the Group\u2019s Central
\n
Costs division.
\n
The amortisation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
1.1
0.9
\n
Administrative and selling expenses (Note 4)
8.1
9.7
\n
9.2
10.6
\n
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.2m). The pro\ufb01t arising on disposal was \u00a30.1m
(2022: \u00a30.1m loss).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23605": { "value": "
The amortisation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
1.1
0.9
\n
Administrative and selling expenses (Note 4)
8.1
9.7
\n
9.2
10.6
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
21.5
17.1
\n
Administrative and selling expenses (Note 4)
2.0
2.2
\n
23.5
19.3
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
7.8
1.6
\n
Administrative and selling expenses (Note 4)
1.1
0.7
\n
8.9
2.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23639": { "value": "16 Impairment of intangible assets
a) Goodwill
\n
Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment testing. The carrying value of
\n
goodwill by CGU is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Insurance
449.6
718.6
\n
449.6
718.6
\n
The Group tests all goodwill balances for impairment at least annually, and twice-yearly if indicators of impairment exist at the interim
\n
reporting date of 31 July. The impairment test compares the recoverable amount of each CGU to the carrying value of its net assets including
\n
the value of the allocated goodwill.
\n
On 1 January 2022, new pricing rules arising from the implementation of recommendations included in the FCA\u2019s GIPP market study came
\n
into e\ufb00ect. As a result, and against the background of a highly competitive motor insurance market, the Group saw a fall in policy volumes in
\n
the\u00a0period to 31 July 2022 and year to 31 January 2023, with a consequential adverse impact on the pro\ufb01tability of the Insurance business.
\n
Management considered this to be an indicator of impairment and therefore conducted full impairment reviews of the Insurance CGU as at
\n
31\u00a0July 2022 and 31 January 2023.
\n
The recoverable amount of the Insurance CGU has been determined based on a value-in-use calculation using nominal cash \ufb02ow projections
\n
from the Group\u2019s latest \ufb01ve-year \ufb01nancial forecasts to 2027/28, which are derived using past experience of the Group\u2019s trading, combined
\n
with the anticipated impact of changes in macroeconomic and regulatory factors. A terminal value has been calculated using the Gordon
\n
Growth Model based on the \ufb01fth year of those projections and an annual growth rate of 2.0% (July 2022: 2.0%; January 2022: 2.0%) as
\n
the\u00a0expected long-term average nominal growth rate of the UK economy. The cash \ufb02ows have then been discounted to present value
\n
using a suitably risk-adjusted nominal discount rate based on a market-participant view of the cost of capital and debt relevant to the
\n
insurance\u00a0industry.
\n
As at 31 January 2023, the pre-tax discount rate used for the Insurance CGU was 13.0% (July 2022: 12.7%; January 2022: 11.5%). The Group\u2019s
\n
\ufb01ve-year \ufb01nancial forecasts incorporate the modelled impact of the new pricing rules and the estimated impact this will likely have on future
\n
new business pricing and retention rates. As per IAS 36.44, incremental cash \ufb02ows directly attributable to growth initiatives not yet enacted
\n
at\u00a0the balance sheet date have then been removed for the purpose of the value-in-use calculation.
\n
The Group has also considered the impact of downside stresses, both in terms of adverse impacts to the cash \ufb02ow projections and to the
\n
discount rate. For the cash \ufb02ow stress test, the Group has modelled the impact of a more prudent outlook of the current competitive
\n
challenges seen in the insurance broking market, in combination with a more cautious nominal terminal growth rate of 1.5% (July 2022: 1.5%;
\n
January 2022: 1.5%), re\ufb02ecting a more conservative outlook for growth in the UK economy. For the discount rate stress test, the Group
\n
applied risk premia of +1.3ppt at 31 January 2023 (July 2022: +1.2ppt; January 2022: +1.5ppt).
\n
The headroom/(de\ufb01cit) for the Insurance CGU against the carrying value of goodwill at the time of the review of \u00a3449.6m at 31 January 2023
\n
and \u00a3718.6m at 31 July 2022 and 31 January 2022 was as follows:
\n
Headroom/(deficit) \u00a3m
\n
Central scenario
\n
Cash flow stress
\n
test scenario
\n
Discount rate stress
\n
test scenario
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
31 January
\n
2023
\n
31 July
\n
2022
\n
31 January
\n
2022
\n
Insurance
153.9
(121.8)
146.3
12.0
(269.0)
89.7
92.6
(146.8)
(10.2)
\n
As at 31 July 2022, the Group determined that the recoverable amount of the goodwill asset allocated to the Insurance CGU was below the
\n
carrying value, and so the Directors took the decision to impair goodwill allocated to the Insurance CGU by \u00a3269.0m.
\n
At 31 January 2023, the recoverable amount of the Insurance goodwill asset is above the carrying value, and no further impairment is
\n
considered necessary.
\n
The headroom calculated is sensitive to the discount rate and terminal growth rate assumed, and to changes in the projected cash \ufb02ow of the
\n
CGU. Increased in\ufb02ationary pressures on claims, the evolving market response to the regulatory changes introduced in early 2022 and in
\n
particular the extent to which market prices move against Saga in a period of heightened global economic uncertainty, combine to increase
\n
the range of possible cash \ufb02ow outcomes in management\u2019s modelling. A quantitative sensitivity analysis for each of these as at 31 January 2023
\n
and its impact on the central scenario headroom against the carrying value of goodwill at the time of the review of \u00a3449.6m is as follows:
\n
Pre-tax discount rate
Terminal growth rate
Cash flow (annual)
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
+10%
\n
\u00a3m
\n
-10%
\n
\u00a3m
\n
Insurance
(47.7)
57.6
59.2
(46.6)
57.2
(57.2)
\n
Given these sensitivities, the Directors consider that there is no reasonably possible change in any of the key assumptions made in the
\n
assessment that, when taken in isolation, would give rise to an impairment greater than that already recognised. However, it is possible that
\n
adverse movements in all key assumptions combined could result in further impairment in future years.
\n
For the reasons explained in Note 13a, goodwill of \u00a30.5m arising on the acquisition of the Big Window was immediately impaired in full.
Saga plc
Annual Report and Accounts 2023
171
Strategic report
Financial statements
Additional information
Governance
\n
b) Other intangible assets
\n
Separately identi\ufb01able intangible assets are valued and their appropriate useful lives established at the time of acquisition. The carrying values
\n
of these assets and their remaining useful lives are reviewed annually for indicators of impairment.
\n
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
\n
Group\u2019s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
\n
an\u00a0impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
\n
impairment charge of \u00a39.4m (Note 15) be recognised against the Group\u2019s software assets as at 31 January 2022, all of which related to the
\n
Tigerbay platform. In addition, the Group concluded that an impairment charge of \u00a30.5m (Note 15) to software assets was required in the
\nGroup\u2019s Central Costs division. ", "dimensions": { "concept": "saga:DisclosureOfImpairmentOfIntangibleAssetsExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f23777": { "value": "17 Property, plant and equipment
Freehold
\n
land and
\n
buildings
\n
\u00a3m
\n
Long
\n
leasehold
\n
land and
\n
buildings
\n
\u00a3m
\n
Ocean
\n
cruise ships
\n
\u00a3m
\n
Plant and
\n
equipment
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
15.4
9.2
648.3
61.6
734.5
\n
Additions
\u2013
\u2013
2.7
4.4
7.1
\n
Disposals
(0.1)
\u2013
\u2013
(18.9)
(19.0)
\n
Transfer of asset class
\u2013
0.3
(0.5)
(0.9)
(1.1)
\n
Reclassification from assets held for sale (Note 38)
3.8
\u2013
\u2013
\u2013
3.8
\n
Reclassification to assets held for sale (Note 38)
(4.0)
\u2013
\u2013
\u2013
(4.0)
\n
At 31 January 2022
15.1
9.5
650.5
46.2
721.3
\n
Additions
\u2013
\u2013
6.5
1.7
8.2
\n
Disposals
\u2013
\u2013
(0.5)
(9.1)
(9.6)
\n
Transfer of asset class
\u2013
\u2013
(0.1)
0.1
\u2013
\n
Reclassification to assets held for sale (Note 38)
(14.7)
(4.3)
\u2013
(4.3)
(23.3)
\n
At 31 January 2023
0.4
5.2
656.4
34.6
696.6
\n
Depreciation and impairment
\n
At 1 February 2021
2.2
5.5
13.3
53.3
74.3
\n
Provided during the year
0.2
0.1
16.1
2.9
19.3
\n
Impairment of assets
0.2
\u2013
\u2013
0.1
0.3
\n
Disposals
\u2013
\u2013
\u2013
(18.4)
(18.4)
\n
Transfer of asset class
\u2013
0.3
(0.2)
(0.6)
(0.5)
\n
Reclassification from assets held for sale (Note 38)
0.8
\u2013
\u2013
\u2013
0.8
\n
Reclassification to assets held for sale (Note 38)
(1.0)
\u2013
\u2013
\u2013
(1.0)
\n
At 31 January 2022
2.4
5.9
29.2
37.3
74.8
\n
Provided during the year
0.2
0.2
20.5
2.6
23.5
\n
Impairment of assets
\u2013
\u2013
\u2013
0.5
0.5
\n
Disposals
\u2013
\u2013
(0.3)
(9.1)
(9.4)
\n
Reclassification to assets held for sale (Note 38)
(2.2)
(0.9)
\u2013
(0.7)
(3.8)
\n
At 31 January 2023
0.4
5.2
49.4
30.6
85.6
\n
Net book value
\n
At 31 January 2023
\u2013
\u2013
607.0
4.0
611.0
\n
At 31 January 2022
12.7
3.6
621.3
8.9
646.5
Notes to the consolidated \ufb01nancial statements continued
\n
172
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
17 Property, plant and equipment
continued
\n
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
21.5
17.1
\n
Administrative and selling expenses (Note 4)
2.0
2.2
\n
23.5
19.3
\n
During the year, the Group disposed of assets with a net book value of \u00a30.2m (2022: \u00a30.6m). The pro\ufb01t arising on disposal was \u00a3nil
\n
(2022:\u00a0\u00a30.4m loss).
\n
Due to the continued impact of the COVID-19 pandemic on the Group\u2019s Cruise and Travel operations in the \ufb01rst half of the year, management
\n
concluded potential indicators of impairment continued to exist as at 31 July 2022 for both of its ocean cruise ships, Spirit of Discovery and
\n
Spirit of Adventure. Management therefore conducted impairment reviews at 31 July 2022 for both vessels, following previous reviews
\n
conducted at 31 January 2022.
\n
The impairment test was conducted using a methodology consistent with that applied as at 31 January 2022. The recoverable amount of
\n
each\u00a0ocean cruise ship was determined based on a value-in-use calculation using cash \ufb02ow projections from the Group\u2019s \ufb01ve-year \ufb01nancial
\n
forecasts to 2026/27 and applying a constant annual growth rate of 2% thereafter for subsequent periods until the end of the ship\u2019s useful
\n
economic life of 30 years, at which point a residual value of 15% of original cost was assumed. This was then discounted back to present value
\n
using a suitably risk-adjusted discount rate. The underlying forecast cash \ufb02ows were updated for the latest impact of the COVID-19 pandemic.
\n
In addition, a stress test of the potential adverse medium-term impact that the pandemic may have on demand for ocean cruises was also
\n
considered, with load factors capped at 80% throughout 2023/24. The annual growth rate beyond the \ufb01fth year of management forecasts
\n
was reduced to 1.5% in the stress test scenario, re\ufb02ecting a more cautious outlook for long-term growth in the UK economy.
\n
Potential environmental regulatory changes were also considered as part of this assessment. The shipping industry has made a commitment
\n
to reduce CO
\n
2
\n
emissions by 40% by 2030 (from a 2008 baseline), and the UK Government has made commitments to reach net zero
\n
emissions by 2050. The EEXI (carbon design/technical e\ufb03ciency indicator) and CII (in-service/operational carbon intensity e\ufb03ciency
\n
indicator) regulations were introduced internationally during the year to enable the industry to meet the 2030 target, and both of Saga\u2019s ocean
\n
cruise ships meet the requirements of these regulations. The end of their useful economic lives of 30 years will have been reached by 2049 in
\n
the case of Spirit of Discovery and 2051 in the case of Spirit of Adventure.
\n
The Group has not factored in any potential fuel modi\ufb01cations that may occur in the future into the cash \ufb02ow forecasts used for the
\n
impairment assessment of either ship. Whilst alternative fuels may present a viable route to decarbonisation for the Ocean Cruise business,
\n
there are signi\ufb01cant upstream supply challenges which will need to be resolved before these become viable for deployment. The main engines
\n
currently installed in the Group\u2019s ocean cruise ships are capable of being modi\ufb01ed for use with certain alternative fuels. Being new vessels, the
\n
design and speci\ufb01cation of the Group\u2019s ocean cruise ships was guided by a desire to maximise e\ufb03ciency through deployment of the most
\n
up-to-date technology. Their hull design maximises fuel e\ufb03ciency, onboard technology minimises fuel consumption and catalytic converters
\n
reduce carbon emissions. Additionally, the Group is planning to retro-\ufb01t shore power connections to both vessels, allowing them to use clean
\n
energy, where available, in ports of call and has commenced a study to evaluate other emerging technologies. The capital expenditure required
\n
for the shore power connections has been included in the forecast cash \ufb02ows used in the assessment.
\n
There is also currently no technological alternative to either oil or gas to power large vessels and it is not clear if such technology will ever be
\n
commercially viable, or in what time frame this might be achieved.
\n
The cash \ufb02ows were discounted to present value using a pre-tax discount rate of 8.6% (January 2022: 9.9%) for both vessels. As at 31 July 2022,
\n
the headroom for each of the ships against the carrying value was as follows:
\n
Headroom \u00a3m
\n
Central
\n
scenario
\n
Lower trading
\n
stress test
\n
scenario
\n
Spirit of Discovery
169.0
146.5
\n
Spirit of Adventure
114.7
91.6
\n
Based on these impairment tests, and looking at the likelihood of a range of outcomes, the Group was satis\ufb01ed that no impairment of either
\n
vessel was necessary as at 31 July 2022.
\n
In the second half of the year, further COVID-19 restrictions were lifted for cruise passengers and trading was in line with forecasts. Discount
\n
rates have risen, but not to the extent that they materially change the headroom in the impairment calculation. The Directors therefore
\n
concluded that there were no additional indicators of impairment at 31 January 2023, and accordingly no further impairment review has been
\n
deemed necessary.
Saga plc
Annual Report and Accounts 2023
173
Strategic report
Financial statements
Additional information
Governance
\n
As the Group is planning to vacate most of its properties (Note 38), management has concluded that this constitutes an indicator of
\n
impairment and has duly conducted an impairment review as at 31 January 2023 of the Group\u2019s freehold, and long leasehold, land and
\n
buildings, and related \ufb01xtures and \ufb01ttings. In relation to these freehold and long leasehold properties, value-in-use is negligible and so the
\n
Group has obtained market valuations to determine the fair value of each building. The outcome of these impairment reviews concluded that
\n
an impairment charge totalling \u00a30.5m relating to \ufb01xtures and \ufb01ttings should be recognised against the Group\u2019s assets as at 31 January 2023.
\n
At the year end, the Group reclassi\ufb01ed assets with a net book value of \u00a319.5m to assets held for sale (Note 38).
\n
In the prior year, the Group declassi\ufb01ed one of the properties classi\ufb01ed as held for sale at 31 January 2021, to property, plant and equipment
\n
since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
During the year ended 31 January 2023, a unsolicited conditional o\ufb00er for sale was accepted by the Group in respect of this property.
\n
As\u00a0a\u00a0consequence the property has been reclassi\ufb01ed back to assets held for sale as at the statement of \ufb01nancial position date.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\nthe Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m.", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24071": { "value": "
In the prior year, the Group declassi\ufb01ed one of the properties classi\ufb01ed as held for sale at 31 January 2021, to property, plant and equipment
\n
since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
During the year ended 31 January 2023, a unsolicited conditional o\ufb00er for sale was accepted by the Group in respect of this property.
\n
As\u00a0a\u00a0consequence the property has been reclassi\ufb01ed back to assets held for sale as at the statement of \ufb01nancial position date.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m.
38 Assets held for sale
\n
At the end of the year ended 31 January 2021, the Group made the decision to initiate an active programme to locate buyers for a number of
\n
its freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a316.9m were considered to be equal to, or below,
\n
fair value less costs to sell and hence no revaluation at the point of reclassi\ufb01cation was required.
\n
During the year ended 31 January 2022, the Group disposed of a property reclassi\ufb01ed from property, plant and equipment to held for sale in
\n
the period. Cash consideration received (net of transaction costs) was \u00a310.2m and the carrying value of the property at the date of disposal
\n
was \u00a33.0m. Pro\ufb01t arising on disposal was \u00a37.2m.
\n
In addition, during the year ended 31 January 2022, the Group declassi\ufb01ed one of the properties from held for sale back to property, plant and
\n
equipment, since it was no longer being actively marketed for disposal. The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
Management conducted impairment reviews of the freehold property assets held for sale as at 31 January 2022 and 31 January 2023.
\n
In\u00a0relation to these freehold properties, value-in-use continued to be negligible and so the Group obtained updated market valuations to
\n
determine the fair value of each building. The outcome of these impairment reviews concluded that net impairment charges totalling \u00a31.2m
\n
(2022: \u00a31.0m) should be recognised against the Group\u2019s property assets held for sale as at 31 January 2023 and 31 January 2022
\n
respectively.
\n
At the end of the year ended 31 January 2023, the Group made the decision to initiate an active programme to locate buyers for a further two
\n
of its freehold properties and one of its long leasehold properties. The Group also reclassi\ufb01ed to held for sale the related \ufb01xtures and \ufb01ttings
\n
associated with one of these freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a315.9m for the
\n
properties and \u00a33.6m for the related \ufb01xtures and \ufb01ttings, total \u00a319.5m, were considered to be equal to, or below, fair value less costs to sell
\n
and hence no revaluation at the point of reclassi\ufb01cation was required. These properties are being actively marketed and the disposals are
\n
expected to be completed within 12 months of the end of the \ufb01nancial year.
\n
As at 31 January 2023, the carrying values of the properties classi\ufb01ed as held for sale, totalling \u00a331.2m, are representative of either each
\n
property\u2019s fair value or historic cost less accumulated depreciation and any impairment charges to date, whichever is lower.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24072": { "value": "
In the prior year, the Group declassi\ufb01ed one of the properties classi\ufb01ed as held for sale at 31 January 2021, to property, plant and equipment
\n
since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
During the year ended 31 January 2023, a unsolicited conditional o\ufb00er for sale was accepted by the Group in respect of this property.
\n
As\u00a0a\u00a0consequence the property has been reclassi\ufb01ed back to assets held for sale as at the statement of \ufb01nancial position date.
\n
In addition, during the year ended 31 January 2022, following management\u2019s decision to restructure the Group\u2019s Tour Operations CGU,
\n
the Group impaired property, plant and equipment in its Tour Operations CGU by \u00a30.3m.
38 Assets held for sale
\n
At the end of the year ended 31 January 2021, the Group made the decision to initiate an active programme to locate buyers for a number of
\n
its freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a316.9m were considered to be equal to, or below,
\n
fair value less costs to sell and hence no revaluation at the point of reclassi\ufb01cation was required.
\n
During the year ended 31 January 2022, the Group disposed of a property reclassi\ufb01ed from property, plant and equipment to held for sale in
\n
the period. Cash consideration received (net of transaction costs) was \u00a310.2m and the carrying value of the property at the date of disposal
\n
was \u00a33.0m. Pro\ufb01t arising on disposal was \u00a37.2m.
\n
In addition, during the year ended 31 January 2022, the Group declassi\ufb01ed one of the properties from held for sale back to property, plant and
\n
equipment, since it was no longer being actively marketed for disposal. The carrying value of this property as at 31 January 2021 was \u00a33.0m.
\n
Management conducted impairment reviews of the freehold property assets held for sale as at 31 January 2022 and 31 January 2023.
\n
In\u00a0relation to these freehold properties, value-in-use continued to be negligible and so the Group obtained updated market valuations to
\n
determine the fair value of each building. The outcome of these impairment reviews concluded that net impairment charges totalling \u00a31.2m
\n
(2022: \u00a31.0m) should be recognised against the Group\u2019s property assets held for sale as at 31 January 2023 and 31 January 2022
\n
respectively.
\n
At the end of the year ended 31 January 2023, the Group made the decision to initiate an active programme to locate buyers for a further two
\n
of its freehold properties and one of its long leasehold properties. The Group also reclassi\ufb01ed to held for sale the related \ufb01xtures and \ufb01ttings
\n
associated with one of these freehold properties. At the point of reclassi\ufb01cation to held for sale, the carrying values of \u00a315.9m for the
\n
properties and \u00a33.6m for the related \ufb01xtures and \ufb01ttings, total \u00a319.5m, were considered to be equal to, or below, fair value less costs to sell
\n
and hence no revaluation at the point of reclassi\ufb01cation was required. These properties are being actively marketed and the disposals are
\n
expected to be completed within 12 months of the end of the \ufb01nancial year.
\n
As at 31 January 2023, the carrying values of the properties classi\ufb01ed as held for sale, totalling \u00a331.2m, are representative of either each
\n
property\u2019s fair value or historic cost less accumulated depreciation and any impairment charges to date, whichever is lower.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24082": { "value": "18 Right-of-use assets
Long
\n
leasehold
\n
land and
\n
buildings
\n
\u00a3m
\n
River
\n
cruise
\n
ships
\n
\u00a3m
\n
Plant and
\n
equipment
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
2.1
\u2013
5.9
8.0
\n
Additions
1.3
33.5
1.0
35.8
\n
Disposals
(0.7)
\u2013
(1.2)
(1.9)
\n
Transfer of asset class
4.0
\u2013
0.9
4.9
\n
Effect of modification of lease terms
(5.1)
\u2013
\u2013
(5.1)
\n
At 31 January 2022
1.6
33.5
6.6
41.7
\n
Additions
0.5
21.5
3.6
25.6
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(22.5)
\u2013
(22.5)
\n
At 31 January 2023
2.1
32.5
8.6
43.2
\n
Depreciation and impairment
\n
At 1 February 2021
1.6
\u2013
3.6
5.2
\n
Provided during the year
0.1
0.7
1.5
2.3
\n
Disposals
(0.7)
\u2013
(0.4)
(1.1)
\n
Transfer of asset class
4.1
\u2013
0.2
4.3
\n
Effect of modification of lease terms
(5.0)
\u2013
\u2013
(5.0)
\n
At 31 January 2022
0.1
0.7
4.9
5.7
\n
Provided during the year
0.4
7.4
1.1
8.9
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(0.5)
_
(0.5)
\n
At 31 January 2023
0.5
7.6
4.4
12.5
\n
Net book value
\n
At 31 January 2023
1.6
24.9
4.2
30.7
\n
At 31 January 2022
1.5
32.8
1.7
36.0
\n
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
7.8
1.6
\n
Administrative and selling expenses (Note 4)
1.1
0.7
\n
8.9
2.3
Notes to the consolidated \ufb01nancial statements continued
\n
174
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
18 Right-of-use assets
continued
\n
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.8m). The pro\ufb01t arising on disposal was \u00a3nil (2022: \u00a30.1m).
\n
The total cash out\ufb02ow for leases amounted to \u00a39.1m (2022: \u00a34.4m).
\n
River cruise ship additions in the year ended 31 January 2023 relate to the river cruise vessels, Spirit of the Danube (Note 37a),
\n
MS\u00a0River\u00a0Discovery II and MS Serenade 1. River cruise ship additions in the year ended 31 January 2022 related to the river cruise vessel,
\n
Spirit\u00a0of\u00a0the\u00a0Rhine.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8.
\n
In the year ended 31 January 2022, the modi\ufb01cation of lease terms relating to long leasehold land and buildings resulted in a gain of \u00a30.3m
\n
being reported in the income statement in the year.
\n
a) Impairment review of right-of-use assets
\n
During the year ended 31 January 2022, the Group took delivery of the river cruise ship, Spirit of the Rhine, under a 10-year lease. The ship\u2019s
\n
\ufb01rst cruise season was initially planned to commence on 1 April 2021, but due to the impact of the COVID-19 pandemic, the start of the \ufb01rst
\n
season was delayed for several months. The Group did not therefore take control of the asset until the ship\u2019s inaugural cruise took place in
\n
September 2021, at which point a right-of-use asset was recognised and a corresponding lease liability was capitalised on the statement of
\n
\ufb01nancial position.
\n
Given the carrying value of the asset is quantitatively material to the Group, combined with the ongoing adverse impacts of the COVID-19
\n
pandemic on the wider travel industry, which constitute an indicator of impairment, management deemed it necessary to conduct an
\n
impairment review on Spirit of the Rhine at 31 January 2022.
\n
Based on the impairment tests undertaken and looking at the likelihood of a range of outcomes, the Group was satis\ufb01ed that there was
\n
headroom over and above the carrying value of Spirit of the Rhine.
\n
The Group does not consider it necessary to conduct an impairment review of right-of-use assets as at 31 January 2023 since no new
\nindicators of impairment exist in relation to the Spirit of the Rhine, Spirit of the Danube, MS River Discovery II or MS Serenade 1.", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24083": { "value": "18 Right-of-use assets
Long
\n
leasehold
\n
land and
\n
buildings
\n
\u00a3m
\n
River
\n
cruise
\n
ships
\n
\u00a3m
\n
Plant and
\n
equipment
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
2.1
\u2013
5.9
8.0
\n
Additions
1.3
33.5
1.0
35.8
\n
Disposals
(0.7)
\u2013
(1.2)
(1.9)
\n
Transfer of asset class
4.0
\u2013
0.9
4.9
\n
Effect of modification of lease terms
(5.1)
\u2013
\u2013
(5.1)
\n
At 31 January 2022
1.6
33.5
6.6
41.7
\n
Additions
0.5
21.5
3.6
25.6
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(22.5)
\u2013
(22.5)
\n
At 31 January 2023
2.1
32.5
8.6
43.2
\n
Depreciation and impairment
\n
At 1 February 2021
1.6
\u2013
3.6
5.2
\n
Provided during the year
0.1
0.7
1.5
2.3
\n
Disposals
(0.7)
\u2013
(0.4)
(1.1)
\n
Transfer of asset class
4.1
\u2013
0.2
4.3
\n
Effect of modification of lease terms
(5.0)
\u2013
\u2013
(5.0)
\n
At 31 January 2022
0.1
0.7
4.9
5.7
\n
Provided during the year
0.4
7.4
1.1
8.9
\n
Disposals
\u2013
\u2013
(1.6)
(1.6)
\n
Effect of reassessment of lease terms
\u2013
(0.5)
_
(0.5)
\n
At 31 January 2023
0.5
7.6
4.4
12.5
\n
Net book value
\n
At 31 January 2023
1.6
24.9
4.2
30.7
\n
At 31 January 2022
1.5
32.8
1.7
36.0
\n
The depreciation charge for the year is analysed as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cost of sales
7.8
1.6
\n
Administrative and selling expenses (Note 4)
1.1
0.7
\n
8.9
2.3
During the year, the Group disposed of assets with a net book value of \u00a3nil (2022: \u00a30.8m). The pro\ufb01t arising on disposal was \u00a3nil (2022: \u00a30.1m).
\n
The total cash out\ufb02ow for leases amounted to \u00a39.1m (2022: \u00a34.4m).
\n
River cruise ship additions in the year ended 31 January 2023 relate to the river cruise vessels, Spirit of the Danube (Note 37a),
\n
MS\u00a0River\u00a0Discovery II and MS Serenade 1. River cruise ship additions in the year ended 31 January 2022 related to the river cruise vessel,
\n
Spirit\u00a0of\u00a0the\u00a0Rhine.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8.
\n
In the year ended 31 January 2022, the modi\ufb01cation of lease terms relating to long leasehold land and buildings resulted in a gain of \u00a30.3m
\n
being reported in the income statement in the year.
\n
a) Impairment review of right-of-use assets
\n
During the year ended 31 January 2022, the Group took delivery of the river cruise ship, Spirit of the Rhine, under a 10-year lease. The ship\u2019s
\n
\ufb01rst cruise season was initially planned to commence on 1 April 2021, but due to the impact of the COVID-19 pandemic, the start of the \ufb01rst
\n
season was delayed for several months. The Group did not therefore take control of the asset until the ship\u2019s inaugural cruise took place in
\n
September 2021, at which point a right-of-use asset was recognised and a corresponding lease liability was capitalised on the statement of
\n
\ufb01nancial position.
\n
Given the carrying value of the asset is quantitatively material to the Group, combined with the ongoing adverse impacts of the COVID-19
\n
pandemic on the wider travel industry, which constitute an indicator of impairment, management deemed it necessary to conduct an
\n
impairment review on Spirit of the Rhine at 31 January 2022.
\n
Based on the impairment tests undertaken and looking at the likelihood of a range of outcomes, the Group was satis\ufb01ed that there was
\n
headroom over and above the carrying value of Spirit of the Rhine.
\n
The Group does not consider it necessary to conduct an impairment review of right-of-use assets as at 31 January 2023 since no new
\n
indicators of impairment exist in relation to the Spirit of the Rhine, Spirit of the Danube, MS River Discovery II or MS Serenade 1.
In addition, \ufb01nance costs recognised in the income statement include \u00a31.2m (2022: \u00a30.7m) relating to interest and \ufb01nance charges on lease liabilities a) Lease commitments
The Group leases various river cruise ships, o\ufb03ces, warehouses, equipment and vehicles. The contract lengths of the leases vary considerably
\n
and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered in a contract, lease
\n
payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum lease payments under
\n
lease contracts, together with the present values of the net minimum lease payments, are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Within one year
11.5
5.4
\n
Between one and five years
15.4
19.5
\n
After five years
11.1
18.0
\n
Total minimum lease payments
38.0
42.9
\n
Less amounts representing finance charges
(5.4)
(7.6)
\n
Present value of minimum lease payments
32.6
35.3
\n
As at 31 January 2023, the value of lease liabilities contracted for, but not provided for, in the \ufb01nancial statements in respect of right-of-use
\n
assets amounted to \u00a3nil (2022: \u00a342.5m). At 31 January 2022, these lease commitments related to the river cruise vessel, Spirit of the Danube
\n
which has been recognised within right-of-use assets (Note 18) during the year to 31 January 2023.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer to Note 18 for
\n
further detail.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24290": { "value": "19 Financial assets and financial liabilities
a) Financial assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
Notes to the consolidated \ufb01nancial statements continued
\n
176
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
b) Financial liabilities
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.2
1.3
\n
0.2
1.3
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
1.0
2.7
\n
Fuel oil swaps
4.0
\u2013
\n
5.0
2.7
\n
Amortised cost
\n
Bonds and bank loans (Note 30)
854.6
896.5
\n
Lease liabilities
32.6
35.3
\n
Bank overdrafts
4.4
0.4
\n
891.6
932.2
\n
Total financial liabilities
896.8
936.2
\n
Current
118.6
56.1
\n
Non-current
778.2
880.1
\n
896.8
936.2
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial liabilities (as above and presented on the face of the statement of financial position)
896.8
936.2
\n
Trade payables (Note 26)
140.1
124.8
\n
Other payables (Note 26)
2.9
5.8
\n
Total financial liabilities (including trade and other payables)
1,039.8
1,066.8
\n
Except for the Group\u2019s bonds, the fair values of \ufb01nancial liabilities held at amortised cost are not materially di\ufb00erent from their carrying
\n
amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group\u2019s bonds (Note 30) at
\n
31\u00a0January 2023 is \u00a3334.3m (2022: \u00a3382.5m).
\n
All \ufb01nancial assets that are measured at FVTPL are mandatorily measured at FVTPL and all \ufb01nancial liabilities that are measured at FVTPL
\n
meet the de\ufb01nition of held for trading.
\n
c) Fair values
\n
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
\n
Valuation techniques include net present value and discounted cash \ufb02ow models, and comparison to similar instruments for which market
\n
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
\n
future oil prices.
\n
The objective of using valuation techniques is to arrive at a fair value determination that re\ufb02ects the price of the \ufb01nancial instrument at the
\n
reporting date, which would have been determined by market participants acting at arm\u2019s length.
\n
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
\n
of\u00a0these depends upon the liquidity of the relevant market.
Saga plc
Annual Report and Accounts 2023
177
Strategic report
Financial statements
Additional information
Governance
\n
c) Fair values
continued
\n
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
\n
i) Level 1
\n
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
\n
All\u00a0money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
\n
market price.
\n
ii) Level 2
\n
These are valuation techniques for which all signi\ufb01cant inputs are taken from observable market data. These include valuation models used to
\n
calculate the present value of expected future cash \ufb02ows and may be employed either when no active market exists or when there are quoted
\n
prices available for similar instruments in active markets.
\n
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
\n
underlying instrument.
\n
All the derivative \ufb01nancial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
\n
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
\n
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
\n
attributable to derivative counterparty default risk.
\n
The fair values are periodically reviewed by the Group\u2019s Treasury Committees.
\n
iii) Level 3
\n
These are valuation techniques for which any signi\ufb01cant inputs are not based on observable market data.
\n
The following tables provide the quantitative fair value hierarchy of the Group\u2019s \ufb01nancial assets and \ufb01nancial liabilities that are held at fair value:
\n
At 31 January 2023
At 31 January 2022
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Financial assets measured
\n
at\u00a0fair value
\n
Foreign exchange forwards
\u2013
2.5
\u2013
2.5
\u2013
0.7
\u2013
0.7
\n
Fuel oil swaps
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
\u2013
1.2
\n
Loan funds
5.9
\u2013
\u2013
5.9
6.2
\u2013
\u2013
6.2
\n
Debt securities
254.4
\u2013
\u2013
254.4
280.8
\u2013
\u2013
280.8
\n
Money market funds
19.6
\u2013
\u2013
19.6
29.2
\u2013
\u2013
29.2
\n
Financial liabilities measured
\n
at fair value
\n
Foreign exchange forwards
\u2013
1.2
\u2013
1.2
\u2013
4.0
\u2013
4.0
\n
Fuel oil swaps
\u2013
4.0
\u2013
4.0
\u2013
\u2013
\u2013
\u2013
\n
Financial assets for which fair
\n
values are disclosed
\n
Deposits with institutions
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
\n
Financial liabilities for which
\n
fair values are disclosed
\n
Bonds and bank loans
\u2013
788.9
\u2013
788.9
\u2013
879.0
\u2013
879.0
\n
Lease liabilities
\u2013
32.6
\u2013
32.6
\u2013
35.3
\u2013
35.3
\n
Bank overdrafts
\u2013
4.4
\u2013
4.4
\u2013
0.4
\u2013
0.4
\n
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
\n
year (2022: none). The Group\u2019s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
\n
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
\n
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
\n
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
\n
which use current Platts index rates, discounted to present value.
Notes to the consolidated \ufb01nancial statements continued
\n
178
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
d) Cash flow hedges
\n
i) Forward currency risk
\n
During the year ended 31 January 2023, the Group designated 352 foreign exchange forward currency contracts as hedges of highly
\n
probable foreign currency cash expenses in future periods. These contracts are entered into to minimise the Group\u2019s exposure to foreign
\n
exchange risk.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Foreign currency cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Euro (
EUR
)
70
0.6
103
1.1
133
(2.5)
\n
US dollar (
USD
)
109
(0.2)
127
0.1
86
0.1
\n
Other currencies
173
(0.1)
216
(0.1)
212
\u2013
\n
Total
352
0.3
446
1.1
431
(2.4)
\n
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
\n
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
\n
ii) Commodity price risk
\n
The Group uses derivative \ufb01nancial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into \ufb01xed price
\n
contracts (
swaps
) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and are designated as cash \ufb02ow hedges. Hedging the price volatility of forecast fuel purchases is in accordance with the risk
\n
management strategy outlined by the Board of Directors.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Commodity cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Hedging instruments
68
(4.0)
68
(4.0)
36
1.2
\n
iii) Hedge maturity profile
\n
The table below summarises the present value of the highly probable forecast cash \ufb02ows that have been designated in a hedging relationship
\n
as at 31 January 2023. These cash \ufb02ows are expected to become determined in pro\ufb01t or loss in the same period in which the cash \ufb02ows occur.
\n
Determination period
\n
EUR
\n
\u00a3m
\n
USD
\n
\u00a3m
\n
Other
\n
currencies
\n
\u00a3m
\n
Currency
\n
hedges \u00a3m
\n
Fuel hedges
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
1 February 2023 to 31 July 2023
28.1
22.4
6.7
57.2
(1.8)
55.4
\n
1 August 2023 to 31 January 2024
20.4
20.6
5.8
46.8
(1.6)
45.2
\n
1 February 2024 to 31 July 2024
2.1
8.1
0.7
10.9
(0.3)
10.6
\n
1 August 2024 to 31 January 2025
0.1
2.2
0.5
2.8
(0.3)
2.5
\n
Total
50.7
53.3
13.7
117.7
(4.0)
113.7
\n
During the year, the Group recognised net losses of \u00a32.0m (2022: \u00a32.1m gains) on cash \ufb02ow hedging instruments through OCI into the
\n
hedging reserve. The Group recognised \u00a3nil gains (2022: \u00a3nil) through the income statement in respect of the ine\ufb00ective portion of hedges
\n
measured during the year.
\n
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value of \u00a30.7m, where forecast cash
\n
\ufb02ows are no longer expected to occur with a su\ufb03ciently high degree of certainty to meet the requirements of IFRS 9. The accumulated gains
\n
in\u00a0relation to these contracts of \u00a3nil have been reclassi\ufb01ed from the hedging reserve into pro\ufb01t or loss during the year. The Group has not
\n
de-designated any fuel oil swaps during the year. During the year, the Group recognised a \u00a30.3m loss (2022: \u00a31.2m gain) through the income
\nstatement in respect of matured hedges which have been recycled from OCI. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24291": { "value": "19 Financial assets and financial liabilities
a) Financial assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
Notes to the consolidated \ufb01nancial statements continued
\n
176
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
b) Financial liabilities
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.2
1.3
\n
0.2
1.3
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
1.0
2.7
\n
Fuel oil swaps
4.0
\u2013
\n
5.0
2.7
\n
Amortised cost
\n
Bonds and bank loans (Note 30)
854.6
896.5
\n
Lease liabilities
32.6
35.3
\n
Bank overdrafts
4.4
0.4
\n
891.6
932.2
\n
Total financial liabilities
896.8
936.2
\n
Current
118.6
56.1
\n
Non-current
778.2
880.1
\n
896.8
936.2
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial liabilities (as above and presented on the face of the statement of financial position)
896.8
936.2
\n
Trade payables (Note 26)
140.1
124.8
\n
Other payables (Note 26)
2.9
5.8
\n
Total financial liabilities (including trade and other payables)
1,039.8
1,066.8
\n
Except for the Group\u2019s bonds, the fair values of \ufb01nancial liabilities held at amortised cost are not materially di\ufb00erent from their carrying
\n
amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group\u2019s bonds (Note 30) at
\n
31\u00a0January 2023 is \u00a3334.3m (2022: \u00a3382.5m).
\n
All \ufb01nancial assets that are measured at FVTPL are mandatorily measured at FVTPL and all \ufb01nancial liabilities that are measured at FVTPL
\nmeet the de\ufb01nition of held for trading.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24292": { "value": "19 Financial assets and financial liabilities
a) Financial assets
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
Notes to the consolidated \ufb01nancial statements continued
\n
176
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
b) Financial liabilities
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.2
1.3
\n
0.2
1.3
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
1.0
2.7
\n
Fuel oil swaps
4.0
\u2013
\n
5.0
2.7
\n
Amortised cost
\n
Bonds and bank loans (Note 30)
854.6
896.5
\n
Lease liabilities
32.6
35.3
\n
Bank overdrafts
4.4
0.4
\n
891.6
932.2
\n
Total financial liabilities
896.8
936.2
\n
Current
118.6
56.1
\n
Non-current
778.2
880.1
\n
896.8
936.2
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial liabilities (as above and presented on the face of the statement of financial position)
896.8
936.2
\n
Trade payables (Note 26)
140.1
124.8
\n
Other payables (Note 26)
2.9
5.8
\n
Total financial liabilities (including trade and other payables)
1,039.8
1,066.8
\n
Except for the Group\u2019s bonds, the fair values of \ufb01nancial liabilities held at amortised cost are not materially di\ufb00erent from their carrying
\n
amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group\u2019s bonds (Note 30) at
\n
31\u00a0January 2023 is \u00a3334.3m (2022: \u00a3382.5m).
\n
All \ufb01nancial assets that are measured at FVTPL are mandatorily measured at FVTPL and all \ufb01nancial liabilities that are measured at FVTPL
\n
meet the de\ufb01nition of held for trading.
\n
c) Fair values
\n
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
\n
Valuation techniques include net present value and discounted cash \ufb02ow models, and comparison to similar instruments for which market
\n
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
\n
future oil prices.
\n
The objective of using valuation techniques is to arrive at a fair value determination that re\ufb02ects the price of the \ufb01nancial instrument at the
\n
reporting date, which would have been determined by market participants acting at arm\u2019s length.
\n
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
\n
of\u00a0these depends upon the liquidity of the relevant market.
Saga plc
Annual Report and Accounts 2023
177
Strategic report
Financial statements
Additional information
Governance
\n
c) Fair values
continued
\n
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
\n
i) Level 1
\n
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
\n
All\u00a0money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
\n
market price.
\n
ii) Level 2
\n
These are valuation techniques for which all signi\ufb01cant inputs are taken from observable market data. These include valuation models used to
\n
calculate the present value of expected future cash \ufb02ows and may be employed either when no active market exists or when there are quoted
\n
prices available for similar instruments in active markets.
\n
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
\n
underlying instrument.
\n
All the derivative \ufb01nancial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
\n
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
\n
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
\n
attributable to derivative counterparty default risk.
\n
The fair values are periodically reviewed by the Group\u2019s Treasury Committees.
\n
iii) Level 3
\n
These are valuation techniques for which any signi\ufb01cant inputs are not based on observable market data.
\n
The following tables provide the quantitative fair value hierarchy of the Group\u2019s \ufb01nancial assets and \ufb01nancial liabilities that are held at fair value:
\n
At 31 January 2023
At 31 January 2022
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Financial assets measured
\n
at\u00a0fair value
\n
Foreign exchange forwards
\u2013
2.5
\u2013
2.5
\u2013
0.7
\u2013
0.7
\n
Fuel oil swaps
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
\u2013
1.2
\n
Loan funds
5.9
\u2013
\u2013
5.9
6.2
\u2013
\u2013
6.2
\n
Debt securities
254.4
\u2013
\u2013
254.4
280.8
\u2013
\u2013
280.8
\n
Money market funds
19.6
\u2013
\u2013
19.6
29.2
\u2013
\u2013
29.2
\n
Financial liabilities measured
\n
at fair value
\n
Foreign exchange forwards
\u2013
1.2
\u2013
1.2
\u2013
4.0
\u2013
4.0
\n
Fuel oil swaps
\u2013
4.0
\u2013
4.0
\u2013
\u2013
\u2013
\u2013
\n
Financial assets for which fair
\n
values are disclosed
\n
Deposits with institutions
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
\n
Financial liabilities for which
\n
fair values are disclosed
\n
Bonds and bank loans
\u2013
788.9
\u2013
788.9
\u2013
879.0
\u2013
879.0
\n
Lease liabilities
\u2013
32.6
\u2013
32.6
\u2013
35.3
\u2013
35.3
\n
Bank overdrafts
\u2013
4.4
\u2013
4.4
\u2013
0.4
\u2013
0.4
\n
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
\n
year (2022: none). The Group\u2019s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
\n
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
\n
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
\n
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
\n
which use current Platts index rates, discounted to present value.
Notes to the consolidated \ufb01nancial statements continued
\n
178
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
19 Financial assets and financial liabilities
continued
\n
d) Cash flow hedges
\n
i) Forward currency risk
\n
During the year ended 31 January 2023, the Group designated 352 foreign exchange forward currency contracts as hedges of highly
\n
probable foreign currency cash expenses in future periods. These contracts are entered into to minimise the Group\u2019s exposure to foreign
\n
exchange risk.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Foreign currency cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Euro (
EUR
)
70
0.6
103
1.1
133
(2.5)
\n
US dollar (
USD
)
109
(0.2)
127
0.1
86
0.1
\n
Other currencies
173
(0.1)
216
(0.1)
212
\u2013
\n
Total
352
0.3
446
1.1
431
(2.4)
\n
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
\n
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
\n
ii) Commodity price risk
\n
The Group uses derivative \ufb01nancial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into \ufb01xed price
\n
contracts (
swaps
) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and are designated as cash \ufb02ow hedges. Hedging the price volatility of forecast fuel purchases is in accordance with the risk
\n
management strategy outlined by the Board of Directors.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Commodity cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Hedging instruments
68
(4.0)
68
(4.0)
36
1.2
\n
iii) Hedge maturity profile
\n
The table below summarises the present value of the highly probable forecast cash \ufb02ows that have been designated in a hedging relationship
\n
as at 31 January 2023. These cash \ufb02ows are expected to become determined in pro\ufb01t or loss in the same period in which the cash \ufb02ows occur.
\n
Determination period
\n
EUR
\n
\u00a3m
\n
USD
\n
\u00a3m
\n
Other
\n
currencies
\n
\u00a3m
\n
Currency
\n
hedges \u00a3m
\n
Fuel hedges
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
1 February 2023 to 31 July 2023
28.1
22.4
6.7
57.2
(1.8)
55.4
\n
1 August 2023 to 31 January 2024
20.4
20.6
5.8
46.8
(1.6)
45.2
\n
1 February 2024 to 31 July 2024
2.1
8.1
0.7
10.9
(0.3)
10.6
\n
1 August 2024 to 31 January 2025
0.1
2.2
0.5
2.8
(0.3)
2.5
\n
Total
50.7
53.3
13.7
117.7
(4.0)
113.7
\n
During the year, the Group recognised net losses of \u00a32.0m (2022: \u00a32.1m gains) on cash \ufb02ow hedging instruments through OCI into the
\n
hedging reserve. The Group recognised \u00a3nil gains (2022: \u00a3nil) through the income statement in respect of the ine\ufb00ective portion of hedges
\n
measured during the year.
\n
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value of \u00a30.7m, where forecast cash
\n
\ufb02ows are no longer expected to occur with a su\ufb03ciently high degree of certainty to meet the requirements of IFRS 9. The accumulated gains
\n
in\u00a0relation to these contracts of \u00a3nil have been reclassi\ufb01ed from the hedging reserve into pro\ufb01t or loss during the year. The Group has not
\n
de-designated any fuel oil swaps during the year. During the year, the Group recognised a \u00a30.3m loss (2022: \u00a31.2m gain) through the income
\nstatement in respect of matured hedges which have been recycled from OCI.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24297": { "value": "a) Financial assets
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\nof\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24298": { "value": "a) Financial assets
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
\n
FVTPL designated in a hedging relationship
\n
Foreign exchange forward contracts
2.1
0.3
\n
Fuel oil swaps
\u2013
1.2
\n
2.1
1.5
\n
FVOCI
\n
Debt securities
254.4
280.8
\n
254.4
280.8
\n
Amortised cost
\n
Deposits with financial institutions
\u2013
14.0
\n
\u2013
14.0
\n
Total financial assets
282.4
332.1
\n
Current
62.8
110.0
\n
Non-current
219.6
222.1
\n
282.4
332.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Total financial assets (as above and presented on the face of the statement of financial position)
282.4
332.1
\n
Trade receivables (Note 23)
141.3
109.9
\n
Other receivables (Note 23)
23.4
17.3
\n
Cash and short-term deposits (Note 25)
176.5
226.9
\n
Total financial assets (including cash and short-term deposits, trade and other receivables)
623.6
686.2
\n
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
\n
Debt securities, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business model is achieved
\n
both by collecting contractual cash \ufb02ows and selling \ufb01nancial assets, are classi\ufb01ed as FVOCI. On disposal of these debt securities, any related
\n
balance within the fair value reserve is reclassi\ufb01ed to other gains/(losses) within pro\ufb01t or loss.
\n
Deposits with \ufb01nancial institutions, where the contractual cash \ufb02ows are solely principal and interest, and the objective of the Group\u2019s business
\n
model is achieved by holding the asset in order to collect contractual cash \ufb02ows, are classi\ufb01ed as measured at amortised cost. The fair values
\n
of\u00a0\ufb01nancial assets held at amortised cost are not materially di\ufb00erent from their carrying amounts.
25 Cash and cash equivalents
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cash at bank and in hand
52.0
174.6
\n
Short-term deposits
124.5
52.3
\n
Cash and short-term deposits
176.5
226.9
\n
Money market funds
19.6
29.2
\n
Bank overdraft
(4.4)
(0.4)
\n
Cash and cash equivalents in the cash flow statement
191.7
255.7
\n
Included within cash and cash equivalents are amounts held by the Group\u2019s River Cruise, Travel and Insurance businesses, which are subject to
\n
contractual or regulatory restrictions (Note 35). These amounts held are not readily available to be used for other purposes within the Group
\n
and total \u00a334.2m (2022: \u00a369.1m). Available Cash
\n
8
\n
excludes these amounts.
\n
Cash at bank earns interest at \ufb02oating rates based on daily bank deposit rates. Short-term deposits are typically made for varying periods
\n
of\u00a0between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
\n
short-term deposit rates.
\n
The bank overdraft is subject to a guarantee in favour of the Group\u2019s bankers and is limited to the amount drawn. The bank overdraft is
\n
repayable on demand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24303": { "value": "
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.4
0.4
\n
Loan funds
5.9
6.2
\n
Money market funds
19.6
29.2
\n
25.9
35.8
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
FVTPL
\n
Foreign exchange forward contracts
0.2
1.3
\n
0.2
1.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24371": { "value": "
Debt securities, loan funds, money market funds and deposits with \ufb01nancial institutions relate to monies held by the Group\u2019s Insurance
\n
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
Included within cash and cash equivalents are amounts held by the Group\u2019s River Cruise, Travel and Insurance businesses, which are subject to
\n
contractual or regulatory restrictions (Note 35). These amounts held are not readily available to be used for other purposes within the Group
\n
and total \u00a334.2m (2022: \u00a369.1m). Available Cash
\n
8
\n
excludes these amounts.
The bank overdraft is subject to a guarantee in favour of the Group\u2019s bankers and is limited to the amount drawn. The bank overdraft is
\n
repayable on demand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24471": { "value": "c) Fair values
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
\n
Valuation techniques include net present value and discounted cash \ufb02ow models, and comparison to similar instruments for which market
\n
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
\n
future oil prices.
\n
The objective of using valuation techniques is to arrive at a fair value determination that re\ufb02ects the price of the \ufb01nancial instrument at the
\n
reporting date, which would have been determined by market participants acting at arm\u2019s length.
\n
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
\n
of\u00a0these depends upon the liquidity of the relevant market.
Saga plc
Annual Report and Accounts 2023
177
Strategic report
Financial statements
Additional information
Governance
\n
c) Fair values
continued
\n
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
\n
i) Level 1
\n
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
\n
All\u00a0money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
\n
market price.
\n
ii) Level 2
\n
These are valuation techniques for which all signi\ufb01cant inputs are taken from observable market data. These include valuation models used to
\n
calculate the present value of expected future cash \ufb02ows and may be employed either when no active market exists or when there are quoted
\n
prices available for similar instruments in active markets.
\n
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
\n
underlying instrument.
\n
All the derivative \ufb01nancial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
\n
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
\n
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
\n
attributable to derivative counterparty default risk.
\n
The fair values are periodically reviewed by the Group\u2019s Treasury Committees.
\n
iii) Level 3
\n
These are valuation techniques for which any signi\ufb01cant inputs are not based on observable market data.
\n
The following tables provide the quantitative fair value hierarchy of the Group\u2019s \ufb01nancial assets and \ufb01nancial liabilities that are held at fair value:
\n
At 31 January 2023
At 31 January 2022
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Financial assets measured
\n
at\u00a0fair value
\n
Foreign exchange forwards
\u2013
2.5
\u2013
2.5
\u2013
0.7
\u2013
0.7
\n
Fuel oil swaps
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
\u2013
1.2
\n
Loan funds
5.9
\u2013
\u2013
5.9
6.2
\u2013
\u2013
6.2
\n
Debt securities
254.4
\u2013
\u2013
254.4
280.8
\u2013
\u2013
280.8
\n
Money market funds
19.6
\u2013
\u2013
19.6
29.2
\u2013
\u2013
29.2
\n
Financial liabilities measured
\n
at fair value
\n
Foreign exchange forwards
\u2013
1.2
\u2013
1.2
\u2013
4.0
\u2013
4.0
\n
Fuel oil swaps
\u2013
4.0
\u2013
4.0
\u2013
\u2013
\u2013
\u2013
\n
Financial assets for which fair
\n
values are disclosed
\n
Deposits with institutions
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
\n
Financial liabilities for which
\n
fair values are disclosed
\n
Bonds and bank loans
\u2013
788.9
\u2013
788.9
\u2013
879.0
\u2013
879.0
\n
Lease liabilities
\u2013
32.6
\u2013
32.6
\u2013
35.3
\u2013
35.3
\n
Bank overdrafts
\u2013
4.4
\u2013
4.4
\u2013
0.4
\u2013
0.4
\n
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
\n
year (2022: none). The Group\u2019s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
\n
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
\n
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
\n
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
\nwhich use current Platts index rates, discounted to present value. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24472": { "value": "c) Fair values
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
\n
Valuation techniques include net present value and discounted cash \ufb02ow models, and comparison to similar instruments for which market
\n
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
\n
future oil prices.
\n
The objective of using valuation techniques is to arrive at a fair value determination that re\ufb02ects the price of the \ufb01nancial instrument at the
\n
reporting date, which would have been determined by market participants acting at arm\u2019s length.
\n
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
\n
of\u00a0these depends upon the liquidity of the relevant market.
Saga plc
Annual Report and Accounts 2023
177
Strategic report
Financial statements
Additional information
Governance
\n
c) Fair values
continued
\n
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
\n
i) Level 1
\n
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
\n
All\u00a0money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
\n
market price.
\n
ii) Level 2
\n
These are valuation techniques for which all signi\ufb01cant inputs are taken from observable market data. These include valuation models used to
\n
calculate the present value of expected future cash \ufb02ows and may be employed either when no active market exists or when there are quoted
\n
prices available for similar instruments in active markets.
\n
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
\n
underlying instrument.
\n
All the derivative \ufb01nancial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
\n
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
\n
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
\n
attributable to derivative counterparty default risk.
\n
The fair values are periodically reviewed by the Group\u2019s Treasury Committees.
\n
iii) Level 3
\n
These are valuation techniques for which any signi\ufb01cant inputs are not based on observable market data.
\n
The following tables provide the quantitative fair value hierarchy of the Group\u2019s \ufb01nancial assets and \ufb01nancial liabilities that are held at fair value:
\n
At 31 January 2023
At 31 January 2022
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Level 1
\n
\u00a3m
\n
Level 2
\n
\u00a3m
\n
Level 3
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Financial assets measured
\n
at\u00a0fair value
\n
Foreign exchange forwards
\u2013
2.5
\u2013
2.5
\u2013
0.7
\u2013
0.7
\n
Fuel oil swaps
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
\u2013
1.2
\n
Loan funds
5.9
\u2013
\u2013
5.9
6.2
\u2013
\u2013
6.2
\n
Debt securities
254.4
\u2013
\u2013
254.4
280.8
\u2013
\u2013
280.8
\n
Money market funds
19.6
\u2013
\u2013
19.6
29.2
\u2013
\u2013
29.2
\n
Financial liabilities measured
\n
at fair value
\n
Foreign exchange forwards
\u2013
1.2
\u2013
1.2
\u2013
4.0
\u2013
4.0
\n
Fuel oil swaps
\u2013
4.0
\u2013
4.0
\u2013
\u2013
\u2013
\u2013
\n
Financial assets for which fair
\n
values are disclosed
\n
Deposits with institutions
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
\n
Financial liabilities for which
\n
fair values are disclosed
\n
Bonds and bank loans
\u2013
788.9
\u2013
788.9
\u2013
879.0
\u2013
879.0
\n
Lease liabilities
\u2013
32.6
\u2013
32.6
\u2013
35.3
\u2013
35.3
\n
Bank overdrafts
\u2013
4.4
\u2013
4.4
\u2013
0.4
\u2013
0.4
\n
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
\n
year (2022: none). The Group\u2019s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
\n
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
\n
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
\n
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
\nwhich use current Platts index rates, discounted to present value. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24683": { "value": "d) Cash flow hedges
i) Forward currency risk
\n
During the year ended 31 January 2023, the Group designated 352 foreign exchange forward currency contracts as hedges of highly
\n
probable foreign currency cash expenses in future periods. These contracts are entered into to minimise the Group\u2019s exposure to foreign
\n
exchange risk.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Foreign currency cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Euro (
EUR
)
70
0.6
103
1.1
133
(2.5)
\n
US dollar (
USD
)
109
(0.2)
127
0.1
86
0.1
\n
Other currencies
173
(0.1)
216
(0.1)
212
\u2013
\n
Total
352
0.3
446
1.1
431
(2.4)
\n
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
\n
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
\n
ii) Commodity price risk
\n
The Group uses derivative \ufb01nancial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into \ufb01xed price
\n
contracts (
swaps
) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and are designated as cash \ufb02ow hedges. Hedging the price volatility of forecast fuel purchases is in accordance with the risk
\n
management strategy outlined by the Board of Directors.
\n
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
\n
Commodity cash flow hedging instruments
Volume
\u00a3m
Volume
\u00a3m
Volume
\u00a3m
\n
Hedging instruments
68
(4.0)
68
(4.0)
36
1.2
\n
iii) Hedge maturity profile
\n
The table below summarises the present value of the highly probable forecast cash \ufb02ows that have been designated in a hedging relationship
\n
as at 31 January 2023. These cash \ufb02ows are expected to become determined in pro\ufb01t or loss in the same period in which the cash \ufb02ows occur.
\n
Determination period
\n
EUR
\n
\u00a3m
\n
USD
\n
\u00a3m
\n
Other
\n
currencies
\n
\u00a3m
\n
Currency
\n
hedges \u00a3m
\n
Fuel hedges
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
1 February 2023 to 31 July 2023
28.1
22.4
6.7
57.2
(1.8)
55.4
\n
1 August 2023 to 31 January 2024
20.4
20.6
5.8
46.8
(1.6)
45.2
\n
1 February 2024 to 31 July 2024
2.1
8.1
0.7
10.9
(0.3)
10.6
\n
1 August 2024 to 31 January 2025
0.1
2.2
0.5
2.8
(0.3)
2.5
\n
Total
50.7
53.3
13.7
117.7
(4.0)
113.7
\n
During the year, the Group recognised net losses of \u00a32.0m (2022: \u00a32.1m gains) on cash \ufb02ow hedging instruments through OCI into the
\n
hedging reserve. The Group recognised \u00a3nil gains (2022: \u00a3nil) through the income statement in respect of the ine\ufb00ective portion of hedges
\n
measured during the year.
\n
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value of \u00a30.7m, where forecast cash
\n
\ufb02ows are no longer expected to occur with a su\ufb03ciently high degree of certainty to meet the requirements of IFRS 9. The accumulated gains
\n
in\u00a0relation to these contracts of \u00a3nil have been reclassi\ufb01ed from the hedging reserve into pro\ufb01t or loss during the year. The Group has not
\n
de-designated any fuel oil swaps during the year. During the year, the Group recognised a \u00a30.3m loss (2022: \u00a31.2m gain) through the income
statement in respect of matured hedges which have been recycled from OCI.", "dimensions": { "concept": "ifrs-full:DisclosureOfDetailedInformationAboutHedgingInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24837": { "value": "20 Financial risk management objectives and policies
The Group\u2019s principal \ufb01nancial liabilities comprise loans and borrowings, and trade and other payables. The main purpose of the loans and
\n
borrowings \ufb01nancial liabilities is to \ufb01nance the Group\u2019s operations and to provide guarantees to support its operations. The Group\u2019s principal
\n
\ufb01nancial assets include debt securities, deposits with \ufb01nancial institutions, money market funds, loan funds, trade and other receivables, and
\n
cash and short-term deposits. The Group also enters into derivative transactions such as foreign exchange forward contracts, fuel and gas oil
\n
swaps and interest rate swaps to manage its exposures to various risks.
\n
The Group is exposed to market risk, credit risk, liquidity risk, insurance risk and operational risk. The Group\u2019s senior management oversees
\n
these risks, supported by the Group Treasury function and Treasury Committees within the key areas of the Group that advise on \ufb01nancial
\n
risks and the appropriate \ufb01nancial risk governance framework for the Group. These functions and Committees ensure that the Group\u2019s
\n
\ufb01nancial risks are governed by appropriate policies and procedures and that \ufb01nancial risks are identi\ufb01ed, measured and managed in
\n
accordance with the Group\u2019s policies and risk objectives. All derivative activities are for risk management purposes and are carried out by
\n
the\u00a0Group\u2019s Treasury function. It is the Group\u2019s policy that no trading in derivatives for speculative purposes may be undertaken.
\n
The Group manages concentration risk on its \ufb01nancial assets through a policy of diversi\ufb01cation that is outlined in the Group Treasury Policy
\n
and approved by the Board. The policy de\ufb01nes the exposure limit by asset class and to third-party institutions based on the credit ratings of
\n
the individual counterparties, combined with the views of the Board. On a monthly basis, exposure to each asset class and counterparty is
\n
calculated and reported, and compliance with the policy is monitored.
\n
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
\n
a) Market risk
\n
Market risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate due to changes in market prices. The Group
\n
is\u00a0exposed to the following market risk factors:
\n
\u2022
Foreign currency risk
\n
\u2022
Commodity price risk
\n
\u2022
Interest rate risk
\n
The Group has policies and limits approved by the Board for managing the market risk exposure. These set out the principles that the business
\n
should adhere to for managing market risk and establishing the maximum limits that the Group is willing to accept considering strategy, risk
\n
appetite and capital resources. The Group has the ability to monitor market risk exposure on a daily basis and has established limits for each
\n
component of market risk.
\n
The Group uses derivatives for hedging its exposure to foreign currency and fuel oil price risks. The market risk policy explicitly prohibits the
\n
use of derivatives for speculative purposes. For risk exposures that the Group hedges, and for which the Group applies hedge accounting,
\n
ine\ufb00ectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the
\n
credit risk of the derivative counterparty. Hedge e\ufb00ectiveness is determined at the inception of the hedge relationship, and through periodic
\n
prospective e\ufb00ectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.
\n
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
\n
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\n
i) Foreign currency risk
\n
Foreign currency risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial asset or liability will \ufb02uctuate because of changes in foreign
\n
exchange rates. The Group\u2019s exposure to the risk of changes in foreign exchange rates relates primarily to the Group\u2019s operating activities
\n
(when revenue or expense is denominated in a di\ufb00erent currency from the Group\u2019s functional currency).
\n
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
\n
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign currency
\n
exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with the level of
\n
expected foreign currency sales and purchases.
Notes to the consolidated \ufb01nancial statements continued
\n
180
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
\n
rates, with all other variables held constant. The Group\u2019s exposure to foreign currency changes for all other currencies is not material.
\n
The\u00a0impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% forex
\n
rate change in
Effect on equity
Effect on profit after tax
\n
2023
EUR
+/\u2013 \u00a32.4m
+/\u2013 \u00a30.2m
\n
USD
+/\u2013 \u00a32.5m
+/\u2013 \u00a30.2m
\n
2022
EUR
+/\u2013 \u00a32.8m
+/\u2013 \u00a30.7m
\n
USD
+/\u2013 \u00a31.7m
+/\u2013 \u00a30.4m
\n
To the extent that forward exchange contracts are held as part of e\ufb00ective hedging relationships, any change to the fair value of the instrument
\n
will be o\ufb00set by an equal and opposite change to the cost of the hedged item.
\n
ii) Commodity price risk
\n
The Group is a\ufb00ected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of fuel and gas oil to
\n
sail its ocean cruise ships and therefore require a continuous supply of fuel and gas oil. The volatility in the price of fuel and gas oil has led to the
\n
decision to enter into commodity fuel and gas oil swap contracts. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and gas oil. Managing the price volatility of forecast oil purchases is in accordance with the risk management strategy
\n
outlined by the Board of Directors.
\n
The Group manages the purchase price using forward commodity purchase contracts based on future forecast fuel oil requirements.
\n
The following table shows the sensitivity of the fair value of fuel oil swaps to changes in the underlying fuel oil price (USD) with all other variables
\n
held constant. The impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
USD \u2013 Fuel oil price
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.0m
\n
2022
USD \u2013 Fuel oil price
+/\u2013 \u00a30.5m
+/\u2013 \u00a30.0m
\n
iii) Interest rate risk
\n
Interest rate risk is de\ufb01ned in IFRS 7 as the risk that the fair value or future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate because of changes
\n
in market interest rates.
\n
Interest rate risk arises primarily from medium and long-term investments in \ufb01xed interest securities. The market value of these investments
\n
is a\ufb00ected by the movement in interest rates. This is managed by a policy of holding the majority of investments to maturity by closely matching
\n
asset and liability duration.
\n
It is also ensured that the investment portfolio has a diversi\ufb01ed range of investments such that there is a combination of \ufb01xed and \ufb02oating rate
\n
securities, as well as other types of investment such as Retail Price Index linked securities.
\n
Interest rate risk also arises in respect of the Group\u2019s borrowings where the interest rate attaching to those borrowings is not \ufb01xed.
\n
Where the Group perceives there to be a signi\ufb01cant interest rate risk, it manages its exposure to such risks by purchasing interest rate caps
\n
to limit the risk.
\n
The following table shows the sensitivity of \ufb01nancial assets and liabilities to changes in the Sterling Overnight Index Average (
SONIA
). The
\n
impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 1% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
SONIA
+/\u2013 \u00a30.4m
+/\u2013 \u00a30.4m
\n
2022
SONIA
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.2m
Saga plc
Annual Report and Accounts 2023
181
Strategic report
Financial statements
Additional information
Governance
\n
b) Credit risk
\n
Credit risk is the risk that a counterparty will not meet its obligations under a \ufb01nancial instrument or customer contract, leading to a \ufb01nancial
\n
loss. The Group is exposed to credit risk in relation to its \ufb01nancial and reinsurance assets, outstanding derivatives, trade and other receivables,
\n
and cash and cash equivalents. The Group assesses its counterparty exposure in relation to the investment of surplus cash, fuel oil and foreign
\n
currency contracts, and undrawn credit facilities. The Group primarily uses published credit ratings to assess counterparty strength and
\n
therefore de\ufb01ne the credit limit for each counterparty in accordance with approved treasury policies.
\n
The credit risk in respect of trade and other receivables is generally limited as payment from customers is generally required before services
\n
are provided. At 31 January 2023, the maximum exposure to credit risk for trade receivables by operating segment was as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cruise and Travel
1.8
2.3
\n
Insurance
68.0
42.6
\n
Other Businesses and Central Costs
2.1
2.3
\n
71.9
47.2
\n
The variance between the quantum of the maximum exposure to credit risk for trade receivables (above) and total of trade receivables
\n
presented in \u2018Trade and other receivables\u2019 (Note 23) primarily relates to insurance instalment gross premium debtors due from customers,
\n
for which a corresponding related creditor exists with third-party insurers for the net premium. In the event of payment obligation default by
\n
a\u00a0customer no longer on risk, the impairment of the debtor balance by the Group would lead to a corresponding reduction in the related
\n
creditor with, or refund of net premium from, the third-party insurer. In the event of payment obligation default by a customer remaining on
\n
risk, the impairment of the debtor balance by the Group would not lead to a corresponding reduction in the related creditor with, or refund
\n
of\u00a0net premium from, the third-party insurer, and the Group would bear the credit risk relating to the debtor balance.
\n
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large
\n
number of small balances. The loss allowance required for these receivables is calculated in line with the simpli\ufb01ed method for trade
\n
receivables per IFRS 9, whereby lifetime ECLs are recognised irrelevant of the credit risk. The loss allowance is based on a combination of:
\n
(i)\u00a0aged debtor analysis; (ii) historical experience of write-o\ufb00s for each receivable; (iii) any speci\ufb01c indicators of credit deterioration observed;
\n
and (iv) management judgement. Loss rates are based on the probability of a receivable progressing through successive stages of delinquency
\n
to write-o\ufb00. Financial assets are written o\ufb00 when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
\n
repayment plan with the Group.
\n
On that basis, the loss allowance as at 31 January 2023 and 31 January 2022 was determined as follows for trade receivables:
\n
31 January 2023
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
0%
7%
6%
34%
15%
66%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3139.1m
\u00a32.1m
\u00a30.2m
\u00a30.1m
\u00a30.2m
\u00a30.7m
\u00a3142.4m
\n
Loss allowance (Note 23)
\u00a30.5m
\u00a30.1m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a30.5m
\u00a31.1m
\n
31 January 2022
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
1%
13%
4%
6%
4%
39%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3101.7m
\u00a31.2m
\u00a30.5m
\u00a30.4m
\u00a30.4m
\u00a310.7m
\u00a3114.9m
\n
Loss allowance (Note 23)
\u00a30.6m
\u00a30.2m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a34.2m
\u00a35.0m
\n
The loss allowance for trade receivables reconciles to the opening allowances as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
(restated)
\n
\u00a3m
\n
Opening loss allowance at 1 February
5.0
13.9
\n
Increase in loan loss allowance recognised in profit or loss during the year
1.3
0.7
\n
7
\n
Receivables written off during the year as uncollectable
(3.5)
(8.0)
\n
7
\n
Unused amount reversed
(1.7)
(1.6)
\n
7
\n
Closing loss allowance at 31 January
1.1
5.0
\n
7
Movements in the credit loss allowance for the year ended 31 January 2022 have been restated due to an incorrect allocation between the various movements in
\n
the\u00a0year
Notes to the consolidated \ufb01nancial statements continued
\n
182
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
Credit risk in relation to deposits, debt securities and derivative counterparties is managed by the Group\u2019s Treasury function in accordance
\n
with the Group\u2019s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
\n
counterparty. Counterparty credit limits are reviewed on a regular basis and updated throughout the year subject to approval by the Board.
\n
The limits are set to minimise the concentration of risks and therefore mitigate \ufb01nancial loss through any potential counterparty failure.
\n
The Group is exposed to the risk of default on the reinsurance arrangements in its Insurance Underwriting business when amounts
\n
recoverable under those arrangements become due. The Group has entered into a funds-withheld quota share reinsurance contract to
\n
reduce its exposure to credit risk. Credit risk in respect of reinsurance arrangements is assessed at the time of entering into a reinsurance
\n
contract. The Group\u2019s reinsurance programme is only placed with reinsurers which meet the Group\u2019s \ufb01nancial strength criteria.
\n
The Group\u2019s maximum exposure to credit risk for the components of the statement of \ufb01nancial position at 31 January 2023 and 31 January
\n
2022 is the gross carrying amount except for derivative \ufb01nancial instruments and trade receivables. The Group\u2019s maximum exposure for
\n
\ufb01nancial guarantees and \ufb01nancial derivative instruments is noted under liquidity risk. None of the \ufb01nancial assets, other than trade receivables
\n
where a loss allowance has been determined as set out above, were impaired at the reporting date.
\n
The Group\u2019s \ufb01nancial assets and reinsurance assets are analysed by Moody\u2019s credit risk rating as follows:
\n
Ratings analysis
\n
31 January 2023
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
23.5
74.9
64.2
91.8
\u2013
254.4
\n
Money market funds
19.6
\u2013
\u2013
\u2013
\u2013
19.6
\n
Derivative assets
\u2013
\u2013
2.5
\u2013
\u2013
2.5
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
5.9
5.9
\n
43.1
74.9
66.7
91.8
5.9
282.4
\n
Reinsurance assets
\u2013
38.2
30.6
\u2013
\u2013
68.8
\n
Total
43.1
113.1
97.3
91.8
5.9
351.2
\n
31 January 2022
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
20.2
94.4
68.0
98.2
\u2013
280.8
\n
Money market funds
29.2
\u2013
\u2013
\u2013
\u2013
29.2
\n
Deposits with financial institutions
\u2013
\u2013
14.0
\u2013
\u2013
14.0
\n
Derivative assets
\u2013
\u2013
1.8
0.1
\u2013
1.9
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
6.2
6.2
\n
49.4
94.4
83.8
98.3
6.2
332.1
\n
Reinsurance assets
\u2013
36.3
29.1
\u2013
\u2013
65.4
\n
Total
49.4
130.7
112.9
98.3
6.2
397.5
\n
c) Liquidity risk
\n
Liquidity risk is the risk that the Group, although solvent, either does not have available su\ufb03cient \ufb01nancial resources to enable it to meet its
\n
obligations as they fall due or can secure them only at excessive cost. The Group\u2019s approach to managing liquidity risk is to evaluate current
\n
and expected liquidity requirements to ensure that it maintains su\ufb03cient reserves of cash or availability on its RCF. The Group manages
\n
its\u00a0obligations to pay claims to policyholders as they fall due by matching the maturity of investments to the expected maturity of
\n
claims\u00a0payments.
\n
The table below analyses the maturity of the Group\u2019s \ufb01nancial liabilities and insurance contract liabilities on contractual payments. The analysis
\n
of non-derivative \ufb01nancial liabilities is based on the remaining period at the reporting date to the contractual maturity date. The analysis of
\n
claims outstanding is based on the expected dates on which the claims will be settled and is before discounting, gross of reinsurance.
\n
31 January 2023
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
62.2
212.2
406.4
188.4
869.2
\n
Interest on bonds and bank loans
\u2013
33.6
28.8
46.0
13.4
121.8
\n
Insurance contract liabilities
\u2013
85.3
79.7
75.7
102.1
342.8
\n
Derivative liabilities
\u2013
4.1
1.1
\u2013
\u2013
5.2
\n
Lease liabilities
\u2013
8.9
3.5
10.0
10.2
32.6
\n
\u2013
194.1
325.3
538.1
314.1
1,371.6
Saga plc
Annual Report and Accounts 2023
183
Strategic report
Financial statements
Additional information
Governance
\n
31 January 2022
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
46.4
62.2
572.0
235.0
915.6
\n
Interest on bonds and bank loans
\u2013
32.7
31.3
65.4
20.0
149.4
\n
Insurance contract liabilities
\u2013
88.0
50.1
76.8
115.9
330.8
\n
Derivative liabilities
\u2013
3.7
0.3
\u2013
\u2013
4.0
\n
Lease liabilities
\u2013
3.9
3.6
11.4
16.4
35.3
\n
\u2013
174.7
147.5
725.6
387.3
1,435.1
\n
d) Insurance risk
\n
Insurance risk arises from the inherent uncertainties as to the occurrence, cost and timing of insured events that could lead to signi\ufb01cant
\n
individual or aggregated claims in terms of quantity or value. This could be for a number of reasons, including weather-related events, large
\n
individual claims, changes in claimant behaviour patterns such as increased levels of fraudulent activities, the use of PPOs, prospective or
\n
retrospective legislative changes, unresponsive and inaccurate pricing or reserving methodologies and the deterioration in the Group\u2019s ability
\n
to e\ufb00ectively and e\ufb03ciently handle claims while delivering excellent customer service.
\n
The Group manages insurance risk within its risk management framework as set out by the Board. The key policies and processes of mitigating
\n
these risks have been implemented, which include underwriting partnership arrangements, reinsurance excess of loss contracts, pricing
\n
policies and claims management, and administration policies.
\n
i) Underwriting and pricing risk
\n
The Group primarily underwrites motor insurance for private cars in the UK. The book consists of a large number of individual risks which are
\n
widely spread geographically, which helps to minimise concentration risk. The Group has controls in place to restrict access to its products to
\n
only those risks that it wishes to underwrite.
\n
The Group has management information to allow it to monitor underwriting performance on a continuous basis and the ability to make pricing
\n
and underwriting changes quickly. The Group undertakes detailed statistical analysis of underwriting experience for each rating factor and
\n
combination of rating factors, to enable it to adjust pricing for emerging trends.
\n
ii) Reserving risk
\n
Reserving risk is the risk that insu\ufb03cient funds have been set aside to settle claims as they fall due. The Group undertakes regular internal
\n
actuarial reviews and commissions external actuarial reviews at least once a year. These reviews estimate the future liabilities in order to
\n
consider the adequacy of the provisions.
\n
Claims which are subject to PPOs are a signi\ufb01cant source of uncertainty in the claim\u2019s reserves. Cash \ufb02ow projections are undertaken for
\n
PPO\u00a0claims to estimate the gross and net of reinsurance provisions required. PPO provisions are discounted to re\ufb02ect expectations of future
\n
investment returns and cost in\ufb02ation.
\n
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost development caused by the impact of the
\n
COVID-19 pandemic and recognised an additional claims reserve above actuarial best estimate to cover this speci\ufb01c risk. The latency risk
\n
provision in relation to the COVID-19 pandemic has been released over the year to 31 January 2023, re\ufb02ective of the improvement in the
\n
COVID-19 outlook.
\n
iii) Reinsurance
\n
The Group purchases reinsurance to reduce the impact of individual large losses or accumulations from a single catastrophic event. During
\n
2018, the Group entered into a funds-withheld quota share reinsurance contract that reinsures 80% of the Group\u2019s motor claims risks limited
\n
by a loss ratio cap of 130%, e\ufb00ective from 1 February 2019. Prior to this, the Group had a funds-withheld quota share reinsurance contract in
\n
place that reinsured 75% of the Group\u2019s motor claims risks limited by a loss ratio cap of 120%. The Group also purchases individual excess of
\n
loss protections for the motor portfolio to limit the impact of a single large claim. Similar protections are in place for all years for which the
\n
Group has underwritten motor business.
\n
Reinsurance recoveries on individual excess of loss protections can take many years to collect, particularly if a claim is subject to a PPO.
\n
This\u00a0means that the Group has exposure to reinsurance credit risk for many years. Reinsurers are therefore required to have strong credit
\n
ratings and their \ufb01nancial health is regularly monitored.
\n
iv) Sensitivities
\n
The following table demonstrates the impact on pro\ufb01t and loss and equity of a \ufb01ve-percentage point variation in the recorded loss ratio at
\n
31\u00a0January 2023 and 31 January 2022. The impact of a 5% change in claims outstanding is also shown at the same dates. The impact is shown
\n
net of reinsurance and tax at the current rate. The impact to the statement of \ufb01nancial position as at 31 January 2023 and 31 January 2022
\n
of\u00a0a\u00a00.25% percentage point change in discount rate for PPOs is also shown.
\n
2023
2022
\n
Impact of a five-percentage point change in loss ratio
+/\u2013 \u00a33.0m
+/\u2013 \u00a33.3m
\n
Impact of 5% change in claims outstanding
+/\u2013 \u00a34.1m
+/\u2013 \u00a34.1m
\n
Impact of a 0.25 percentage point change in discount rate for PPOs
+/\u2013 \u00a32.0m
+/\u2013 \u00a32.2m
Notes to the consolidated \ufb01nancial statements continued
\n
184
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
e) Operational risk
\n
E\ufb00ective operational risk management requires the Group to identify, assess, manage, monitor, report and mitigate all areas of exposure.
\n
The\u00a0Group operates across a range of segments and operational risk is inherent in all of the Group\u2019s products and services, arising from the
\n
operation of assets, from external events and dependencies, and from internal processes and systems.
\n
The Group manages its operational risk through the risk management framework agreed by the Board, and through the use of risk
\n
management tools which, together, ensure that operational risks are identi\ufb01ed, managed and mitigated to the level accepted, and that
\n
contingency processes and disaster recovery plans are in place. Regular reporting is undertaken to segment boards and includes details of
\n
new and emerging risks, as well as monitoring of existing risks. Testing of contingency processes and disaster recovery plans is undertaken to
\n
ensure the e\ufb00ectiveness of these processes. The resilience of the Group\u2019s disaster recovery plans was demonstrated during the COVID-19
\n
lockdown. The Group was able to quickly move o\ufb03ce-based colleagues to working from home arrangements, ensuring that it was able to
\n
continue to support existing and new customers through the contact centre and support functions.
\n
All of the Group\u2019s operations are dependent on: the proper functioning of its IT and communication systems; its properties and other
\n
infrastructure assets; the need to adequately maintain and protect customer and employee data and other information; and the ability of
\n
the\u00a0Group to attract and retain colleagues. Speci\ufb01c areas of operational risk by segment include:
\n
i) Cruise and Travel
\n
The Cruise and Travel segment operates two ocean cruise ships, which are the Group\u2019s largest trading assets. Risk to the operation of these
\n
cruise ships arises from the impact of mechanical or other malfunction, non-compliance with regulatory requirements, and from global
\n
weather and socio-economic events. The tour holidays operated by the segment are also a\ufb00ected by global weather and socio-economic
\n
events which impact either the Group directly, or its suppliers. The Cruise and Travel segments transact with multiple suppliers which
\n
minimises the impact of any socio-economic events a\ufb00ecting its suppliers. The COVID-19 pandemic created an unprecedented challenge for
\n
the Group and a high level of uncertainty for all companies. This uncertainty eased as COVID-19 restrictions lifted. Further detail is provided
\n
within the basis of preparation and going concern sections in Note 2.1 on pages 143-144.
\n
ii) Insurance
\n
The Insurance segment is required to comply with various operational regulatory requirements, primarily in the UK but also within Gibraltar
\n
for its Underwriting business. To the extent that signi\ufb01cant external events could increase the incidence of claims, these would place additional
\n
strain on the claims handling function but any \ufb01nancial impact of such an event is considered to be an insurance risk.
\n
iii) Other Businesses and Central Costs
\nThe \ufb01nancial services business is required to comply with various operational regulatory requirements in the UK.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24856": { "value": "a) Market risk
Market risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate due to changes in market prices. The Group
\n
is\u00a0exposed to the following market risk factors:
\n
\u2022
Foreign currency risk
\n
\u2022
Commodity price risk
\n
\u2022
Interest rate risk
\n
The Group has policies and limits approved by the Board for managing the market risk exposure. These set out the principles that the business
\n
should adhere to for managing market risk and establishing the maximum limits that the Group is willing to accept considering strategy, risk
\n
appetite and capital resources. The Group has the ability to monitor market risk exposure on a daily basis and has established limits for each
\n
component of market risk.
\n
The Group uses derivatives for hedging its exposure to foreign currency and fuel oil price risks. The market risk policy explicitly prohibits the
\n
use of derivatives for speculative purposes. For risk exposures that the Group hedges, and for which the Group applies hedge accounting,
\n
ine\ufb00ectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the
\n
credit risk of the derivative counterparty. Hedge e\ufb00ectiveness is determined at the inception of the hedge relationship, and through periodic
\n
prospective e\ufb00ectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.
\n
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
\n
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\n
i) Foreign currency risk
\n
Foreign currency risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial asset or liability will \ufb02uctuate because of changes in foreign
\n
exchange rates. The Group\u2019s exposure to the risk of changes in foreign exchange rates relates primarily to the Group\u2019s operating activities
\n
(when revenue or expense is denominated in a di\ufb00erent currency from the Group\u2019s functional currency).
\n
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
\n
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign currency
\n
exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with the level of
\n
expected foreign currency sales and purchases.
Notes to the consolidated \ufb01nancial statements continued
\n
180
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
\n
rates, with all other variables held constant. The Group\u2019s exposure to foreign currency changes for all other currencies is not material.
\n
The\u00a0impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% forex
\n
rate change in
Effect on equity
Effect on profit after tax
\n
2023
EUR
+/\u2013 \u00a32.4m
+/\u2013 \u00a30.2m
\n
USD
+/\u2013 \u00a32.5m
+/\u2013 \u00a30.2m
\n
2022
EUR
+/\u2013 \u00a32.8m
+/\u2013 \u00a30.7m
\n
USD
+/\u2013 \u00a31.7m
+/\u2013 \u00a30.4m
\n
To the extent that forward exchange contracts are held as part of e\ufb00ective hedging relationships, any change to the fair value of the instrument
\n
will be o\ufb00set by an equal and opposite change to the cost of the hedged item.
\n
ii) Commodity price risk
\n
The Group is a\ufb00ected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of fuel and gas oil to
\n
sail its ocean cruise ships and therefore require a continuous supply of fuel and gas oil. The volatility in the price of fuel and gas oil has led to the
\n
decision to enter into commodity fuel and gas oil swap contracts. These contracts are expected to reduce the volatility attributable to price
\n
\ufb02uctuations of fuel and gas oil. Managing the price volatility of forecast oil purchases is in accordance with the risk management strategy
\n
outlined by the Board of Directors.
\n
The Group manages the purchase price using forward commodity purchase contracts based on future forecast fuel oil requirements.
\n
The following table shows the sensitivity of the fair value of fuel oil swaps to changes in the underlying fuel oil price (USD) with all other variables
\n
held constant. The impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
USD \u2013 Fuel oil price
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.0m
\n
2022
USD \u2013 Fuel oil price
+/\u2013 \u00a30.5m
+/\u2013 \u00a30.0m
\n
iii) Interest rate risk
\n
Interest rate risk is de\ufb01ned in IFRS 7 as the risk that the fair value or future cash \ufb02ows of a \ufb01nancial instrument will \ufb02uctuate because of changes
\n
in market interest rates.
\n
Interest rate risk arises primarily from medium and long-term investments in \ufb01xed interest securities. The market value of these investments
\n
is a\ufb00ected by the movement in interest rates. This is managed by a policy of holding the majority of investments to maturity by closely matching
\n
asset and liability duration.
\n
It is also ensured that the investment portfolio has a diversi\ufb01ed range of investments such that there is a combination of \ufb01xed and \ufb02oating rate
\n
securities, as well as other types of investment such as Retail Price Index linked securities.
\n
Interest rate risk also arises in respect of the Group\u2019s borrowings where the interest rate attaching to those borrowings is not \ufb01xed.
\n
Where the Group perceives there to be a signi\ufb01cant interest rate risk, it manages its exposure to such risks by purchasing interest rate caps
\n
to limit the risk.
\n
The following table shows the sensitivity of \ufb01nancial assets and liabilities to changes in the Sterling Overnight Index Average (
SONIA
). The
\n
impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 1% rate
\n
change in
Effect on equity
Effect on profit after tax
\n
2023
SONIA
+/\u2013 \u00a30.4m
+/\u2013 \u00a30.4m
\n
2022
SONIA
+/\u2013 \u00a30.8m
+/\u2013 \u00a30.2m ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f24878": { "value": "i) Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash \ufb02ows of a \ufb01nancial asset or liability will \ufb02uctuate because of changes in foreign
\n
exchange rates. The Group\u2019s exposure to the risk of changes in foreign exchange rates relates primarily to the Group\u2019s operating activities
\n
(when revenue or expense is denominated in a di\ufb00erent currency from the Group\u2019s functional currency).
\n
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
\n
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign currency
\n
exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with the level of
\n
expected foreign currency sales and purchases.
Notes to the consolidated \ufb01nancial statements continued
\n
180
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
\n
rates, with all other variables held constant. The Group\u2019s exposure to foreign currency changes for all other currencies is not material.
\n
The\u00a0impact is shown net of tax at the current rate.
\n
Sensitivity of +/\u2013 5% forex
\n
rate change in
Effect on equity
Effect on profit after tax
\n
2023
EUR
+/\u2013 \u00a32.4m
+/\u2013 \u00a30.2m
\n
USD
+/\u2013 \u00a32.5m
+/\u2013 \u00a30.2m
\n
2022
EUR
+/\u2013 \u00a32.8m
+/\u2013 \u00a30.7m
\n
USD
+/\u2013 \u00a31.7m
+/\u2013 \u00a30.4m
\n
To the extent that forward exchange contracts are held as part of e\ufb00ective hedging relationships, any change to the fair value of the instrument
\nwill be o\ufb00set by an equal and opposite change to the cost of the hedged item. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25002": { "value": "b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a \ufb01nancial instrument or customer contract, leading to a \ufb01nancial
\n
loss. The Group is exposed to credit risk in relation to its \ufb01nancial and reinsurance assets, outstanding derivatives, trade and other receivables,
\n
and cash and cash equivalents. The Group assesses its counterparty exposure in relation to the investment of surplus cash, fuel oil and foreign
\n
currency contracts, and undrawn credit facilities. The Group primarily uses published credit ratings to assess counterparty strength and
\n
therefore de\ufb01ne the credit limit for each counterparty in accordance with approved treasury policies.
\n
The credit risk in respect of trade and other receivables is generally limited as payment from customers is generally required before services
\n
are provided. At 31 January 2023, the maximum exposure to credit risk for trade receivables by operating segment was as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cruise and Travel
1.8
2.3
\n
Insurance
68.0
42.6
\n
Other Businesses and Central Costs
2.1
2.3
\n
71.9
47.2
\n
The variance between the quantum of the maximum exposure to credit risk for trade receivables (above) and total of trade receivables
\n
presented in \u2018Trade and other receivables\u2019 (Note 23) primarily relates to insurance instalment gross premium debtors due from customers,
\n
for which a corresponding related creditor exists with third-party insurers for the net premium. In the event of payment obligation default by
\n
a\u00a0customer no longer on risk, the impairment of the debtor balance by the Group would lead to a corresponding reduction in the related
\n
creditor with, or refund of net premium from, the third-party insurer. In the event of payment obligation default by a customer remaining on
\n
risk, the impairment of the debtor balance by the Group would not lead to a corresponding reduction in the related creditor with, or refund
\n
of\u00a0net premium from, the third-party insurer, and the Group would bear the credit risk relating to the debtor balance.
\n
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large
\n
number of small balances. The loss allowance required for these receivables is calculated in line with the simpli\ufb01ed method for trade
\n
receivables per IFRS 9, whereby lifetime ECLs are recognised irrelevant of the credit risk. The loss allowance is based on a combination of:
\n
(i)\u00a0aged debtor analysis; (ii) historical experience of write-o\ufb00s for each receivable; (iii) any speci\ufb01c indicators of credit deterioration observed;
\n
and (iv) management judgement. Loss rates are based on the probability of a receivable progressing through successive stages of delinquency
\n
to write-o\ufb00. Financial assets are written o\ufb00 when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
\n
repayment plan with the Group.
\n
On that basis, the loss allowance as at 31 January 2023 and 31 January 2022 was determined as follows for trade receivables:
\n
31 January 2023
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
0%
7%
6%
34%
15%
66%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3139.1m
\u00a32.1m
\u00a30.2m
\u00a30.1m
\u00a30.2m
\u00a30.7m
\u00a3142.4m
\n
Loss allowance (Note 23)
\u00a30.5m
\u00a30.1m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a30.5m
\u00a31.1m
\n
31 January 2022
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
\n
Expected loss rate
1%
13%
4%
6%
4%
39%
\n
Gross carrying amount \u2013 trade
\n
receivables (Note 23)
\u00a3101.7m
\u00a31.2m
\u00a30.5m
\u00a30.4m
\u00a30.4m
\u00a310.7m
\u00a3114.9m
\n
Loss allowance (Note 23)
\u00a30.6m
\u00a30.2m
\u00a30.0m
\u00a30.0m
\u00a30.0m
\u00a34.2m
\u00a35.0m
\n
The loss allowance for trade receivables reconciles to the opening allowances as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
(restated)
\n
\u00a3m
\n
Opening loss allowance at 1 February
5.0
13.9
\n
Increase in loan loss allowance recognised in profit or loss during the year
1.3
0.7
\n
7
\n
Receivables written off during the year as uncollectable
(3.5)
(8.0)
\n
7
\n
Unused amount reversed
(1.7)
(1.6)
\n
7
\n
Closing loss allowance at 31 January
1.1
5.0
\n
7
Movements in the credit loss allowance for the year ended 31 January 2022 have been restated due to an incorrect allocation between the various movements in
\n
the\u00a0year
Notes to the consolidated \ufb01nancial statements continued
\n
182
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
20 Financial risk management objectives and policies
continued
\n
Credit risk in relation to deposits, debt securities and derivative counterparties is managed by the Group\u2019s Treasury function in accordance
\n
with the Group\u2019s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
\n
counterparty. Counterparty credit limits are reviewed on a regular basis and updated throughout the year subject to approval by the Board.
\n
The limits are set to minimise the concentration of risks and therefore mitigate \ufb01nancial loss through any potential counterparty failure.
\n
The Group is exposed to the risk of default on the reinsurance arrangements in its Insurance Underwriting business when amounts
\n
recoverable under those arrangements become due. The Group has entered into a funds-withheld quota share reinsurance contract to
\n
reduce its exposure to credit risk. Credit risk in respect of reinsurance arrangements is assessed at the time of entering into a reinsurance
\n
contract. The Group\u2019s reinsurance programme is only placed with reinsurers which meet the Group\u2019s \ufb01nancial strength criteria.
\n
The Group\u2019s maximum exposure to credit risk for the components of the statement of \ufb01nancial position at 31 January 2023 and 31 January
\n
2022 is the gross carrying amount except for derivative \ufb01nancial instruments and trade receivables. The Group\u2019s maximum exposure for
\n
\ufb01nancial guarantees and \ufb01nancial derivative instruments is noted under liquidity risk. None of the \ufb01nancial assets, other than trade receivables
\n
where a loss allowance has been determined as set out above, were impaired at the reporting date.
\n
The Group\u2019s \ufb01nancial assets and reinsurance assets are analysed by Moody\u2019s credit risk rating as follows:
\n
Ratings analysis
\n
31 January 2023
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
23.5
74.9
64.2
91.8
\u2013
254.4
\n
Money market funds
19.6
\u2013
\u2013
\u2013
\u2013
19.6
\n
Derivative assets
\u2013
\u2013
2.5
\u2013
\u2013
2.5
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
5.9
5.9
\n
43.1
74.9
66.7
91.8
5.9
282.4
\n
Reinsurance assets
\u2013
38.2
30.6
\u2013
\u2013
68.8
\n
Total
43.1
113.1
97.3
91.8
5.9
351.2
\n
31 January 2022
\n
\u00a3m
AAA
AA
A
BBB
Unrated
Total
\n
Debt securities
20.2
94.4
68.0
98.2
\u2013
280.8
\n
Money market funds
29.2
\u2013
\u2013
\u2013
\u2013
29.2
\n
Deposits with financial institutions
\u2013
\u2013
14.0
\u2013
\u2013
14.0
\n
Derivative assets
\u2013
\u2013
1.8
0.1
\u2013
1.9
\n
Loan funds
\u2013
\u2013
\u2013
\u2013
6.2
6.2
\n
49.4
94.4
83.8
98.3
6.2
332.1
\n
Reinsurance assets
\u2013
36.3
29.1
\u2013
\u2013
65.4
\n
Total
49.4
130.7
112.9
98.3
6.2
397.5", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25106": { "value": "The loss allowance for trade receivables reconciles to the opening allowances as follows:
2023
\n
\u00a3m
\n
2022
\n
(restated)
\n
\u00a3m
\n
Opening loss allowance at 1 February
5.0
13.9
\n
Increase in loan loss allowance recognised in profit or loss during the year
1.3
0.7
\n
7
\n
Receivables written off during the year as uncollectable
(3.5)
(8.0)
\n
7
\n
Unused amount reversed
(1.7)
(1.6)
\n
7
\n
Closing loss allowance at 31 January
1.1
5.0 ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25291": { "value": "c) Liquidity risk
Liquidity risk is the risk that the Group, although solvent, either does not have available su\ufb03cient \ufb01nancial resources to enable it to meet its
\n
obligations as they fall due or can secure them only at excessive cost. The Group\u2019s approach to managing liquidity risk is to evaluate current
\n
and expected liquidity requirements to ensure that it maintains su\ufb03cient reserves of cash or availability on its RCF. The Group manages
\n
its\u00a0obligations to pay claims to policyholders as they fall due by matching the maturity of investments to the expected maturity of
\n
claims\u00a0payments.
\n
The table below analyses the maturity of the Group\u2019s \ufb01nancial liabilities and insurance contract liabilities on contractual payments. The analysis
\n
of non-derivative \ufb01nancial liabilities is based on the remaining period at the reporting date to the contractual maturity date. The analysis of
\n
claims outstanding is based on the expected dates on which the claims will be settled and is before discounting, gross of reinsurance.
\n
31 January 2023
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
62.2
212.2
406.4
188.4
869.2
\n
Interest on bonds and bank loans
\u2013
33.6
28.8
46.0
13.4
121.8
\n
Insurance contract liabilities
\u2013
85.3
79.7
75.7
102.1
342.8
\n
Derivative liabilities
\u2013
4.1
1.1
\u2013
\u2013
5.2
\n
Lease liabilities
\u2013
8.9
3.5
10.0
10.2
32.6
\n
\u2013
194.1
325.3
538.1
314.1
1,371.6
Saga plc
Annual Report and Accounts 2023
183
Strategic report
Financial statements
Additional information
Governance
\n
31 January 2022
\n
\u00a3m
On demand
\n
Less than
\n
1 year
\n
1 to 2
\n
years
\n
2 to 5
\n
years
\n
Over 5
\n
years
Total
\n
Bonds and bank loans
\u2013
46.4
62.2
572.0
235.0
915.6
\n
Interest on bonds and bank loans
\u2013
32.7
31.3
65.4
20.0
149.4
\n
Insurance contract liabilities
\u2013
88.0
50.1
76.8
115.9
330.8
\n
Derivative liabilities
\u2013
3.7
0.3
\u2013
\u2013
4.0
\n
Lease liabilities
\u2013
3.9
3.6
11.4
16.4
35.3
\n
\u2013
174.7
147.5
725.6
387.3
1,435.1", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25456": { "value": "iii) Reinsurance
The Group purchases reinsurance to reduce the impact of individual large losses or accumulations from a single catastrophic event. During
\n
2018, the Group entered into a funds-withheld quota share reinsurance contract that reinsures 80% of the Group\u2019s motor claims risks limited
\n
by a loss ratio cap of 130%, e\ufb00ective from 1 February 2019. Prior to this, the Group had a funds-withheld quota share reinsurance contract in
\n
place that reinsured 75% of the Group\u2019s motor claims risks limited by a loss ratio cap of 120%. The Group also purchases individual excess of
\n
loss protections for the motor portfolio to limit the impact of a single large claim. Similar protections are in place for all years for which the
\n
Group has underwritten motor business.
\n
Reinsurance recoveries on individual excess of loss protections can take many years to collect, particularly if a claim is subject to a PPO.
\n
This\u00a0means that the Group has exposure to reinsurance credit risk for many years. Reinsurers are therefore required to have strong credit
\nratings and their \ufb01nancial health is regularly monitored. ", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25533": { "value": "21 Interests in unconsolidated structured entities
A structured entity is de\ufb01ned as an entity that has been designed so that voting, or similar, rights are not the dominant factor in deciding who
\n
controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directed by means of
\n
contractual agreements. The Group has interests in unconsolidated structured entities in the form of investment funds comprising:
\n
\u2022
bank loan funds; and
\n
\u2022
money market funds.
\n
The nature and purpose of the bank loan funds are to diversify the investment portfolio and enhance the overall yield, while maintaining an
\n
acceptable level of risk for the portfolio as a whole.
\n
Bank loan funds invest in secured loans to companies rated below investment grade.
\n
The nature and purpose of the money market funds is to provide maximum security and liquidity for the funds invested while also providing an
\n
adequate return. The money market funds used by the Group are all members of the Institutional Money Market Funds Association. They are
\n
thus required to maintain speci\ufb01ed liquidity and diversi\ufb01cation characteristics of their underlying portfolios, which comprise investment grade
\n
investments in \ufb01nancial institutions.
\n
The Group invests in unconsolidated structured entities as part of its investment activities. The Group does not sponsor any of the
\n
unconsolidated structured entities.
\n
At 31 January 2023, the Group\u2019s total interest in unconsolidated structured entities was \u00a325.5m analysed as follows:
\n
Carrying
\n
value
\n
\u00a3m
\n
Interest
\n
income
\n
\u00a3m
\n
Fair value
\n
losses
\n
\u00a3m
\n
Loan funds
5.9
0.2
(0.3)
\n
Money market funds
19.6
0.5
\u2013
\n
These investments are typically managed under credit risk management as described in Note 20. The Group\u2019s maximum exposure to loss on
\n
the interests presented above is the carrying amount of the Group\u2019s investments. No further loss can be made by the Group in relation to
\n
these investments. For this reason, the total assets of the entities are not considered meaningful for the purposes of understanding the
\nrelated risks and so have not been presented.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInUnconsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25591": { "value": "22 Inventories
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Raw materials
0.7
0.3
\n
Technical stocks
4.4
2.3
\n
Finished goods
1.9
3.7
\n
7.0
6.3
\n
Technical stocks are spare parts for the Group\u2019s ocean cruise ships. Finished goods primarily relate to ocean cruise ship fuel, food, bar and
\nsundry stocks.", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25612": { "value": "23 Trade and other receivables
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Trade receivables (Note 20b)
142.4
114.9
\n
Loss allowance (Note 20b)
(1.1)
(5.0)
\n
141.3
109.9
\n
Other receivables
23.4
17.3
\n
Prepayments
25.8
16.8
\n
Contract cost assets (Note 3b)
2.5
2.6
\n
Deferred acquisition costs
13.9
18.2
\n
Other taxes and social security costs
5.6
4.7
\n
212.5
169.5
\n
An explanation of how the Group manages and measures the credit risk of trade receivables can be found in Note 20b. The Group expects
\n
trade and other receivables to be normally settled within 12 months. Due to the short-term nature of the current receivables, their carrying
\namount is considered to be the same as their fair value.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25644": { "value": "The Group expects trade and other receivables to be normally settled within 12 months", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25650": { "value": "24 Trust accounts
The Civil Aviation Authority (
CAA
) and Association of British Travel Agents (
ABTA
) regulated the River Cruise and Travel businesses
\n
conducted by the Group in the UK during the year. To comply with its regulatory obligations, the Group is required to arrange \ufb01nancial security
\n
to protect customer monies, in addition to making ATOL Protection Contributions, which the Group pays into the Air Travel Trust Fund.
\n
From 25 September 2020, the Group changed its method of customer protection for ATOL licensable bookings from \ufb01nancial security
\n
bonds to paying customer monies into trust (
Trust Accounting
). Under Trust Accounting, all monies the Group receives from customers in
\n
respect of ATOL licensable holiday packages sold, are held in trust until such time as the Group has ful\ufb01lled its obligations to the customer. The
\n
trust is administered and controlled by an independent Trustee, PT Trustees Limited. Interest arising from the funds held on trust belongs to
\n
the Group.
\n
With the introduction of Trust Accounting in September 2020, the Group is no longer required to hold \ufb01nancial security bonds in relation to
\nATOL bookings. In relation to ABTA bookings a bonding requirement still exists (Note 37c).", "dimensions": { "concept": "saga:DisclosureOfTrustAccountsExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25651": { "value": "24 Trust accounts
The Civil Aviation Authority (
CAA
) and Association of British Travel Agents (
ABTA
) regulated the River Cruise and Travel businesses
\n
conducted by the Group in the UK during the year. To comply with its regulatory obligations, the Group is required to arrange \ufb01nancial security
\n
to protect customer monies, in addition to making ATOL Protection Contributions, which the Group pays into the Air Travel Trust Fund.
\n
From 25 September 2020, the Group changed its method of customer protection for ATOL licensable bookings from \ufb01nancial security
\n
bonds to paying customer monies into trust (
Trust Accounting
). Under Trust Accounting, all monies the Group receives from customers in
\n
respect of ATOL licensable holiday packages sold, are held in trust until such time as the Group has ful\ufb01lled its obligations to the customer. The
\n
trust is administered and controlled by an independent Trustee, PT Trustees Limited. Interest arising from the funds held on trust belongs to
\n
the Group.
\n
With the introduction of Trust Accounting in September 2020, the Group is no longer required to hold \ufb01nancial security bonds in relation to
\nATOL bookings. In relation to ABTA bookings a bonding requirement still exists (Note 37c). ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25673": { "value": "25 Cash and cash equivalents
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Cash at bank and in hand
52.0
174.6
\n
Short-term deposits
124.5
52.3
\n
Cash and short-term deposits
176.5
226.9
\n
Money market funds
19.6
29.2
\n
Bank overdraft
(4.4)
(0.4)
\n
Cash and cash equivalents in the cash flow statement
191.7
255.7
\n
Included within cash and cash equivalents are amounts held by the Group\u2019s River Cruise, Travel and Insurance businesses, which are subject to
\n
contractual or regulatory restrictions (Note 35). These amounts held are not readily available to be used for other purposes within the Group
\n
and total \u00a334.2m (2022: \u00a369.1m). Available Cash
\n
8
\n
excludes these amounts.
\n
Cash at bank earns interest at \ufb02oating rates based on daily bank deposit rates. Short-term deposits are typically made for varying periods
\n
of\u00a0between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
\n
short-term deposit rates.
\n
The bank overdraft is subject to a guarantee in favour of the Group\u2019s bankers and is limited to the amount drawn. The bank overdraft is
\nrepayable on demand.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25731": { "value": "26 Trade and other payables
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Trade payables
140.1
124.8
\n
Other payables
2.9
5.8
\n
Other taxes and social security costs
8.7
9.4
\n
Assets in the course of construction
4.5
3.8
\n
Accruals
41.5
55.9
\n
197.7
199.7
\n
All trade and other payables are current in nature. The carrying amounts of trade and other payables are considered to be the same as their
\nfair values, due to their short-term nature. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25732": { "value": "26 Trade and other payables
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Trade payables
140.1
124.8
\n
Other payables
2.9
5.8
\n
Other taxes and social security costs
8.7
9.4
\n
Assets in the course of construction
4.5
3.8
\n
Accruals
41.5
55.9
\n
197.7
199.7
\n
All trade and other payables are current in nature. The carrying amounts of trade and other payables are considered to be the same as their
\nfair values, due to their short-term nature. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25757": { "value": "All trade and other payables are current in nature. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25762": { "value": "27 Retirement benefit schemes
The Group operates retirement bene\ufb01t schemes for the employees of the Group consisting of de\ufb01ned contribution plans and a legacy de\ufb01ned
\n
bene\ufb01t plan.
\n
In July 2021, following the completion of a review of the Group\u2019s pension arrangements, a consultation process with active members
\n
was launched. The consultation process concluded during October 2021, and with e\ufb00ect from 31 October 2021, the Group closed both its
\n
existing schemes to future accrual: the Saga Pension Scheme (its de\ufb01ned bene\ufb01t plan) and the Saga Workplace Pension Plan (its de\ufb01ned
\n
contribution plan). In their place, the Group launched a new de\ufb01ned contribution pension scheme arrangement, operated as a Master Trust.
\n
This move served to reduce the risk of further de\ufb01cits developing in the future on the de\ufb01ned bene\ufb01t scheme, while moving to a fairer
\n
scheme for all colleagues.
\n
a) Defined contribution plans
\n
There are three de\ufb01ned contribution schemes in the Group at 31 January 2023 (2022: three). The total charge for the year in respect of the
\n
de\ufb01ned contribution schemes was \u00a39.9m (2022: \u00a34.5m). The assets of these schemes are held separately from those of the Group in funds
\n
under the control of Trustees.
\n
b) Defined benefit plan
\n
The Group operated a funded de\ufb01ned bene\ufb01t scheme, the Saga Pension Scheme, which was closed to future accrual on 31 October 2021.
\n
From 1 November 2021, members moved from active to deferred status, with future indexation of deferred pensions before retirement
\n
measured by reference to the Consumer Price Index. During the prior year, a net expense of \u00a32.0m was recognised as a past service cost
\n
(within administrative and selling expenses) relating to the closure. The assets of the scheme are held separately from those of the Group
\n
in\u00a0independently administered funds.
\n
The scheme is governed by the employment laws of the UK. The level of bene\ufb01ts provided depends on the member\u2019s length of service and
\n
average salary while a member of the scheme. The scheme requires contributions to be made to a separately administered fund which is
\n
governed by a Board of Trustees and consists of an equal number of employer and employee representatives. The Board of Trustees is
\n
responsible for the administration of the plan assets and for the de\ufb01nition of the investment strategy.
\n
The long-term investment objectives of the Trustees and the Group are to limit the risk of the assets failing to meet the liabilities of the scheme
\n
over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the scheme.
\n
To\u00a0meet those objectives, the scheme\u2019s assets are invested in di\ufb00erent categories of assets, with di\ufb00erent maturities designed to match
\n
liabilities as they fall due. The investment strategy will continue to evolve over time and is expected to match the liability pro\ufb01le increasingly
\n
closely. The pension liability is exposed to in\ufb02ation rate risks and changes in the life expectancy of members. As the plan assets include
\n
investments in quoted equities, the Group is exposed to equity market risk. The Group has provided super security to the Trustees of the
\n
scheme, which ranks before any liabilities under the senior facilities agreement (as detailed in Note 30). The value of the security is capped
\n
at\u00a0\u00a347.5m.
\n
The fair value of the assets and present value of the obligations of the Saga de\ufb01ned bene\ufb01t scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Fair value of scheme assets
224.1
412.0
\n
Present value of defined benefit obligation
(236.2)
(410.9)
\n
Defined benefit scheme (liability)/asset
(12.1)
1.1
\n
The present values of the de\ufb01ned bene\ufb01t obligation, and any related current service and past service costs, have been measured using the
\n
projected unit credit valuation method.
Saga plc
Annual Report and Accounts 2023
187
Strategic report
Financial statements
Additional information
Governance
\n
During the year ended 31 January 2023, the net position of the Saga Scheme has decreased by \u00a313.2m, resulting in an overall scheme de\ufb01cit
\n
of \u00a312.1m. The movements observed in the scheme\u2019s assets and obligations have been impacted signi\ufb01cantly by macroeconomic factors
\n
during the year where, at a global level, there have been rising in\ufb02ation and cost of living pressures, as well as shifts in long-term market yields.
\n
The present value of de\ufb01ned bene\ufb01t obligations decreased by \u00a3174.7m to \u00a3236.2m, primarily due to a 245bps increase in the discount rate
\n
which is based on increases in long-term trend corporate bond yields. The fair value of scheme assets decreased by \u00a3187.9m to \u00a3224.1m.
\n
The\u00a0decrease in asset values has been largely driven by the sharp rise in interest rates in the year. Liability driven investment (
LDI
) strategies
\n
resulted in assets being sold in order to meet the liquidity calls required by the fall in leveraged LDI values. The Saga scheme has a hedged
\n
component, but this is relative to gilt yields, rather than corporate bond yields, which are used to derive the de\ufb01ned bene\ufb01t obligation. A \u00a35.8m
\n
de\ufb01cit funding contribution was paid by the Group in February 2022 in relation to a recovery plan agreed under the latest triennial valuation
\n
of\u00a0the scheme as at 31 January 2020.
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2023:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
liability
\n
\u00a3m
\n
1 February 2022
412.0
(410.9)
1.1
\n
Pension cost charge to income statement
\n
Net interest
8.9
(8.8)
0.1
\n
Included in income statement
8.9
(8.8)
0.1
\n
Benefits paid
(6.8)
6.8
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(195.8)
\u2013
(195.8)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
184.3
184.3
\n
Experience adjustments
\u2013
(7.6)
(7.6)
\n
Sub-total included in OCI
(202.6)
183.5
(19.1)
\n
Total contributions by employer
5.8
\u2013
5.8
\n
At 31 January 2023
224.1
(236.2)
(12.1)
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2022:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
(liability)/
\n
surplus
\n
\u00a3m
\n
At 1 February 2021
411.2
(415.5)
(4.3)
\n
Pension cost charge to income statement
\n
Current service cost paid in cash during the period
\u2013
(3.9)
(3.9)
\n
Non-cash current service cost uplift
\u2013
(1.6)
(1.6)
\n
Total current service cost
\u2013
(5.5)
(5.5)
\n
Past service costs
\u2013
(2.0)
(2.0)
\n
Net interest
5.9
(5.9)
\u2013
\n
Included in income statement
5.9
(13.4)
(7.5)
\n
Benefits paid
(7.5)
7.5
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(5.8)
\u2013
(5.8)
\n
Actuarial changes arising from changes in demographic assumptions
\u2013
(5.3)
(5.3)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
16.2
16.2
\n
Experience adjustments
\u2013
(0.3)
(0.3)
\n
Sub-total included in OCI
(13.3)
18.1
4.8
\n
Total contributions by employer
8.2
(0.1)
8.1
\n
At 31 January 2022
412.0
(410.9)
1.1
Notes to the consolidated \ufb01nancial statements continued
\n
188
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
27 Retirement benefit schemes
continued
\n
b) Defined benefit plan
continued
\n
The major categories of assets in the scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Equities
16.4
50.2
\n
Bonds
92.2
159.4
\n
Property and alternatives
74.6
58.4
\n
Hedge funds
28.7
133.5
\n
Insured annuities
3.9
5.3
\n
Cash and other
8.3
5.2
\n
Total
224.1
412.0
\n
Equities and bonds are all quoted in active markets, while property and hedge funds are not. The impact of COVID-19 over the past three years
\n
and the Russia-Ukraine con\ufb02ict have increased the level of uncertainty and volatility in global \ufb01nancial markets. While the ultimate extent of the
\n
e\ufb00ect of this on the asset portfolio is not possible to quantify at this time, management has used the latest available fund pricing data to derive
\n
the valuations of assets which are not quoted in active markets.
\n
Within bonds is a hedging component totalling \u00a385.5m (2022: \u00a3118.7m).
\n
The pension scheme has not invested in any of the Group\u2019s own \ufb01nancial instruments.
\n
The principal assumptions used in determining pension bene\ufb01t obligations for the scheme are shown below:
\n
2023
2022
\n
Real rate of increase of pensions in payment
3.05%
3.45%
\n
Real rate of increase of pensions in deferment
3.00%
3.30%
\n
Discount rate \u2013 pensioner
4.65%
2.20%
\n
Discount rate \u2013 non-pensioner
4.60%
2.15%
\n
Inflation \u2013 pensioner
3.20%
3.80%
\n
Inflation \u2013 non-pensioner
3.15%
3.60%
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Male
27.8 yrs
27.8 yrs
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Female
29.5 yrs
29.5 yrs
\n
The discount rate assumption is used to calculate the de\ufb01ned bene\ufb01t obligation. The rate is derived from high quality corporate bonds,
\n
generally regarded as those with an AA rating. Management have opted to use the XPS Single Agency curve for deriving the discount rate
\n
assumptions at January 2023, rather than deriving the rate from the Merrill Lynch AA yield curve which was used for the 31 January 2022
\n
valuation. The impact of this change in methodology is estimated at a \u00a310.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
In addition, the scheme lost some of its in\ufb02ation hedge during the year and as a result management have made an allowance for in\ufb02ation risk
\n
premium of 0.2% (2022: nil). The impact of the change was an estimated \u00a35.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
Mortality assumptions are set using standard tables based on speci\ufb01c experience, where available, and allow for future mortality improvements.
\n
The scheme assumption is that a member currently aged 60 will live on average for a further 26.2 years if they are male and on average for a
\n
further 28.0 years if they are female.
\n
A quantitative sensitivity analysis for signi\ufb01cant assumptions as at 31 January 2023 and their impact on the scheme liabilities is as follows:
\n
Assumptions
Discount rate
Future inflation
Life expectancy
\n
Sensitivity
+/\u2013 0.25%
+/\u2013 0.25%
+/\u2013 1 year
\n
Increase
Decrease
Increase
Decrease
Increase
Decrease
\n
Impact \u00a3m
(12.3)
13.2
5.7
(6.1)
8.0
(9.2)
\n
Note: a positive impact represents an increase in the net de\ufb01ned bene\ufb01t liability.
\n
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity
\n
of the de\ufb01ned bene\ufb01t obligation to signi\ufb01cant actuarial assumptions, the same method has been applied as when calculating the pension
\n
liability recognised within the statement of \ufb01nancial position. The methods and types of assumption used in preparing the sensitivity analysis
\n
did not change compared to the prior period.
\n
The expected contribution in respect of the accrual of bene\ufb01ts payable to the scheme for the next \ufb01nancial year is \u00a3nil and the average
\n
duration of the de\ufb01ned bene\ufb01t plan obligation at the end of the reporting period has reduced from 22 to 23 years down to 20 to 21 years,
\n
due\u00a0to the signi\ufb01cant rise in the discount rate assumption. Formal actuarial valuations take place every three years for the scheme. The
\n
assumptions adopted for actuarial valuations are determined by the Trustees, agreed with the Group and are normally more prudent than
\n
the\u00a0assumptions adopted for IAS 19 purposes, which are best estimate. Where a funding de\ufb01cit is identi\ufb01ed, the Group and the Trustees
\n
may\u00a0agree a de\ufb01cit recovery plan to pay additional contributions above those needed to fund the scheme.
Saga plc
Annual Report and Accounts 2023
189
Strategic report
Financial statements
Additional information
Governance
\n
The Group\u2019s latest triennial valuation of the Saga Scheme de\ufb01ned bene\ufb01t plan was as at 31 January 2020. Saga plc, and certain guarantor
\n
subsidiaries in the Group, have provided a super security to the Trustees of the scheme, which ranks before any liabilities under the Group\u2019s
\n
bank facilities. The value of the security is capped at \u00a347.5m under the 2020 triennial valuation. Further to this valuation, a recovery plan was
\n
also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of \u00a35.8m during the year ended
\n
31\u00a0January 2023 and will make annual payments of \u00a35.8m totalling a further \u00a329.0m over the next \ufb01ve \ufb01nancial years, with the last payment
\n
being made on 29 February 2027. The total expected contributions in the year ending 31 January 2024 are \u00a35.8m and entirely relate to the
\n
\u00a35.8m recovery payment.
\n
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set periods
\n
of\u00a0time. Dependent upon the level of return on the scheme\u2019s assets between 31 January 2020 and 31 January 2027, any amount in the escrow
\naccount will be released to either the Group, or the scheme, by 30 June 2027.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25773": { "value": "a) Defined contribution plans
There are three de\ufb01ned contribution schemes in the Group at 31 January 2023 (2022: three). The total charge for the year in respect of the
\n
de\ufb01ned contribution schemes was \u00a39.9m (2022: \u00a34.5m). The assets of these schemes are held separately from those of the Group in funds
\nunder the control of Trustees.", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f25780": { "value": "b) Defined benefit plan
The Group operated a funded de\ufb01ned bene\ufb01t scheme, the Saga Pension Scheme, which was closed to future accrual on 31 October 2021.
\n
From 1 November 2021, members moved from active to deferred status, with future indexation of deferred pensions before retirement
\n
measured by reference to the Consumer Price Index. During the prior year, a net expense of \u00a32.0m was recognised as a past service cost
\n
(within administrative and selling expenses) relating to the closure. The assets of the scheme are held separately from those of the Group
\n
in\u00a0independently administered funds.
\n
The scheme is governed by the employment laws of the UK. The level of bene\ufb01ts provided depends on the member\u2019s length of service and
\n
average salary while a member of the scheme. The scheme requires contributions to be made to a separately administered fund which is
\n
governed by a Board of Trustees and consists of an equal number of employer and employee representatives. The Board of Trustees is
\n
responsible for the administration of the plan assets and for the de\ufb01nition of the investment strategy.
\n
The long-term investment objectives of the Trustees and the Group are to limit the risk of the assets failing to meet the liabilities of the scheme
\n
over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the scheme.
\n
To\u00a0meet those objectives, the scheme\u2019s assets are invested in di\ufb00erent categories of assets, with di\ufb00erent maturities designed to match
\n
liabilities as they fall due. The investment strategy will continue to evolve over time and is expected to match the liability pro\ufb01le increasingly
\n
closely. The pension liability is exposed to in\ufb02ation rate risks and changes in the life expectancy of members. As the plan assets include
\n
investments in quoted equities, the Group is exposed to equity market risk. The Group has provided super security to the Trustees of the
\n
scheme, which ranks before any liabilities under the senior facilities agreement (as detailed in Note 30). The value of the security is capped
\n
at\u00a0\u00a347.5m.
\n
The fair value of the assets and present value of the obligations of the Saga de\ufb01ned bene\ufb01t scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Fair value of scheme assets
224.1
412.0
\n
Present value of defined benefit obligation
(236.2)
(410.9)
\n
Defined benefit scheme (liability)/asset
(12.1)
1.1
\n
The present values of the de\ufb01ned bene\ufb01t obligation, and any related current service and past service costs, have been measured using the
\n
projected unit credit valuation method.
Saga plc
Annual Report and Accounts 2023
187
Strategic report
Financial statements
Additional information
Governance
\n
During the year ended 31 January 2023, the net position of the Saga Scheme has decreased by \u00a313.2m, resulting in an overall scheme de\ufb01cit
\n
of \u00a312.1m. The movements observed in the scheme\u2019s assets and obligations have been impacted signi\ufb01cantly by macroeconomic factors
\n
during the year where, at a global level, there have been rising in\ufb02ation and cost of living pressures, as well as shifts in long-term market yields.
\n
The present value of de\ufb01ned bene\ufb01t obligations decreased by \u00a3174.7m to \u00a3236.2m, primarily due to a 245bps increase in the discount rate
\n
which is based on increases in long-term trend corporate bond yields. The fair value of scheme assets decreased by \u00a3187.9m to \u00a3224.1m.
\n
The\u00a0decrease in asset values has been largely driven by the sharp rise in interest rates in the year. Liability driven investment (
LDI
) strategies
\n
resulted in assets being sold in order to meet the liquidity calls required by the fall in leveraged LDI values. The Saga scheme has a hedged
\n
component, but this is relative to gilt yields, rather than corporate bond yields, which are used to derive the de\ufb01ned bene\ufb01t obligation. A \u00a35.8m
\n
de\ufb01cit funding contribution was paid by the Group in February 2022 in relation to a recovery plan agreed under the latest triennial valuation
\n
of\u00a0the scheme as at 31 January 2020.
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2023:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
liability
\n
\u00a3m
\n
1 February 2022
412.0
(410.9)
1.1
\n
Pension cost charge to income statement
\n
Net interest
8.9
(8.8)
0.1
\n
Included in income statement
8.9
(8.8)
0.1
\n
Benefits paid
(6.8)
6.8
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(195.8)
\u2013
(195.8)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
184.3
184.3
\n
Experience adjustments
\u2013
(7.6)
(7.6)
\n
Sub-total included in OCI
(202.6)
183.5
(19.1)
\n
Total contributions by employer
5.8
\u2013
5.8
\n
At 31 January 2023
224.1
(236.2)
(12.1)
\n
The following table summarises the components of the net bene\ufb01t expense recognised in the income statement, OCI and amounts
\n
recognised in the statement of \ufb01nancial position for the scheme for the year ended 31 January 2022:
\n
Fair value of
\n
scheme
\n
assets
\n
\u00a3m
\n
Defined
\n
benefit
\n
obligation
\n
\u00a3m
\n
Defined
\n
benefit
\n
scheme
\n
(liability)/
\n
surplus
\n
\u00a3m
\n
At 1 February 2021
411.2
(415.5)
(4.3)
\n
Pension cost charge to income statement
\n
Current service cost paid in cash during the period
\u2013
(3.9)
(3.9)
\n
Non-cash current service cost uplift
\u2013
(1.6)
(1.6)
\n
Total current service cost
\u2013
(5.5)
(5.5)
\n
Past service costs
\u2013
(2.0)
(2.0)
\n
Net interest
5.9
(5.9)
\u2013
\n
Included in income statement
5.9
(13.4)
(7.5)
\n
Benefits paid
(7.5)
7.5
\u2013
\n
Return on plan assets (excluding amounts included in net interest expense)
(5.8)
\u2013
(5.8)
\n
Actuarial changes arising from changes in demographic assumptions
\u2013
(5.3)
(5.3)
\n
Actuarial changes arising from changes in financial assumptions
\u2013
16.2
16.2
\n
Experience adjustments
\u2013
(0.3)
(0.3)
\n
Sub-total included in OCI
(13.3)
18.1
4.8
\n
Total contributions by employer
8.2
(0.1)
8.1
\n
At 31 January 2022
412.0
(410.9)
1.1
Notes to the consolidated \ufb01nancial statements continued
\n
188
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
27 Retirement benefit schemes
continued
\n
b) Defined benefit plan
continued
\n
The major categories of assets in the scheme are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Equities
16.4
50.2
\n
Bonds
92.2
159.4
\n
Property and alternatives
74.6
58.4
\n
Hedge funds
28.7
133.5
\n
Insured annuities
3.9
5.3
\n
Cash and other
8.3
5.2
\n
Total
224.1
412.0
\n
Equities and bonds are all quoted in active markets, while property and hedge funds are not. The impact of COVID-19 over the past three years
\n
and the Russia-Ukraine con\ufb02ict have increased the level of uncertainty and volatility in global \ufb01nancial markets. While the ultimate extent of the
\n
e\ufb00ect of this on the asset portfolio is not possible to quantify at this time, management has used the latest available fund pricing data to derive
\n
the valuations of assets which are not quoted in active markets.
\n
Within bonds is a hedging component totalling \u00a385.5m (2022: \u00a3118.7m).
\n
The pension scheme has not invested in any of the Group\u2019s own \ufb01nancial instruments.
\n
The principal assumptions used in determining pension bene\ufb01t obligations for the scheme are shown below:
\n
2023
2022
\n
Real rate of increase of pensions in payment
3.05%
3.45%
\n
Real rate of increase of pensions in deferment
3.00%
3.30%
\n
Discount rate \u2013 pensioner
4.65%
2.20%
\n
Discount rate \u2013 non-pensioner
4.60%
2.15%
\n
Inflation \u2013 pensioner
3.20%
3.80%
\n
Inflation \u2013 non-pensioner
3.15%
3.60%
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Male
27.8 yrs
27.8 yrs
\n
Life expectancy of a member retiring in 20 years\u2019 time \u2013 Female
29.5 yrs
29.5 yrs
\n
The discount rate assumption is used to calculate the de\ufb01ned bene\ufb01t obligation. The rate is derived from high quality corporate bonds,
\n
generally regarded as those with an AA rating. Management have opted to use the XPS Single Agency curve for deriving the discount rate
\n
assumptions at January 2023, rather than deriving the rate from the Merrill Lynch AA yield curve which was used for the 31 January 2022
\n
valuation. The impact of this change in methodology is estimated at a \u00a310.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
In addition, the scheme lost some of its in\ufb02ation hedge during the year and as a result management have made an allowance for in\ufb02ation risk
\n
premium of 0.2% (2022: nil). The impact of the change was an estimated \u00a35.0m reduction in the de\ufb01ned bene\ufb01t obligation as at 31 January 2023.
\n
Mortality assumptions are set using standard tables based on speci\ufb01c experience, where available, and allow for future mortality improvements.
\n
The scheme assumption is that a member currently aged 60 will live on average for a further 26.2 years if they are male and on average for a
\n
further 28.0 years if they are female.
\n
A quantitative sensitivity analysis for signi\ufb01cant assumptions as at 31 January 2023 and their impact on the scheme liabilities is as follows:
\n
Assumptions
Discount rate
Future inflation
Life expectancy
\n
Sensitivity
+/\u2013 0.25%
+/\u2013 0.25%
+/\u2013 1 year
\n
Increase
Decrease
Increase
Decrease
Increase
Decrease
\n
Impact \u00a3m
(12.3)
13.2
5.7
(6.1)
8.0
(9.2)
\n
Note: a positive impact represents an increase in the net de\ufb01ned bene\ufb01t liability.
\n
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity
\n
of the de\ufb01ned bene\ufb01t obligation to signi\ufb01cant actuarial assumptions, the same method has been applied as when calculating the pension
\n
liability recognised within the statement of \ufb01nancial position. The methods and types of assumption used in preparing the sensitivity analysis
\n
did not change compared to the prior period.
\n
The expected contribution in respect of the accrual of bene\ufb01ts payable to the scheme for the next \ufb01nancial year is \u00a3nil and the average
\n
duration of the de\ufb01ned bene\ufb01t plan obligation at the end of the reporting period has reduced from 22 to 23 years down to 20 to 21 years,
\n
due\u00a0to the signi\ufb01cant rise in the discount rate assumption. Formal actuarial valuations take place every three years for the scheme. The
\n
assumptions adopted for actuarial valuations are determined by the Trustees, agreed with the Group and are normally more prudent than
\n
the\u00a0assumptions adopted for IAS 19 purposes, which are best estimate. Where a funding de\ufb01cit is identi\ufb01ed, the Group and the Trustees
\n
may\u00a0agree a de\ufb01cit recovery plan to pay additional contributions above those needed to fund the scheme.
Saga plc
Annual Report and Accounts 2023
189
Strategic report
Financial statements
Additional information
Governance
\n
The Group\u2019s latest triennial valuation of the Saga Scheme de\ufb01ned bene\ufb01t plan was as at 31 January 2020. Saga plc, and certain guarantor
\n
subsidiaries in the Group, have provided a super security to the Trustees of the scheme, which ranks before any liabilities under the Group\u2019s
\n
bank facilities. The value of the security is capped at \u00a347.5m under the 2020 triennial valuation. Further to this valuation, a recovery plan was
\n
also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of \u00a35.8m during the year ended
\n
31\u00a0January 2023 and will make annual payments of \u00a35.8m totalling a further \u00a329.0m over the next \ufb01ve \ufb01nancial years, with the last payment
\n
being made on 29 February 2027. The total expected contributions in the year ending 31 January 2024 are \u00a35.8m and entirely relate to the
\n
\u00a35.8m recovery payment.
\n
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set periods
\n
of\u00a0time. Dependent upon the level of return on the scheme\u2019s assets between 31 January 2020 and 31 January 2027, any amount in the escrow
\naccount will be released to either the Group, or the scheme, by 30 June 2027.", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26124": { "value": "
The Group\u2019s latest triennial valuation of the Saga Scheme de\ufb01ned bene\ufb01t plan was as at 31 January 2020. Saga plc, and certain guarantor
\n
subsidiaries in the Group, have provided a super security to the Trustees of the scheme, which ranks before any liabilities under the Group\u2019s
\n
bank facilities. The value of the security is capped at \u00a347.5m under the 2020 triennial valuation. Further to this valuation, a recovery plan was
\n
also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of \u00a35.8m during the year ended
\n
31\u00a0January 2023 and will make annual payments of \u00a35.8m totalling a further \u00a329.0m over the next \ufb01ve \ufb01nancial years, with the last payment
\n
being made on 29 February 2027. The total expected contributions in the year ending 31 January 2024 are \u00a35.8m and entirely relate to the
\n
\u00a35.8m recovery payment.
\n
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set periods
\n
of\u00a0time. Dependent upon the level of return on the scheme\u2019s assets between 31 January 2020 and 31 January 2027, any amount in the escrow
\n
account will be released to either the Group, or the scheme, by 30 June 2027.
Bonds, RCF and term loan
\n
At 31 January 2023, the Group\u2019s \ufb01nancing facilities consisted of a \u00a3150.0m seven-year senior unsecured bond (repayable May 2024),
\n
a\u00a0\u00a3250.0m \ufb01ve-year senior unsecured bond (repayable July 2026) and a \u00a350.0m \ufb01ve-year RCF (expiry in May 2025). The bonds are listed
\n
on\u00a0the Irish Stock Exchange and are guaranteed by Saga Services Limited and Saga Mid Co Limited.
\n
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026 corporate bond is incurred at an
\n
annual interest rate of 5.5%. Interest payable on the Group\u2019s RCF, if drawn down, is incurred at a variable rate of SONIA plus a bank margin
\n
which is linked to the Group\u2019s leverage ratio.
\n
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF arrangement to remove certain
\n
clauses that were introduced during the COVID-19 pandemic and reduce the aggregate facility cost. The amendments to the RCF include:
\n
\u2022
removal of the \u00a340.0m minimum liquidity requirement;
\n
\u2022
removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024 bond has not been redeemed prior to
\n
this date; and
\n
\u2022
reduction of the RCF commitment from \u00a3100.0m to \u00a350.0m.
\n
In addition, dividends remain restricted while leverage (excluding Cruise) is above 3.0x.
\n
Subsequent to the above, the Group had further discussions with its lending banks behind the RCF and agreed the following amendments to
\n
the facility:
\n
\u2022
The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment of the 2024 bond if leverage exceeds
\n
5.5x, or liquidity is below \u00a3170m.
\n
\u2022
During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
\n
\u2022
Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
\n
\u2022
Amendments to the leverage and interest cover covenants attached to the facility, as follows:
\n
Leverage
\n
(excl. Ocean Cruise)
\n
Interest
\n
cover
\n
31 January 2023
4.75x
2.5x
\n
30 April 2023
6.75x
n/a
\n
31 July 2023
6.75x
2.5x
\n
31 October 2023
6.75x
n/a
\n
31 January 2024
5.5x
2.75x
\n
30 April 2024
5.5x
n/a
\n
31 July 2024
5.5x
3.0x
\n
31 October 2024
5.5x
n/a
\n
31 January 2025
4.75x
3.0x
\n
At 31 January 2023, the Group\u2019s \u00a350.0m RCF remained undrawn. Accrued interest payable on the Group\u2019s bonds at 31 January 2023 is
\n
\u00a32.2m (2022: \u00a32.8m).
\n
During the year ended 31 January 2022, the Group repaid its \u00a3200.0m \ufb01ve-year term loan (repayable May 2023) in full. Interest was incurred
\n
at a variable rate of London Inter-Bank O\ufb00ered Rate (LIBOR, since replaced by SONIA) plus a bank margin which was linked to the Group\u2019s
\n
leverage ratio.
Ocean cruise ship loans
\n
In June 2019, the Group drew down \u00a3245.0m of \ufb01nancing for its ocean cruise ship, Spirit of Discovery. The \ufb01nancing represents a 12-year
\n
\ufb01xed-rate sterling loan, secured against the Spirit of Discovery cruise ship asset, and backed by an export credit guarantee. The initial loan was
\n
repayable in 24 broadly equal instalments, with the \ufb01rst payment of \u00a310.2m paid in December 2019.
\n
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the Group\u2019s ship facilities. The Group\u2019s
\n
lenders agreed to a deferral of \u00a332.1m in principal payments under the ship facilities that were due up to 31 March 2021. These deferred
\n
amounts were to be paid between June 2021 and December 2024 for Spirit of Discovery and between September 2021 and March 2025
\n
for\u00a0Spirit of Adventure, and interest remained payable.
\n
On 29 September 2020, the Group drew down \u00a3280.8m of \ufb01nancing for its ocean cruise ship, Spirit of Adventure. The \ufb01nancing, secured
\n
against the Spirit of Adventure cruise ship asset, represents a 12-year \ufb01xed-rate sterling loan, backed by an export credit guarantee. The loan
\n
is repayable in 24 broadly equal instalments, with the \ufb01rst payment originally due six months after delivery in March 2021, but initially deferred
\n
to September 2021 as a result of the debt holiday described above.
\n
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise ship facilities. As part of an
\n
industry-wide package of measures to support the cruise industry, an extension of the existing debt deferral was agreed to 31 March 2022.
\n
The key terms of this deferral were:
\n
\u2022
all principal payments to 31 March 2022 (\u00a351.8m) deferred and repaid over five years;
\n
\u2022
all financial covenants until 31 March 2022 waived; and
\n
\u2022
dividends remain restricted while the deferred principal is outstanding.
\n
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 41). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Interest on the Spirit of Discovery ship loan is incurred at an e\ufb00ective annual interest rate of 4.31% (including arrangement and commitment
\n
fees). Interest on the Spirit of Adventure ship loan is incurred at an e\ufb00ective annual interest rate of 3.30% (including arrangement and
\n
commitment fees). Interest payable on the Group\u2019s ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
\n
Accrued interest payable on the Group\u2019s ocean cruise ship loans at 31 January 2023 is \u00a33.3m (2022: \u00a33.1m).
\n
Also since the year end, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga plc,
\n
Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of the
\n
loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is subject
\n
to\u00a0a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the facility
\n
is\u00a0payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024 and
\n
31\u00a0December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26140": { "value": "28 Insurance contract liabilities and reinsurance assets
The analysis of gross and net insurance liabilities is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross
\n
Claims outstanding
285.2
292.8
\n
Provision for unearned premiums
83.1
93.9
\n
Total gross liabilities
368.3
386.7
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Recoverable from reinsurers
\n
Claims outstanding
62.1
59.1
\n
Provision for unearned premiums
6.7
6.3
\n
Total reinsurers\u2019 share of insurance liabilities (as presented on the face of the statement of financial position)
68.8
65.4
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
123.1
133.0
\n
\u2013 Provision for unearned premiums
44.6
50.7
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
Analysed as:
\n
Claims outstanding
185.2
192.1
\n
Provision for unearned premiums
51.3
57.0
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net
\n
Claims outstanding
223.1
233.7
\n
Provision for unearned premiums
76.4
87.6
\n
Total net insurance liabilities
299.5
321.3
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
(123.1)
(133.0)
\n
\u2013 Provision for unearned premiums
(44.6)
(50.7)
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
\n
Analysed as:
\n
Claims outstanding
100.0
100.7
\n
Provision for unearned premiums
31.8
36.9
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
Notes to the consolidated \ufb01nancial statements continued
\n
190
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
Reconciliation of movements in claims outstanding
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross claims outstanding at 1 February
292.8
329.5
\n
Less: reinsurance claims outstanding
(192.1)
(212.3)
\n
Net claims outstanding at 1 February
100.7
117.2
\n
Gross claims incurred
157.2
94.6
\n
Less: reinsurance recoveries
(99.1)
(63.3)
\n
Net claims incurred
58.1
31.3
\n
Gross claims paid
(164.8)
(131.3)
\n
Less: received from reinsurance
106.0
83.5
\n
Net claims paid
(58.8)
(47.8)
\n
Gross claims outstanding at 31 January
285.2
292.8
\n
Less: reinsurance claims outstanding
(185.2)
(192.1)
\n
Net claims outstanding at 31 January
100.0
100.7
\n
Reconciliation of movements in the provision for net unearned premiums
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross unearned premiums at 1 February
93.9
96.8
\n
Less: unearned reinsurance premiums
(57.0)
(62.3)
\n
Net unearned premiums at 1 February
36.9
34.5
\n
Gross premiums written
178.7
200.1
\n
Less: outward reinsurance premium
(105.6)
(118.5)
\n
Net premiums written
73.1
81.6
\n
Gross premiums earned
(189.5)
(203.0)
\n
Less reinsurance premium earned
111.3
123.8
\n
Net premiums earned
(78.2)
(79.2)
\n
Gross unearned premiums at 31 January
83.1
93.9
\n
Less: unearned reinsurance premiums
(51.3)
(57.0)
\n
Net unearned premiums at 31 January
31.8
36.9
\n
The net income of purchasing reinsurance in 2023 was \u00a322.4m (2022: \u00a37.7m cost).
\n
The insurance liabilities presented here, and on the face of the Group\u2019s statement of \ufb01nancial position, are based on an Ogden discount rate
\n
of \u20130.25%.
\n
a) Discounting
\n
Claims outstanding provisions are calculated on an undiscounted basis, with the exception of PPOs made by the courts as part of a bodily
\n
injury claim settlement. Claims outstanding provisions for PPOs are discounted at a rate of \u20131.5% (2022: \u20131.5%) representing the Group\u2019s
\n
view\u00a0on long-term carer wage in\ufb02ation, less the expected return on holding the invested \ufb01nancial assets associated with these claims.
\n
The value of claims outstanding before discounting was \u00a3342.8m (2022: \u00a3330.8m) gross of reinsurance and \u00a3116.2m (2022: \u00a3109.2m)
\n
net\u00a0of\u00a0reinsurance.
\n
The period between the statement of \ufb01nancial position date and the estimated \ufb01nal payment date was calculated using Ogden life expectancy
\n
tables, with appropriate adjustments where necessary for impaired life. The average life expectancy from PPO settlement date to the \ufb01nal
\n
PPO payment was 36 years (2022: 38 years) and the rate of investment return used to determine the discounted value of claims provisions
\n
was 2.0% (2022: 2.0%).
Saga plc
Annual Report and Accounts 2023
191
Strategic report
Financial statements
Additional information
Governance
\n
b) Analysis of claims incurred: claims development tables
\n
The following tables detail the Group\u2019s initial estimate of ultimate gross and net claims incurred over the past 10 years and the re-estimation
\n
at\u00a0subsequent \ufb01nancial period ends.
\n
The following table analyses the gross incurred claims (before deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Gross
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
238.4
(66.8)
(65.1)
(65.3)
(36.6)
(25.5)
(15.1)
(13.4)
(1.7)
(4.0)
n/a
n/a
45.6
\n
2015
231.6
12.9
(12.2)
(14.0)
(16.5)
(8.6)
(8.5)
(1.2)
(0.8)
182.7
(178.2)
4.5
\n
2016
250.0
2.2
(11.0)
(33.1)
(7.3)
(1.9)
(9.7)
0.2
189.4
(176.1)
13.3
\n
2017
204.2
(1.7)
(13.7)
(9.5)
(14.6)
(2.2)
(1.8)
160.7
(155.5)
5.2
\n
2018
196.9
5.4
(10.9)
(10.8)
(7.0)
(4.5)
169.1
(162.7)
6.4
\n
2019
185.4
4.5
(1.5)
(9.6)
(10.7)
168.1
(145.1)
23.0
\n
2020
182.4
9.1
(9.9)
(6.3)
175.3
(151.0)
24.3
\n
2021
142.9
(15.0)
(16.5)
111.4
(87.6)
23.8
\n
2022
136.6
19.4
156.0
(101.8)
54.2
\n
2023
166.4
166.4
(88.3)
78.1
\n
238.4
164.8
197.8
128.9
133.6
102.0
135.5
101.3
80.3
141.4
278.4
\n
Claims handling
\n
costs
\n
17.2
18.0
21.4
20.6
20.8
18.0
16.7
16.3
14.3
15.8
6.8
\n
255.6
182.8
219.2
149.5
154.4
120.0
152.2
117.6
94.6
157.2
285.2
\n
Favourable claims development over the year has resulted in a \u00a325.0m (2022: \u00a356.3m) reduction in the gross claims incurred in respect of
\n
prior years.
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
76%
72%
67%
63%
61%
58%
57%
56%
56%
56%
\n
2015
70%
73%
70%
66%
61%
58%
55%
55%
55%
\n
2016
77%
78%
75%
65%
62%
62%
59%
59%
\n
2017
70%
69%
65%
61%
56%
56%
55%
\n
2018
76%
78%
74%
70%
67%
65%
\n
2019
78%
80%
79%
75%
71%
\n
2020
78%
82%
78%
75%
\n
2021
64%
58%
50%
\n
2022
67%
77%
\n
2023
88%
Notes to the consolidated \ufb01nancial statements continued
\n
192
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
The following table analyses the net incurred claims (after deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Net
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
219.8
(57.8)
(72.8)
(53.9)
(35.3)
(28.1)
(13.0)
(11.1)
(2.3)
(4.7)
n/a
n/a
18.9
\n
2015
219.1
5.3
(9.2)
(11.1)
(16.4)
(5.0)
(7.9)
(1.0)
(0.8)
173.0
(168.5)
4.5
\n
2016
220.9
3.2
(15.1)
(22.5)
(9.1)
(5.8)
(4.6)
(1.7)
165.3
(161.2)
4.1
\n
2017
94.0
1.5
(3.8)
(1.9)
(3.6)
(0.5)
(1.8)
83.9
(78.7)
5.2
\n
2018
78.8
(0.8)
(1.6)
(2.7)
(1.7)
(4.4)
67.6
(61.2)
6.4
\n
2019
72.3
(0.2)
(0.1)
(2.0)
(9.6)
60.4
(42.7)
17.7
\n
2020
55.9
0.6
(1.4)
(0.2)
54.9
(48.8)
6.1
\n
2021
41.8
(4.9)
(2.0)
34.9
(29.6)
5.3
\n
2022
43.7
(1.8)
41.9
(35.7)
6.2
\n
2023
78.9
78.9
(60.1)
18.8
\n
219.8
161.3
153.4
34.1
18.8
0.7
25.1
11.2
25.3
51.9
93.2
\n
Claims handling
\n
costs
\n
17.2
18.0
21.5
11.5
10.5
8.9
5.7
7.0
6.0
6.2
6.8
\n
237.0
179.3
174.9
45.6
29.3
9.6
30.8
18.2
31.3
58.1
100.0
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
75%
71%
65%
62%
59%
56%
55%
54%
54%
54%
\n
2015
67%
69%
66%
63%
58%
56%
54%
53%
53%
\n
2016
70%
71%
66%
59%
56%
54%
53%
52%
\n
2017
56%
56%
54%
53%
51%
51%
50%
\n
2018
66%
65%
64%
62%
60%
56%
\n
2019
71%
71%
71%
69%
59%
\n
2020
63%
64%
62%
62%
\n
2021
53%
47%
44%
\n
2022
55%
53%
\n
2023
101%
\nFavourable claims development over the year resulted in a \u00a327.0m (2022: \u00a318.4m) reduction in the net claims incurred in respect of prior years.", "dimensions": { "concept": "saga:DisclosureOfInsuranceContractLiabilitiesAndReinsuranceAssetsExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26141": { "value": "28 Insurance contract liabilities and reinsurance assets
The analysis of gross and net insurance liabilities is as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross
\n
Claims outstanding
285.2
292.8
\n
Provision for unearned premiums
83.1
93.9
\n
Total gross liabilities
368.3
386.7
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Recoverable from reinsurers
\n
Claims outstanding
62.1
59.1
\n
Provision for unearned premiums
6.7
6.3
\n
Total reinsurers\u2019 share of insurance liabilities (as presented on the face of the statement of financial position)
68.8
65.4
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
123.1
133.0
\n
\u2013 Provision for unearned premiums
44.6
50.7
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
Analysed as:
\n
Claims outstanding
185.2
192.1
\n
Provision for unearned premiums
51.3
57.0
\n
Total reinsurers\u2019 share of insurance liabilities after funds-withheld quota share
236.5
249.1
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Net
\n
Claims outstanding
223.1
233.7
\n
Provision for unearned premiums
76.4
87.6
\n
Total net insurance liabilities
299.5
321.3
\n
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
\n
\u2013 Claims outstanding
(123.1)
(133.0)
\n
\u2013 Provision for unearned premiums
(44.6)
(50.7)
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
\n
Analysed as:
\n
Claims outstanding
100.0
100.7
\n
Provision for unearned premiums
31.8
36.9
\n
Total net insurance liabilities after funds-withheld quota share
131.8
137.6
Notes to the consolidated \ufb01nancial statements continued
\n
190
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
Reconciliation of movements in claims outstanding
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross claims outstanding at 1 February
292.8
329.5
\n
Less: reinsurance claims outstanding
(192.1)
(212.3)
\n
Net claims outstanding at 1 February
100.7
117.2
\n
Gross claims incurred
157.2
94.6
\n
Less: reinsurance recoveries
(99.1)
(63.3)
\n
Net claims incurred
58.1
31.3
\n
Gross claims paid
(164.8)
(131.3)
\n
Less: received from reinsurance
106.0
83.5
\n
Net claims paid
(58.8)
(47.8)
\n
Gross claims outstanding at 31 January
285.2
292.8
\n
Less: reinsurance claims outstanding
(185.2)
(192.1)
\n
Net claims outstanding at 31 January
100.0
100.7
\n
Reconciliation of movements in the provision for net unearned premiums
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross unearned premiums at 1 February
93.9
96.8
\n
Less: unearned reinsurance premiums
(57.0)
(62.3)
\n
Net unearned premiums at 1 February
36.9
34.5
\n
Gross premiums written
178.7
200.1
\n
Less: outward reinsurance premium
(105.6)
(118.5)
\n
Net premiums written
73.1
81.6
\n
Gross premiums earned
(189.5)
(203.0)
\n
Less reinsurance premium earned
111.3
123.8
\n
Net premiums earned
(78.2)
(79.2)
\n
Gross unearned premiums at 31 January
83.1
93.9
\n
Less: unearned reinsurance premiums
(51.3)
(57.0)
\n
Net unearned premiums at 31 January
31.8
36.9
\n
The net income of purchasing reinsurance in 2023 was \u00a322.4m (2022: \u00a37.7m cost).
\n
The insurance liabilities presented here, and on the face of the Group\u2019s statement of \ufb01nancial position, are based on an Ogden discount rate
\n
of \u20130.25%.
\n
a) Discounting
\n
Claims outstanding provisions are calculated on an undiscounted basis, with the exception of PPOs made by the courts as part of a bodily
\n
injury claim settlement. Claims outstanding provisions for PPOs are discounted at a rate of \u20131.5% (2022: \u20131.5%) representing the Group\u2019s
\n
view\u00a0on long-term carer wage in\ufb02ation, less the expected return on holding the invested \ufb01nancial assets associated with these claims.
\n
The value of claims outstanding before discounting was \u00a3342.8m (2022: \u00a3330.8m) gross of reinsurance and \u00a3116.2m (2022: \u00a3109.2m)
\n
net\u00a0of\u00a0reinsurance.
\n
The period between the statement of \ufb01nancial position date and the estimated \ufb01nal payment date was calculated using Ogden life expectancy
\n
tables, with appropriate adjustments where necessary for impaired life. The average life expectancy from PPO settlement date to the \ufb01nal
\n
PPO payment was 36 years (2022: 38 years) and the rate of investment return used to determine the discounted value of claims provisions
\n
was 2.0% (2022: 2.0%).
Saga plc
Annual Report and Accounts 2023
191
Strategic report
Financial statements
Additional information
Governance
\n
b) Analysis of claims incurred: claims development tables
\n
The following tables detail the Group\u2019s initial estimate of ultimate gross and net claims incurred over the past 10 years and the re-estimation
\n
at\u00a0subsequent \ufb01nancial period ends.
\n
The following table analyses the gross incurred claims (before deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Gross
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
238.4
(66.8)
(65.1)
(65.3)
(36.6)
(25.5)
(15.1)
(13.4)
(1.7)
(4.0)
n/a
n/a
45.6
\n
2015
231.6
12.9
(12.2)
(14.0)
(16.5)
(8.6)
(8.5)
(1.2)
(0.8)
182.7
(178.2)
4.5
\n
2016
250.0
2.2
(11.0)
(33.1)
(7.3)
(1.9)
(9.7)
0.2
189.4
(176.1)
13.3
\n
2017
204.2
(1.7)
(13.7)
(9.5)
(14.6)
(2.2)
(1.8)
160.7
(155.5)
5.2
\n
2018
196.9
5.4
(10.9)
(10.8)
(7.0)
(4.5)
169.1
(162.7)
6.4
\n
2019
185.4
4.5
(1.5)
(9.6)
(10.7)
168.1
(145.1)
23.0
\n
2020
182.4
9.1
(9.9)
(6.3)
175.3
(151.0)
24.3
\n
2021
142.9
(15.0)
(16.5)
111.4
(87.6)
23.8
\n
2022
136.6
19.4
156.0
(101.8)
54.2
\n
2023
166.4
166.4
(88.3)
78.1
\n
238.4
164.8
197.8
128.9
133.6
102.0
135.5
101.3
80.3
141.4
278.4
\n
Claims handling
\n
costs
\n
17.2
18.0
21.4
20.6
20.8
18.0
16.7
16.3
14.3
15.8
6.8
\n
255.6
182.8
219.2
149.5
154.4
120.0
152.2
117.6
94.6
157.2
285.2
\n
Favourable claims development over the year has resulted in a \u00a325.0m (2022: \u00a356.3m) reduction in the gross claims incurred in respect of
\n
prior years.
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
76%
72%
67%
63%
61%
58%
57%
56%
56%
56%
\n
2015
70%
73%
70%
66%
61%
58%
55%
55%
55%
\n
2016
77%
78%
75%
65%
62%
62%
59%
59%
\n
2017
70%
69%
65%
61%
56%
56%
55%
\n
2018
76%
78%
74%
70%
67%
65%
\n
2019
78%
80%
79%
75%
71%
\n
2020
78%
82%
78%
75%
\n
2021
64%
58%
50%
\n
2022
67%
77%
\n
2023
88%
Notes to the consolidated \ufb01nancial statements continued
\n
192
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
28 Insurance contract liabilities and reinsurance assets
continued
\n
The following table analyses the net incurred claims (after deducting reinsurance recoveries) on an accident year basis:
\n
Financial year ended 31 January
\n
Analysis of
\n
claims incurred
\n
2014
\n
\u00a3m
\n
2015
\n
\u00a3m
\n
2016
\n
\u00a3m
\n
2017
\n
\u00a3m
\n
2018
\n
\u00a3m
\n
2019
\n
\u00a3m
\n
2020
\n
\u00a3m
\n
2021
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Claims
\n
paid
\n
\u00a3m
\n
Net
\n
claims
\n
out-
\n
standing
\n
\u00a3m
\n
Accident year
\n
2014 and earlier
219.8
(57.8)
(72.8)
(53.9)
(35.3)
(28.1)
(13.0)
(11.1)
(2.3)
(4.7)
n/a
n/a
18.9
\n
2015
219.1
5.3
(9.2)
(11.1)
(16.4)
(5.0)
(7.9)
(1.0)
(0.8)
173.0
(168.5)
4.5
\n
2016
220.9
3.2
(15.1)
(22.5)
(9.1)
(5.8)
(4.6)
(1.7)
165.3
(161.2)
4.1
\n
2017
94.0
1.5
(3.8)
(1.9)
(3.6)
(0.5)
(1.8)
83.9
(78.7)
5.2
\n
2018
78.8
(0.8)
(1.6)
(2.7)
(1.7)
(4.4)
67.6
(61.2)
6.4
\n
2019
72.3
(0.2)
(0.1)
(2.0)
(9.6)
60.4
(42.7)
17.7
\n
2020
55.9
0.6
(1.4)
(0.2)
54.9
(48.8)
6.1
\n
2021
41.8
(4.9)
(2.0)
34.9
(29.6)
5.3
\n
2022
43.7
(1.8)
41.9
(35.7)
6.2
\n
2023
78.9
78.9
(60.1)
18.8
\n
219.8
161.3
153.4
34.1
18.8
0.7
25.1
11.2
25.3
51.9
93.2
\n
Claims handling
\n
costs
\n
17.2
18.0
21.5
11.5
10.5
8.9
5.7
7.0
6.0
6.2
6.8
\n
237.0
179.3
174.9
45.6
29.3
9.6
30.8
18.2
31.3
58.1
100.0
\n
The development of the associated loss ratios on the same basis is as follows:
\n
Financial year ended 31 January
\n
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
\n
Accident year
\n
2014
75%
71%
65%
62%
59%
56%
55%
54%
54%
54%
\n
2015
67%
69%
66%
63%
58%
56%
54%
53%
53%
\n
2016
70%
71%
66%
59%
56%
54%
53%
52%
\n
2017
56%
56%
54%
53%
51%
51%
50%
\n
2018
66%
65%
64%
62%
60%
56%
\n
2019
71%
71%
71%
69%
59%
\n
2020
63%
64%
62%
62%
\n
2021
53%
47%
44%
\n
2022
55%
53%
\n
2023
101%
\nFavourable claims development over the year resulted in a \u00a327.0m (2022: \u00a318.4m) reduction in the net claims incurred in respect of prior years.", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26249": { "value": "Reconciliation of movements in claims outstanding
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross claims outstanding at 1 February
292.8
329.5
\n
Less: reinsurance claims outstanding
(192.1)
(212.3)
\n
Net claims outstanding at 1 February
100.7
117.2
\n
Gross claims incurred
157.2
94.6
\n
Less: reinsurance recoveries
(99.1)
(63.3)
\n
Net claims incurred
58.1
31.3
\n
Gross claims paid
(164.8)
(131.3)
\n
Less: received from reinsurance
106.0
83.5
\n
Net claims paid
(58.8)
(47.8)
\n
Gross claims outstanding at 31 January
285.2
292.8
\n
Less: reinsurance claims outstanding
(185.2)
(192.1)
\n
Net claims outstanding at 31 January
100.0
100.7", "dimensions": { "concept": "ifrs-full:DisclosureOfClaimsAndBenefitsPaidExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26294": { "value": "
Reconciliation of movements in the provision for net unearned premiums
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Gross unearned premiums at 1 February
93.9
96.8
\n
Less: unearned reinsurance premiums
(57.0)
(62.3)
\n
Net unearned premiums at 1 February
36.9
34.5
\n
Gross premiums written
178.7
200.1
\n
Less: outward reinsurance premium
(105.6)
(118.5)
\n
Net premiums written
73.1
81.6
\n
Gross premiums earned
(189.5)
(203.0)
\n
Less reinsurance premium earned
111.3
123.8
\n
Net premiums earned
(78.2)
(79.2)
\n
Gross unearned premiums at 31 January
83.1
93.9
\n
Less: unearned reinsurance premiums
(51.3)
(57.0)
\n
Net unearned premiums at 31 January
31.8
36.9
29 Contract liabilities
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred revenue (Note 3b)
122.2
114.6
\n
122.2
114.6
\n
Current
119.6
113.0
\n
Non-current
2.6
1.6
\n
122.2
114.6
\n
Deferred revenue comprises amounts received within the Cruise and Travel segment for cruises and holidays with departure dates after
\n
the\u00a0reporting date, and insurance premiums and sales revenues received in the Insurance segment in respect of insurance policies which
\n
commence after the reporting date, and represents the performance obligations not yet satis\ufb01ed as at 31 January 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26885": { "value": "29 Contract liabilities
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Deferred revenue (Note 3b)
122.2
114.6
\n
122.2
114.6
\n
Current
119.6
113.0
\n
Non-current
2.6
1.6
\n
122.2
114.6
\n
Deferred revenue comprises amounts received within the Cruise and Travel segment for cruises and holidays with departure dates after
\n
the\u00a0reporting date, and insurance premiums and sales revenues received in the Insurance segment in respect of insurance policies which
\ncommence after the reporting date, and represents the performance obligations not yet satis\ufb01ed as at 31 January 2023.", "dimensions": { "concept": "saga:DisclosureOfContractLiabilitiesExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26927": { "value": "30 Loans and borrowings
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Bonds
400.0
400.0
\n
Ship loans
469.2
515.6
\n
Revolving credit facility
\u2013
\u2013
\n
Accrued interest payable
5.5
5.9
\n
874.7
921.5
\n
Less: deferred issue costs
(20.1)
(25.0)
\n
854.6
896.5
\n
Bonds, RCF and term loan
\n
At 31 January 2023, the Group\u2019s \ufb01nancing facilities consisted of a \u00a3150.0m seven-year senior unsecured bond (repayable May 2024),
\n
a\u00a0\u00a3250.0m \ufb01ve-year senior unsecured bond (repayable July 2026) and a \u00a350.0m \ufb01ve-year RCF (expiry in May 2025). The bonds are listed
\n
on\u00a0the Irish Stock Exchange and are guaranteed by Saga Services Limited and Saga Mid Co Limited.
\n
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026 corporate bond is incurred at an
\n
annual interest rate of 5.5%. Interest payable on the Group\u2019s RCF, if drawn down, is incurred at a variable rate of SONIA plus a bank margin
\n
which is linked to the Group\u2019s leverage ratio.
\n
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF arrangement to remove certain
\n
clauses that were introduced during the COVID-19 pandemic and reduce the aggregate facility cost. The amendments to the RCF include:
\n
\u2022
removal of the \u00a340.0m minimum liquidity requirement;
\n
\u2022
removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024 bond has not been redeemed prior to
\n
this date; and
\n
\u2022
reduction of the RCF commitment from \u00a3100.0m to \u00a350.0m.
\n
In addition, dividends remain restricted while leverage (excluding Cruise) is above 3.0x.
\n
Subsequent to the above, the Group had further discussions with its lending banks behind the RCF and agreed the following amendments to
\n
the facility:
\n
\u2022
The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment of the 2024 bond if leverage exceeds
\n
5.5x, or liquidity is below \u00a3170m.
\n
\u2022
During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
\n
\u2022
Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
\n
\u2022
Amendments to the leverage and interest cover covenants attached to the facility, as follows:
\n
Leverage
\n
(excl. Ocean Cruise)
\n
Interest
\n
cover
\n
31 January 2023
4.75x
2.5x
\n
30 April 2023
6.75x
n/a
\n
31 July 2023
6.75x
2.5x
\n
31 October 2023
6.75x
n/a
\n
31 January 2024
5.5x
2.75x
\n
30 April 2024
5.5x
n/a
\n
31 July 2024
5.5x
3.0x
\n
31 October 2024
5.5x
n/a
\n
31 January 2025
4.75x
3.0x
\n
At 31 January 2023, the Group\u2019s \u00a350.0m RCF remained undrawn. Accrued interest payable on the Group\u2019s bonds at 31 January 2023 is
\n
\u00a32.2m (2022: \u00a32.8m).
\n
During the year ended 31 January 2022, the Group repaid its \u00a3200.0m \ufb01ve-year term loan (repayable May 2023) in full. Interest was incurred
\n
at a variable rate of London Inter-Bank O\ufb00ered Rate (LIBOR, since replaced by SONIA) plus a bank margin which was linked to the Group\u2019s
\n
leverage ratio.
Notes to the consolidated \ufb01nancial statements continued
\n
194
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
30 Loans and borrowings
continued
\n
Ocean cruise ship loans
\n
In June 2019, the Group drew down \u00a3245.0m of \ufb01nancing for its ocean cruise ship, Spirit of Discovery. The \ufb01nancing represents a 12-year
\n
\ufb01xed-rate sterling loan, secured against the Spirit of Discovery cruise ship asset, and backed by an export credit guarantee. The initial loan was
\n
repayable in 24 broadly equal instalments, with the \ufb01rst payment of \u00a310.2m paid in December 2019.
\n
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the Group\u2019s ship facilities. The Group\u2019s
\n
lenders agreed to a deferral of \u00a332.1m in principal payments under the ship facilities that were due up to 31 March 2021. These deferred
\n
amounts were to be paid between June 2021 and December 2024 for Spirit of Discovery and between September 2021 and March 2025
\n
for\u00a0Spirit of Adventure, and interest remained payable.
\n
On 29 September 2020, the Group drew down \u00a3280.8m of \ufb01nancing for its ocean cruise ship, Spirit of Adventure. The \ufb01nancing, secured
\n
against the Spirit of Adventure cruise ship asset, represents a 12-year \ufb01xed-rate sterling loan, backed by an export credit guarantee. The loan
\n
is repayable in 24 broadly equal instalments, with the \ufb01rst payment originally due six months after delivery in March 2021, but initially deferred
\n
to September 2021 as a result of the debt holiday described above.
\n
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise ship facilities. As part of an
\n
industry-wide package of measures to support the cruise industry, an extension of the existing debt deferral was agreed to 31 March 2022.
\n
The key terms of this deferral were:
\n
\u2022
all principal payments to 31 March 2022 (\u00a351.8m) deferred and repaid over five years;
\n
\u2022
all financial covenants until 31 March 2022 waived; and
\n
\u2022
dividends remain restricted while the deferred principal is outstanding.
\n
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 41). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Interest on the Spirit of Discovery ship loan is incurred at an e\ufb00ective annual interest rate of 4.31% (including arrangement and commitment
\n
fees). Interest on the Spirit of Adventure ship loan is incurred at an e\ufb00ective annual interest rate of 3.30% (including arrangement and
\n
commitment fees). Interest payable on the Group\u2019s ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
\n
Accrued interest payable on the Group\u2019s ocean cruise ship loans at 31 January 2023 is \u00a33.3m (2022: \u00a33.1m).
\n
Also since the year end, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga plc,
\n
Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of the
\n
loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is subject
\n
to\u00a0a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the facility
\n
is\u00a0payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024 and
\n
31\u00a0December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
\n
Total debt and finance costs
\n
At 31 January 2023, debt issue costs were \u00a320.1m (2022: \u00a325.0m). The movement in the year represents expense amortisation for
\n
the period.
\n
During the year, the Group charged \u00a341.0m (2022: \u00a337.4m) to the income statement in respect of fees and interest associated with the
\n
bonds, RCF, term loan and ship loans. In addition, \ufb01nance costs recognised in the income statement include \u00a31.2m (2022: \u00a30.7m) relating to
\n
interest and \ufb01nance charges on lease liabilities and net fair value losses on derivatives are \u00a3nil (2022: \u00a32.7m). The Group has complied with the
\n\ufb01nancial covenants of its borrowing facilities during the current year and prior year.", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f26928": { "value": "30 Loans and borrowings
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Bonds
400.0
400.0
\n
Ship loans
469.2
515.6
\n
Revolving credit facility
\u2013
\u2013
\n
Accrued interest payable
5.5
5.9
\n
874.7
921.5
\n
Less: deferred issue costs
(20.1)
(25.0)
\n
854.6
896.5
\n
Bonds, RCF and term loan
\n
At 31 January 2023, the Group\u2019s \ufb01nancing facilities consisted of a \u00a3150.0m seven-year senior unsecured bond (repayable May 2024),
\n
a\u00a0\u00a3250.0m \ufb01ve-year senior unsecured bond (repayable July 2026) and a \u00a350.0m \ufb01ve-year RCF (expiry in May 2025). The bonds are listed
\n
on\u00a0the Irish Stock Exchange and are guaranteed by Saga Services Limited and Saga Mid Co Limited.
\n
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026 corporate bond is incurred at an
\n
annual interest rate of 5.5%. Interest payable on the Group\u2019s RCF, if drawn down, is incurred at a variable rate of SONIA plus a bank margin
\n
which is linked to the Group\u2019s leverage ratio.
\n
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF arrangement to remove certain
\n
clauses that were introduced during the COVID-19 pandemic and reduce the aggregate facility cost. The amendments to the RCF include:
\n
\u2022
removal of the \u00a340.0m minimum liquidity requirement;
\n
\u2022
removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024 bond has not been redeemed prior to
\n
this date; and
\n
\u2022
reduction of the RCF commitment from \u00a3100.0m to \u00a350.0m.
\n
In addition, dividends remain restricted while leverage (excluding Cruise) is above 3.0x.
\n
Subsequent to the above, the Group had further discussions with its lending banks behind the RCF and agreed the following amendments to
\n
the facility:
\n
\u2022
The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment of the 2024 bond if leverage exceeds
\n
5.5x, or liquidity is below \u00a3170m.
\n
\u2022
During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
\n
\u2022
Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
\n
\u2022
Amendments to the leverage and interest cover covenants attached to the facility, as follows:
\n
Leverage
\n
(excl. Ocean Cruise)
\n
Interest
\n
cover
\n
31 January 2023
4.75x
2.5x
\n
30 April 2023
6.75x
n/a
\n
31 July 2023
6.75x
2.5x
\n
31 October 2023
6.75x
n/a
\n
31 January 2024
5.5x
2.75x
\n
30 April 2024
5.5x
n/a
\n
31 July 2024
5.5x
3.0x
\n
31 October 2024
5.5x
n/a
\n
31 January 2025
4.75x
3.0x
\n
At 31 January 2023, the Group\u2019s \u00a350.0m RCF remained undrawn. Accrued interest payable on the Group\u2019s bonds at 31 January 2023 is
\n
\u00a32.2m (2022: \u00a32.8m).
\n
During the year ended 31 January 2022, the Group repaid its \u00a3200.0m \ufb01ve-year term loan (repayable May 2023) in full. Interest was incurred
\n
at a variable rate of London Inter-Bank O\ufb00ered Rate (LIBOR, since replaced by SONIA) plus a bank margin which was linked to the Group\u2019s
\n
leverage ratio.
Notes to the consolidated \ufb01nancial statements continued
\n
194
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
30 Loans and borrowings
continued
\n
Ocean cruise ship loans
\n
In June 2019, the Group drew down \u00a3245.0m of \ufb01nancing for its ocean cruise ship, Spirit of Discovery. The \ufb01nancing represents a 12-year
\n
\ufb01xed-rate sterling loan, secured against the Spirit of Discovery cruise ship asset, and backed by an export credit guarantee. The initial loan was
\n
repayable in 24 broadly equal instalments, with the \ufb01rst payment of \u00a310.2m paid in December 2019.
\n
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the Group\u2019s ship facilities. The Group\u2019s
\n
lenders agreed to a deferral of \u00a332.1m in principal payments under the ship facilities that were due up to 31 March 2021. These deferred
\n
amounts were to be paid between June 2021 and December 2024 for Spirit of Discovery and between September 2021 and March 2025
\n
for\u00a0Spirit of Adventure, and interest remained payable.
\n
On 29 September 2020, the Group drew down \u00a3280.8m of \ufb01nancing for its ocean cruise ship, Spirit of Adventure. The \ufb01nancing, secured
\n
against the Spirit of Adventure cruise ship asset, represents a 12-year \ufb01xed-rate sterling loan, backed by an export credit guarantee. The loan
\n
is repayable in 24 broadly equal instalments, with the \ufb01rst payment originally due six months after delivery in March 2021, but initially deferred
\n
to September 2021 as a result of the debt holiday described above.
\n
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise ship facilities. As part of an
\n
industry-wide package of measures to support the cruise industry, an extension of the existing debt deferral was agreed to 31 March 2022.
\n
The key terms of this deferral were:
\n
\u2022
all principal payments to 31 March 2022 (\u00a351.8m) deferred and repaid over five years;
\n
\u2022
all financial covenants until 31 March 2022 waived; and
\n
\u2022
dividends remain restricted while the deferred principal is outstanding.
\n
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 41). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Interest on the Spirit of Discovery ship loan is incurred at an e\ufb00ective annual interest rate of 4.31% (including arrangement and commitment
\n
fees). Interest on the Spirit of Adventure ship loan is incurred at an e\ufb00ective annual interest rate of 3.30% (including arrangement and
\n
commitment fees). Interest payable on the Group\u2019s ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
\n
Accrued interest payable on the Group\u2019s ocean cruise ship loans at 31 January 2023 is \u00a33.3m (2022: \u00a33.1m).
\n
Also since the year end, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga plc,
\n
Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of the
\n
loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is subject
\n
to\u00a0a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the facility
\n
is\u00a0payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024 and
\n
31\u00a0December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
\n
Total debt and finance costs
\n
At 31 January 2023, debt issue costs were \u00a320.1m (2022: \u00a325.0m). The movement in the year represents expense amortisation for
\n
the period.
\n
During the year, the Group charged \u00a341.0m (2022: \u00a337.4m) to the income statement in respect of fees and interest associated with the
\n
bonds, RCF, term loan and ship loans. In addition, \ufb01nance costs recognised in the income statement include \u00a31.2m (2022: \u00a30.7m) relating to
\n
interest and \ufb01nance charges on lease liabilities and net fair value losses on derivatives are \u00a3nil (2022: \u00a32.7m). The Group has complied with the
\n\ufb01nancial covenants of its borrowing facilities during the current year and prior year.", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27104": { "value": "31 Provisions
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
At 1 February 2021
4.9
6.8
11.7
\n
Utilised during the year
(4.8)
(8.5)
(13.3)
\n
Released unutilised during the year
\u2013
(0.4)
(0.4)
\n
Charge for the year
0.7
8.0
8.7
\n
At 31 January 2022
0.8
5.9
6.7
\n
Utilised during the year
(0.8)
(4.2)
(5.0)
\n
Released unutilised during the year
\u2013
(0.6)
(0.6)
\n
Charge for the year
\u2013
4.1
4.1
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
\u2013
4.4
4.4
\n
Non-current
\u2013
0.8
0.8
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
0.8
5.6
6.4
\n
Non-current
\u2013
0.3
0.3
\n
At 31 January 2022
0.8
5.9
6.7
\n
The COVID-19 pandemic led to a high level of disruption to private medical inpatient appointments over 2020 and 2021, with appointments
\n
and operations initially being delayed and rescheduled. In the year ended 31 January 2021, delayed appointments had a favourable impact on
\n
the underwriting performance of PMI, resulting in a pro\ufb01t share due from the underwriter. Due to the Group\u2019s public commitment to not pro\ufb01t
\n
from the impacts of COVID-19, a provision to o\ufb00set this pro\ufb01t share was made.
\n
Other provisions primarily comprise:
\n
\u2022
provisions for the return of insurance commission in respect of policies cancelled mid-term after the reporting date or as a result of being
\n
cancelled during the statutory cooling-off period after the reporting date;
\n
\u2022
credit hire and repair claims handling and litigation costs on income booked as at the reporting date;
\n
\u2022
fleet insurance at the estimated cost of settling all outstanding incidents at the reporting date;
\n
\u2022
customer remediation relating to areas where there is likely to be a requirement to remedy various errors that have had an adverse
\n
impact on customer outcomes; and
\n
\u2022
an employer liability provision relating to various Group-related, self-funded insurance arrangements.
\n
All provisions are expected to be fully utilised over the next 12 months with the exception of the \ufb02eet insurance, credit hire and repair claims
\n
handling and litigation costs, and employer liability provisions. The timing of \ufb02eet insurance costs is uncertain and will depend upon the nature
\n
of each incident. The costs of debt recovery on credit hire and repair claims handling and litigation costs are uncertain and will depend upon
\n
the nature and timing of each claim. The settlement cash out\ufb02ows from the employer liability provision depend on the timing of the settlement
\n
of claims.
\nThese items are reviewed and updated annually.", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27105": { "value": "31 Provisions
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
At 1 February 2021
4.9
6.8
11.7
\n
Utilised during the year
(4.8)
(8.5)
(13.3)
\n
Released unutilised during the year
\u2013
(0.4)
(0.4)
\n
Charge for the year
0.7
8.0
8.7
\n
At 31 January 2022
0.8
5.9
6.7
\n
Utilised during the year
(0.8)
(4.2)
(5.0)
\n
Released unutilised during the year
\u2013
(0.6)
(0.6)
\n
Charge for the year
\u2013
4.1
4.1
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
\u2013
4.4
4.4
\n
Non-current
\u2013
0.8
0.8
\n
At 31 January 2023
\u2013
5.2
5.2
\n
PMI
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
Total
\n
\u00a3m
\n
Current
0.8
5.6
6.4
\n
Non-current
\u2013
0.3
0.3
\n
At 31 January 2022
0.8
5.9
6.7
\n
The COVID-19 pandemic led to a high level of disruption to private medical inpatient appointments over 2020 and 2021, with appointments
\n
and operations initially being delayed and rescheduled. In the year ended 31 January 2021, delayed appointments had a favourable impact on
\n
the underwriting performance of PMI, resulting in a pro\ufb01t share due from the underwriter. Due to the Group\u2019s public commitment to not pro\ufb01t
\n
from the impacts of COVID-19, a provision to o\ufb00set this pro\ufb01t share was made.
\n
Other provisions primarily comprise:
\n
\u2022
provisions for the return of insurance commission in respect of policies cancelled mid-term after the reporting date or as a result of being
\n
cancelled during the statutory cooling-off period after the reporting date;
\n
\u2022
credit hire and repair claims handling and litigation costs on income booked as at the reporting date;
\n
\u2022
fleet insurance at the estimated cost of settling all outstanding incidents at the reporting date;
\n
\u2022
customer remediation relating to areas where there is likely to be a requirement to remedy various errors that have had an adverse
\n
impact on customer outcomes; and
\n
\u2022
an employer liability provision relating to various Group-related, self-funded insurance arrangements.
\n
All provisions are expected to be fully utilised over the next 12 months with the exception of the \ufb02eet insurance, credit hire and repair claims
\n
handling and litigation costs, and employer liability provisions. The timing of \ufb02eet insurance costs is uncertain and will depend upon the nature
\n
of each incident. The costs of debt recovery on credit hire and repair claims handling and litigation costs are uncertain and will depend upon
\n
the nature and timing of each claim. The settlement cash out\ufb02ows from the employer liability provision depend on the timing of the settlement
\n
of claims.
\n
These items are reviewed and updated annually.
c) Contingent liabilities
The CAA and ABTA regulate the Group\u2019s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
\n
customer protection. At 31 January 2023, the Group had \u00a328.4m (2022: \u00a319.4m) of Ocean Cruise and Travel related bonds in place.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27226": { "value": "32 Reconciliation of liabilities arising from financing activities
The following tables analyse the cash and non-cash movements for liabilities arising from \ufb01nancing activities:
\n
Non-cash changes
\n
2022
\n
\u00a3m
\n
Financing
\n
cash flows
\n
\u00a3m
\n
New leases
\n
(Note 18)
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
2023
\n
\u00a3m
\n
Lease liabilities (Note 37)
35.3
(7.8)
25.6
(20.5)
32.6
\n
Ship loans (Note 30)
515.6
(46.4)
\u2013
\u2013
469.2
\n
Bonds (Note 30)
400.0
\u2013
\u2013
\u2013
400.0
\n
Deferred issue costs (Note 30)
(25.0)
\u2013
\u2013
4.9
(20.1)
\n
Non-cash changes
\n
2021
\n
\u00a3m
\n
Financing
\n
cash flows
\n
\u00a3m
\n
New leases
\n
(Note 18)
\n
\u00a3m
\n
Other
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Lease liabilities (Note 37)
4.4
(3.6)
35.8
(1.3)
35.3
\n
Bank loans (Note 30)
70.0
(70.0)
\u2013
\u2013
\u2013
\n
Ship loans (Note 30)
515.6
\u2013
\u2013
\u2013
515.6
\n
Bonds (Note 30)
250.0
150.0
\u2013
\u2013
400.0
\n
Deferred issue costs (Note 30)
(26.8)
(6.8)
\u2013
8.6
(25.0)
\n
Included within \u2018Other\u2019 for lease liabilities are amounts relating to foreign exchange movements of \u00a32.0m credit (2022: \u00a30.9m debit), lease
\n
modi\ufb01cations of \u00a3nil (2022: \u00a30.4m debit) and lease re-assessments of \u00a322.5m debit (2022: \u00a3nil) (Note 18).
\n
Included within \u2018Other\u2019 for deferred issue costs is the amortisation of costs of \u00a34.9m (2022: \u00a38.6m).
\n
In the prior year, cash \ufb02ows relating to bonds comprise proceeds from borrowings of \u00a3250.0m, relating to a new \ufb01ve-year senior unsecured
\n
bond, less repayment of borrowings of \u00a3100.0m, relating to the existing seven-year senior unsecured 2024 bond.
\n
Accrued interest payable on the loans and bonds above is disclosed in Note 30. Interest paid during the year is included within operating
\nactivities in the consolidated statement of cash \ufb02ows. ", "dimensions": { "concept": "saga:DisclosureOfReconciliationOfLiabilitiesArisingFromFinancingActivitiesExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27318": { "value": "33 Called up share capital
Ordinary shares
\n
Number
\n
Nominal
\n
value
\n
\u00a3
\n
Value
\n
\u00a3m
\n
Allotted, called up and fully paid
\n
At 1 February 2021
140,102,227
0.15
21.0
\n
Issue of shares \u2013 12 November 2021
235,044
0.15
0.1
\n
At 31 January 2022 and 31 January 2023
140,337,271
0.15
21.1
\n
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of \u00a30.1m, for transfer into an Employee Bene\ufb01t
\nTrust to satisfy employee incentive arrangements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27319": { "value": "33 Called up share capital
Ordinary shares
\n
Number
\n
Nominal
\n
value
\n
\u00a3
\n
Value
\n
\u00a3m
\n
Allotted, called up and fully paid
\n
At 1 February 2021
140,102,227
0.15
21.0
\n
Issue of shares \u2013 12 November 2021
235,044
0.15
0.1
\n
At 31 January 2022 and 31 January 2023
140,337,271
0.15
21.1
\n
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of \u00a30.1m, for transfer into an Employee Bene\ufb01t
\n
Trust to satisfy employee incentive arrangements.
\n
34 Reserves
\n
Share-based payment reserve
\n
Prior to vesting, the share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
\n
employees, including key management personnel, as part of their remuneration. More detail is provided in Note 36.
\n
Fair value reserve
\n
The fair value reserve comprises the unrealised gains or losses of FVOCI assets pending subsequent recognition in pro\ufb01t or loss once the
\n
investment is derecognised.
\n
Hedging reserve
\n
The hedging reserve comprises the e\ufb00ective portion of the cumulative net change in the fair value of hedging instruments used in cash \ufb02ow
\n
hedges pending subsequent recognition in: (a) pro\ufb01t or loss as the hedged cash \ufb02ows or items a\ufb00ect pro\ufb01t or loss; or (b) the statement of
\n
\ufb01nancial position as the hedged cash \ufb02ows or items a\ufb00ect property, plant and equipment.
36 Share-based payments
The Group has granted a number of di\ufb00erent equity-based awards to employees and customers which it has determined to be
\n
share-based payments:
\n
a. Share options and Free Shares offer granted at the time of the IPO
\n
\u2022
On 29 May 2014, nil cost options over 13,132,410 shares were granted to certain Directors and employees with no exercise price and
\n
no\u00a0service or performance vesting conditions. There are no cash settlement alternatives.
\n
\u2022
Eligible customers and employees who acquired their shares under the Customer or Employee Offers in the Prospectus received one
\n
bonus share for every 20 shares they acquired and held continuously for one year to 29 May 2015. As these were bonus shares, there
\n
was\u00a0no exercise price and no cash settlement alternative.
\n
b. Saga Transformation Plan (
STP
)
\n
\u2022
In July 2022, the Board and shareholders approved the issue of an additional new award called the STP. The\u00a0STP has a five-year vesting
\n
period and participants receive a 12.5% share in shareholder value (share price plus dividends) created above a \u00a36 per share hurdle over
\n
a five-year performance period commencing from the grant date, subject to continuing employment. For Directors and senior leaders,
\n
the STP will be equity-settled. For other employees, the STP will be settled in cash. There is a cap of \u00a388.0m on the value of awards that
\n
may vest, and the awards have a range of grant dates based on the tranche that each participant falls\u00a0into.
\n
\u2022
On 5 July 2022, nil cost options were issued under the STP to certain Directors and other senior employees which vest and become
\n
exercisable on the fifth anniversary of the grant date, subject to continuing employment.
\n
c. Restricted Share Plan (
RSP
)
\n
\u2022
The RSP is a discretionary executive share plan under which the Board may grant options over shares in Saga plc.
\n
\u2022
During the year, nil cost options over 2,548,775 shares were issued under the RSP to certain Directors and other senior employees
\n
which\u00a0vest and become exercisable on the third anniversary of the grant date, subject to continuing employment.
d. Long-term Incentive Plan (
LTIP
)
\n
\u2022
The LTIP is a legacy discretionary executive share plan under which the Board may, within certain limits and subject to applicable
\n
performance conditions, grant options over shares in Saga plc.
\n
\u2022
Up to 31 January 2017, these options are 50% linked to a non-market vesting condition, earnings per share, and 50% linked to a market
\n
vesting condition, total shareholder return (
TSR
).
\n
\u2022
From 1 February 2017 to 31 January 2018, these options were 60% linked to non-market vesting conditions (30% linked to basic earnings
\n
per share and 30% linked to organic earnings per share) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2018, these options were 60% linked to non-market vesting conditions (30% linked to organic earnings per share and
\n
30% linked to return on capital employed (
ROCE
)) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2019, these options are 75% linked to non-market vesting conditions (50% linked to operational and strategic measures
\n
and 25% linked to ROCE) and 25% linked to a market vesting condition, TSR.
\n
e. Deferred Bonus Plan (
DBP
)
\n
\u2022
On 28 April 2022, nil cost options over 345,353 shares were issued under the DBP to the Executive Directors reflecting their deferred
\n
bonus in respect of 2021/22, which vest and become exercisable on the third anniversary of the grant date. Under the DBP scheme,
\n
executives receive two-thirds of the bonus award in cash and one-third in the form of rights to shares of the Company.
\n
f. Employee Free Shares
\n
\u2022
There were no shares awarded during the year. Employee Free Shares are allocated at nil cost and the shares become beneficially owned
\n
over a three-year period from allocation, subject to continuing service.
\n
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
\n
on\u00a0receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date
\n
of\u00a0vesting to the date of their expiry. With the exception of share options granted at the time of the IPO, if an employee ceases to be employed
\n
by the Group, the option rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
\n
The table below summarises the movements in the number of share options outstanding for the Group and their weighted average
\n
exercise\u00a0price:
\n
IPO options
RSP
LTIP
DBP
STP
\n
Employee
\n
Free
\n
Shares
Total
\n
At 1 February 2022
8,437
1,362,338
618,203
365,502
\u2013
560,566
2,915,046
\n
Granted
\u2013
2,548,775
\u2013
345,353
\u2013
\u2013
2,894,128
\n
Forfeited
\u2013
(59,184)
(545,236)
\u2013
\u2013
(28,065)
(632,485)
\n
Exercised
(1,117)
\u2013
(9,402)
\u2013
\u2013
(40,453)
(50,972)
\n
At 31 January 2023
7,320
3,851,929
63,565
710,855
\u2013
492,048
5,125,717
\n
Exercise price
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\n
Exercisable at 31 January 2023
7,320
\u2013
63,565
33,094
\u2013
114,464
218,443
\n
Average remaining contractual life
\u2013
1.9 years
\u2013
1.5 years
4.4 years
1.0 years
1.7 years
\n
Average fair value at grant
\u00a327.75
\u00a32.11
\u00a39.84
\u00a33.26
n/a
\u00a35.80
\u00a32.75
\n
The average fair values at grant date have been restated to re\ufb02ect the impact of the share consolidation on 13 October 2020.
\n
The weighted average share price at the date of exercise for share options exercised during the year ended 31 January 2023 was \u00a31.48
\n
(2022:\u00a0\u00a33.85).
\n
The following information is relevant in the determination of the fair value of options granted during the year under the equity-settled and
\n
cash-settled share-based remuneration schemes operated by the Group.
\n
RSP
DBP
\n
Model used
Black-Scholes
Black-Scholes
\n
Expected life of share option
3 years
3 years
\n
Weighted average share price
\u00a31.55
\u00a32.43
As at 31 January 2023, the Group did not hold any liability in relation to cash-settled share-based remuneration that had vested by the end
\n
of\u00a0the year.
\n
As only limited historical data for the Group\u2019s share price is available, the Group estimated the Company\u2019s share price volatility as an average
\n
of\u00a0the volatilities of its TSR comparator group over a historical period commensurate with the expected life of the award immediately prior
\n
to\u00a0the date of the grant for awards under the RSP, DBP and Employee Free Share scheme.
\n
For awards under the new STP scheme, approved in July 2022, a volatility assumption of 31% has been employed, calculated based on volatility
\n
in Saga plc\u2019s historical share price in the \ufb01ve years to 31 December 2019. This time period was selected to strip out the impact of the COVID-19
\n
pandemic, which has had a signi\ufb01cant impact on Saga\u2019s business since the beginning of 2020. The impacts on the share price of pro\ufb01t warnings
\n
in December 2019 and April 2019 have also been excluded from the calculation.
\n
The total amount charged to the income statement in the year ended 31 January 2023 is \u00a33.9m (2022: \u00a33.4m). This has been charged to
\n
administrative and selling expenses.
\n
The Group did not enter into any share-based payment transactions with parties other than employees during the current period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27346": { "value": "34 Reserves
Share-based payment reserve
\n
Prior to vesting, the share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
\n
employees, including key management personnel, as part of their remuneration. More detail is provided in Note 36.
\n
Fair value reserve
\n
The fair value reserve comprises the unrealised gains or losses of FVOCI assets pending subsequent recognition in pro\ufb01t or loss once the
\n
investment is derecognised.
\n
Hedging reserve
\n
The hedging reserve comprises the e\ufb00ective portion of the cumulative net change in the fair value of hedging instruments used in cash \ufb02ow
\n
hedges pending subsequent recognition in: (a) pro\ufb01t or loss as the hedged cash \ufb02ows or items a\ufb00ect pro\ufb01t or loss; or (b) the statement of
\n\ufb01nancial position as the hedged cash \ufb02ows or items a\ufb00ect property, plant and equipment.", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27376": { "value": "35 Capital management
The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns
\n
for shareholders and bene\ufb01ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
\n
For the purposes of the Group\u2019s capital management, capital comprises total equity of \u00a3369.5m (2022: \u00a3652.9m) as shown on the
\n
consolidated statement of \ufb01nancial position. The Group operates in a number of regulated markets and includes subsidiaries which are
\n
required to comply with speci\ufb01c requirements in respect of capital or other resources.
\n
The Group\u2019s \ufb01nancial services businesses are regulated primarily by the Financial Services Commission in Gibraltar and by the FCA in\u00a0the UK;
\n
and the cash requirements of its River Cruise and Travel businesses are regulated by the CAA in the UK. It is the Group\u2019s policy to comply with
\n
the requirements of these regulators in respect of capital adequacy or other similar tests at all times.
\n
The Group\u2019s regulated Underwriting business is based in Gibraltar and regulated by the FSC. The Underwriting business is required to ensure
\n
that it has a su\ufb03cient level of capitalisation in accordance with Solvency II.
\n
The Group and its subsidiaries have complied with externally-imposed capital requirements during the year. (The amounts set out in the
\n
following three paragraphs are provisional and unaudited).
\n
The Group monitored its ability to comply with the requirements of Solvency II throughout the year to 31 January 2023, having previously
\n
received approval from the FSC for the Undertaking of Speci\ufb01c Parameters when applying the standard formula to measure capital
\n
requirements for this business under Solvency II rules. Under Solvency II, AICL remained well capitalised, and at 31 January 2023 available
\n
capital was \u00a398.4m against a Solvency Capital Requirement of \u00a345.6m, giving 216% coverage. As at 31 January 2022, available capital was
\n
\u00a3115.1m against a Solvency Capital Requirement of \u00a354.1m, giving 213% coverage.
\n
The Group\u2019s regulated Insurance Broking business is based in the UK and regulated by the FCA. Due to the nature of the business, the capital
\n
requirements are signi\ufb01cantly less than for the Underwriting business, but the Group is required to comply with the Adequate Resources
\n
requirements of Threshold Condition 2.4 of the FCA Handbook. The Group undertakes a rigorous assessment against the requirements of
\n
this Condition on an annual basis and, as a consequence, calculates and holds an appropriate amount of capital in respect of the Insurance
\n
Broking business. The Minimum Regulatory Capital requirement of this business at 31 January 2023 was \u00a35.7m (2022: \u00a311.7m).
\n
The regulated River Cruise and Travel businesses are required to comply with a main test based on liquidity. The CAA liquidity test is a
\n
requirement to hold at least 70% of advanced customer receipts in cash on the last day of each month. The Group monitors its compliance
\n
with this test on a monthly basis including forward-looking compliance using budgets and forecasts. As at 31 January 2023 and 31 January
\n2022, the businesses had su\ufb03cient coverage against this covenant.", "dimensions": { "concept": "saga:DisclosureOfCapitalManagementExplanatoryTextBlock", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27406": { "value": "36 Share-based payments
The Group has granted a number of di\ufb00erent equity-based awards to employees and customers which it has determined to be
\n
share-based payments:
\n
a. Share options and Free Shares offer granted at the time of the IPO
\n
\u2022
On 29 May 2014, nil cost options over 13,132,410 shares were granted to certain Directors and employees with no exercise price and
\n
no\u00a0service or performance vesting conditions. There are no cash settlement alternatives.
\n
\u2022
Eligible customers and employees who acquired their shares under the Customer or Employee Offers in the Prospectus received one
\n
bonus share for every 20 shares they acquired and held continuously for one year to 29 May 2015. As these were bonus shares, there
\n
was\u00a0no exercise price and no cash settlement alternative.
\n
b. Saga Transformation Plan (
STP
)
\n
\u2022
In July 2022, the Board and shareholders approved the issue of an additional new award called the STP. The\u00a0STP has a five-year vesting
\n
period and participants receive a 12.5% share in shareholder value (share price plus dividends) created above a \u00a36 per share hurdle over
\n
a five-year performance period commencing from the grant date, subject to continuing employment. For Directors and senior leaders,
\n
the STP will be equity-settled. For other employees, the STP will be settled in cash. There is a cap of \u00a388.0m on the value of awards that
\n
may vest, and the awards have a range of grant dates based on the tranche that each participant falls\u00a0into.
\n
\u2022
On 5 July 2022, nil cost options were issued under the STP to certain Directors and other senior employees which vest and become
\n
exercisable on the fifth anniversary of the grant date, subject to continuing employment.
\n
c. Restricted Share Plan (
RSP
)
\n
\u2022
The RSP is a discretionary executive share plan under which the Board may grant options over shares in Saga plc.
\n
\u2022
During the year, nil cost options over 2,548,775 shares were issued under the RSP to certain Directors and other senior employees
\n
which\u00a0vest and become exercisable on the third anniversary of the grant date, subject to continuing employment.
Notes to the consolidated \ufb01nancial statements continued
\n
198
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
36 Share-based payments
continued
\n
d. Long-term Incentive Plan (
LTIP
)
\n
\u2022
The LTIP is a legacy discretionary executive share plan under which the Board may, within certain limits and subject to applicable
\n
performance conditions, grant options over shares in Saga plc.
\n
\u2022
Up to 31 January 2017, these options are 50% linked to a non-market vesting condition, earnings per share, and 50% linked to a market
\n
vesting condition, total shareholder return (
TSR
).
\n
\u2022
From 1 February 2017 to 31 January 2018, these options were 60% linked to non-market vesting conditions (30% linked to basic earnings
\n
per share and 30% linked to organic earnings per share) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2018, these options were 60% linked to non-market vesting conditions (30% linked to organic earnings per share and
\n
30% linked to return on capital employed (
ROCE
)) and 40% linked to a market vesting condition, TSR.
\n
\u2022
From 1 February 2019, these options are 75% linked to non-market vesting conditions (50% linked to operational and strategic measures
\n
and 25% linked to ROCE) and 25% linked to a market vesting condition, TSR.
\n
e. Deferred Bonus Plan (
DBP
)
\n
\u2022
On 28 April 2022, nil cost options over 345,353 shares were issued under the DBP to the Executive Directors reflecting their deferred
\n
bonus in respect of 2021/22, which vest and become exercisable on the third anniversary of the grant date. Under the DBP scheme,
\n
executives receive two-thirds of the bonus award in cash and one-third in the form of rights to shares of the Company.
\n
f. Employee Free Shares
\n
\u2022
There were no shares awarded during the year. Employee Free Shares are allocated at nil cost and the shares become beneficially owned
\n
over a three-year period from allocation, subject to continuing service.
\n
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
\n
on\u00a0receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date
\n
of\u00a0vesting to the date of their expiry. With the exception of share options granted at the time of the IPO, if an employee ceases to be employed
\n
by the Group, the option rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
\n
The table below summarises the movements in the number of share options outstanding for the Group and their weighted average
\n
exercise\u00a0price:
\n
IPO options
RSP
LTIP
DBP
STP
\n
Employee
\n
Free
\n
Shares
Total
\n
At 1 February 2022
8,437
1,362,338
618,203
365,502
\u2013
560,566
2,915,046
\n
Granted
\u2013
2,548,775
\u2013
345,353
\u2013
\u2013
2,894,128
\n
Forfeited
\u2013
(59,184)
(545,236)
\u2013
\u2013
(28,065)
(632,485)
\n
Exercised
(1,117)
\u2013
(9,402)
\u2013
\u2013
(40,453)
(50,972)
\n
At 31 January 2023
7,320
3,851,929
63,565
710,855
\u2013
492,048
5,125,717
\n
Exercise price
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\u00a3nil
\n
Exercisable at 31 January 2023
7,320
\u2013
63,565
33,094
\u2013
114,464
218,443
\n
Average remaining contractual life
\u2013
1.9 years
\u2013
1.5 years
4.4 years
1.0 years
1.7 years
\n
Average fair value at grant
\u00a327.75
\u00a32.11
\u00a39.84
\u00a33.26
n/a
\u00a35.80
\u00a32.75
\n
The average fair values at grant date have been restated to re\ufb02ect the impact of the share consolidation on 13 October 2020.
\n
The weighted average share price at the date of exercise for share options exercised during the year ended 31 January 2023 was \u00a31.48
\n
(2022:\u00a0\u00a33.85).
\n
The following information is relevant in the determination of the fair value of options granted during the year under the equity-settled and
\n
cash-settled share-based remuneration schemes operated by the Group.
\n
RSP
DBP
\n
Model used
Black-Scholes
Black-Scholes
\n
Expected life of share option
3 years
3 years
\n
Weighted average share price
\u00a31.55
\u00a32.43
Saga plc
Annual Report and Accounts 2023
199
Strategic report
Financial statements
Additional information
Governance
\n
As at 31 January 2023, the Group did not hold any liability in relation to cash-settled share-based remuneration that had vested by the end
\n
of\u00a0the year.
\n
As only limited historical data for the Group\u2019s share price is available, the Group estimated the Company\u2019s share price volatility as an average
\n
of\u00a0the volatilities of its TSR comparator group over a historical period commensurate with the expected life of the award immediately prior
\n
to\u00a0the date of the grant for awards under the RSP, DBP and Employee Free Share scheme.
\n
For awards under the new STP scheme, approved in July 2022, a volatility assumption of 31% has been employed, calculated based on volatility
\n
in Saga plc\u2019s historical share price in the \ufb01ve years to 31 December 2019. This time period was selected to strip out the impact of the COVID-19
\n
pandemic, which has had a signi\ufb01cant impact on Saga\u2019s business since the beginning of 2020. The impacts on the share price of pro\ufb01t warnings
\n
in December 2019 and April 2019 have also been excluded from the calculation.
\n
The total amount charged to the income statement in the year ended 31 January 2023 is \u00a33.9m (2022: \u00a33.4m). This has been charged to
\n
administrative and selling expenses.
\nThe Group did not enter into any share-based payment transactions with parties other than employees during the current period.", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27630": { "value": "37 Commitments and contingencies
a) Lease commitments
\n
The Group leases various river cruise ships, o\ufb03ces, warehouses, equipment and vehicles. The contract lengths of the leases vary considerably
\n
and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered in a contract, lease
\n
payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum lease payments under
\n
lease contracts, together with the present values of the net minimum lease payments, are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Within one year
11.5
5.4
\n
Between one and five years
15.4
19.5
\n
After five years
11.1
18.0
\n
Total minimum lease payments
38.0
42.9
\n
Less amounts representing finance charges
(5.4)
(7.6)
\n
Present value of minimum lease payments
32.6
35.3
\n
As at 31 January 2023, the value of lease liabilities contracted for, but not provided for, in the \ufb01nancial statements in respect of right-of-use
\n
assets amounted to \u00a3nil (2022: \u00a342.5m). At 31 January 2022, these lease commitments related to the river cruise vessel, Spirit of the Danube
\n
which has been recognised within right-of-use assets (Note 18) during the year to 31 January 2023.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer to Note 18 for
\n
further detail.
\n
b) Commitments
\n
As at 31 January 2023, the capital amount contracted for, but not provided for, in the \ufb01nancial statements in respect of property, plant and
\n
equipment, amounted to \u00a3nil (2022: \u00a3nil).
\n
c) Contingent liabilities
\n
The CAA and ABTA regulate the Group\u2019s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
\ncustomer protection. At 31 January 2023, the Group had \u00a328.4m (2022: \u00a319.4m) of Ocean Cruise and Travel related bonds in place.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27633": { "value": "a) Lease commitments
The Group leases various river cruise ships, o\ufb03ces, warehouses, equipment and vehicles. The contract lengths of the leases vary considerably
\n
and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered in a contract, lease
\n
payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum lease payments under
\n
lease contracts, together with the present values of the net minimum lease payments, are as follows:
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Within one year
11.5
5.4
\n
Between one and five years
15.4
19.5
\n
After five years
11.1
18.0
\n
Total minimum lease payments
38.0
42.9
\n
Less amounts representing finance charges
(5.4)
(7.6)
\n
Present value of minimum lease payments
32.6
35.3
\n
As at 31 January 2023, the value of lease liabilities contracted for, but not provided for, in the \ufb01nancial statements in respect of right-of-use
\n
assets amounted to \u00a3nil (2022: \u00a342.5m). At 31 January 2022, these lease commitments related to the river cruise vessel, Spirit of the Danube
\n
which has been recognised within right-of-use assets (Note 18) during the year to 31 January 2023.
\n
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
\n
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
\n
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, re\ufb02ecting a prospective
\n
change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer to Note 18 for
\n
further detail.
\n
b) Commitments
\n
As at 31 January 2023, the capital amount contracted for, but not provided for, in the \ufb01nancial statements in respect of property, plant and
\nequipment, amounted to \u00a3nil (2022: \u00a3nil). ", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27676": { "value": "c) Contingent liabilities
The CAA and ABTA regulate the Group\u2019s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
\ncustomer protection. At 31 January 2023, the Group had \u00a328.4m (2022: \u00a319.4m) of Ocean Cruise and Travel related bonds in place.", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27741": { "value": "39 Subsidiaries
The entities listed below are subsidiaries of the Company or Group. All of the undertakings are wholly owned and included within the
\n
consolidated \ufb01nancial statements. The registered o\ufb03ce address for all entities registered in England is Enbrook Park, Sandgate, Folkestone,
\n
Kent CT20 3SE, United Kingdom. The registered o\ufb03ce address of Acromas Insurance Company Limited is 57/63 Line Wall Road, Gibraltar.
\n
The registered o\ufb03ce address of Saga Cruises GmbH is Industriegebiet S\u00fcd, 26871, Papenburg, Niedersachsen, Germany. The registered
\n
o\ufb03ce address of Sa\ufb00ron Maritime Limited is Aspire Corporate Services Limited, PO Box 191, Elizabeth House, Ruettes Brayes, St Peter Port,
\n
Guernsey, GY1 4HW.
\n
Company name
Country of registration
Nature of business
\n
Saga Personal Finance Limited
England
Delivery of regulated investment products
\n
Saga Services Limited
England
Regulated Insurance broking
\n
Acromas Insurance Company Limited
Gibraltar
Insurance underwriting
\n
CHMC Limited
\n
9
\n
England
Motor accident management
\n
PEC Services Limited
\n
9
\n
England
Repairer of automotive vehicles
\n
ST&H Limited
England
Tour operating
\n
Titan Transport (UK) Limited
England
Dormant company
\n
Saga Travel Group (UK) Limited (formerly Titan Travel (UK) Limited)
England
Tour operating
\n
Saga Travel Group Limited (formerly Titan Travel Group Limited)
England
Tour operating
\n
Titan Transport Limited
England
Tour operating
\n
Saga Cruises Limited
England
Cruising
\n
Saga Cruises IV Limited
England
Cruising
\n
Saga Cruises V Limited
England
Cruising
\n
Saga Cruises VI Limited
England
Cruising
\n
Saga Cruises GmbH
Germany
Cruising
\n
Saga Crewing Services Limited
\n
9
\n
England
Cruising
\n
Saffron Maritime Limited
Guernsey
Cruising
\n
CustomerKNECT Limited
\n
9
\n
(formerly MetroMail Limited)
England
Mailing house
\n
Saga Mid Co Limited
England
Debt service provider
\n
Saga Publishing Limited
\n
9
\n
England
Publishing
\n
Saga Membership Limited
\n
9
\n
England
Customer loyalty scheme
\n
The Big Window Consulting Limited
\n
9
\n
England
Research and insight analysis
\n
CHMC Holdings Limited
England
Dormant holding company
\n
ST&H Group Limited
England
Holding company
\n
Saga Leisure Limited
England
Dormant holding company
\n
Saga Group Limited
England
Provision of administrative function
\n
for\u00a0central costs
\n
Confident Services Limited
England
Dormant company
\n
Saga Healthcare Limited
England
Dormant company
\n
Saga Radio (North West) Limited
England
Dormant company
\n
9
These subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 31 January 2023. As required,
\n
Saga plc, the ultimate parent undertaking and controlling party of the Group, guarantees all outstanding liabilities to which these subsidiary companies are subject at
\n
the end of the financial year, until they are satisfied in full. This is in accordance with Section 479C of the Companies Act 2006. The guarantee is enforceable against
\nSaga plc as the ultimate parent undertaking, by any person to whom the subsidiary companies listed above are liable in respect of those liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27870": { "value": "40 Related party transactions
There were no related party transactions in the year ended 31 January 2023.
\n
A working capital facility of \u00a310.0m, agreed with Sir Roger De Haan, the Non-Executive Chairman of Saga plc, to fund the short-term liquidity
\n
needs of the Cruise business was cancelled in July 2021.
\n
As set out in Note 30, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
\n
commencing on 1 January 2024, under which the Company may draw down up to \u00a350m with 30 days\u2019 notice to support liquidity needs and
\n
speci\ufb01cally the repayment of \u00a3150m bonds maturing in May 2024. The facility is provided on an arm\u2019s length basis and is guaranteed by Saga
\n
plc, Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of
\n
the loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is
\n
subject to a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the
\n
facility is payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024
\nand 31 December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27885": { "value": "41 Events after the reporting period
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
\n
debt facilities (Note 30). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
\n
Also since 31 January, the Company has agreed a \u00a350m loan facility with Sir Roger De Haan, to commence on 1 January 2024, details of which
are set out in Note 40 above.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f27908": { "value": "Company \ufb01nancial statements of Saga plc
Balance sheet
\n
Note
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Fixed assets
\n
Investment in subsidiaries
2
167.3
552.3
\n
Current assets
\n
Debtors \u2013 amounts falling due after more than one year
3
521.3
501.8
\n
Debtors \u2013 amounts falling due within one year
3
3.3
3.0
\n
Cash and short-term deposits
\u2013
38.0
\n
524.6
542.8
\n
Creditors \u2013 amounts falling due within one year
4
(2.9)
(3.9)
\n
Net current assets
521.7
538.9
\n
Creditors \u2013 amounts falling due after more than one year
5
(397.2)
(396.2)
\n
Net assets
291.8
695.0
\n
Capital and reserves
\n
Called up share capital
6
21.1
21.1
\n
Share premium account
648.3
648.3
\n
Retained (deficit)/earnings
(386.6)
18.1
\n
Share-based payment reserve
9.0
7.5
\n
Total shareholders\u2019 funds
291.8
695.0
\n
The Company has not presented its own pro\ufb01t and loss account as permitted by section 408(3) of the Companies Act 2006 (the
Act
).
\n
The\u00a0loss included in the \ufb01nancial statements of the Company, determined in accordance with the Act, was \u00a3407.1m (2022: \u00a321.9m).
\n
Company number: 08804263
\n
The Notes on pages 205-208 form an integral part of these \ufb01nancial statements.
\n
Signed for and on behalf of the Board on 17 April 2023 by
\n
E A Sutherland
J B Quin
\n
Group Chief Executive O\ufb03cer
Group Chief Financial O\ufb03cer
204
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
\n
Company \ufb01nancial statements of Saga plc
\n
Statement of changes in equity
\n
Called up
\n
share
\n
capital
\n
\u00a3m
\n
Share
\n
premium
\n
account
\n
\u00a3m
\n
Retained
\n
earnings/
\n
(deficit)
\n
\u00a3m
\n
Share-based
\n
payment
\n
reserve
\n
\u00a3m
\n
Total
\n
equity
\n
\u00a3m
\n
At 1 February 2021
21.0
648.3
38.2
5.9
713.4
\n
Loss for the financial year
\u2013
\u2013
(21.9)
\u2013
(21.9)
\n
Issue of share capital (Note 6)
0.1
\u2013
\u2013
\u2013
0.1
\n
Share-based payment charge
\u2013
\u2013
\u2013
3.4
3.4
\n
Transfer upon vesting of share options
\u2013
\u2013
1.8
(1.8)
\u2013
\n
At 31 January 2022
21.1
648.3
18.1
7.5
695.0
\n
Loss for the financial year
\u2013
\u2013
(407.1)
\u2013
(407.1)
\n
Share-based payment charge
\u2013
\u2013
\u2013
3.9
3.9
\n
Transfer upon vesting of share options
\u2013
\u2013
2.4
(2.4)
\u2013
\n
At 31 January 2023
21.1
648.3
(386.6)
9.0
291.8
\n
The Notes on pages 205-208 form an integral part of these \ufb01nancial statements.
Saga plc
Annual Report and Accounts 2023
205
\n
Strategic report
Financial statements
Additional information
Governance
\n
Notes to the Company \ufb01nancial statements
\n
1.1 Accounting policies
\n
a) Accounting convention
\n
These \ufb01nancial statements were prepared in accordance with
\n
Financial Reporting Standard 101 \u2018Reduced Disclosure Framework\u2019
\n
(
FRS 101
).
\n
In preparing these \ufb01nancial statements, the Company applies
\n
the\u00a0recognition, measurement and disclosure requirements of
\n
UK-adopted international accounting standards, but makes
\n
amendments where necessary in order to comply with Companies
\n
Act 2006 (the
Act
) and has set out below where advantage of the
\n
FRS\u00a0101 disclosure exemptions has been taken.
\n
The \ufb01nancial statements are prepared under the historical cost
\n
convention, as modi\ufb01ed by derivative \ufb01nancial assets and \ufb01nancial
\n
liabilities measured at fair value through pro\ufb01t or loss, and in
\n
accordance with the Act, and are prepared on\u00a0a\u00a0going concern basis
\n
(please refer to Note 2.1 of the Saga plc consolidated accounts on
\n
pages 143-144 for an assessment of the\u00a0going concern basis for the
\n
Group and the Company).
\n
The Company\u2019s \ufb01nancial statements are presented in sterling
\n
and\u00a0all\u00a0values are rounded to the nearest hundred thousand (\u00a3m)
\n
except\u00a0when otherwise indicated.
\n
The accounting policies which follow set out those policies which
\n
apply\u00a0in preparing the \ufb01nancial statements for the year ended
\n
31\u00a0January 2023.
\n
The Company has taken advantage of the following disclosure
\n
exemptions under FRS 101:
\n
\u2022
The requirements of International Financial Reporting Standard
\n
(
IFRS
) 7 \u2018Financial Instruments: Disclosures\u2019.
\n
\u2022
The requirement in paragraph 38 of International Accounting
\n
Standard (
IAS
) 1 \u2018Presentation of Financial Statements\u2019 to present
\n
comparative information in respect of paragraph 79(a)(iv) of IAS 1.
\n
\u2022
The requirements of paragraphs 10(d), 10(f), 16, 38A,
\n
38B-D, 40A-D, 111 and 134-136 of IAS 1 \u2018Presentation of
\n
Financial\u00a0Statements\u2019.
\n
\u2022
The requirements of IAS 7 \u2018Statement of Cash Flows\u2019.
\n
\u2022
The requirements of paragraphs 30 and 31 of IAS 8 \u2018Accounting
\n
Policies, Changes in Accounting Estimates and Errors\u2019.
\n
\u2022
The requirements of paragraphs 17 and 18A of IAS 24 \u2018Related
\n
Party Disclosures\u2019.
\n
\u2022
The requirements in IAS 24 \u2018Related Party Disclosures\u2019 to disclose
\n
related party transactions entered into between two or more
\n
members of a group, provided that any subsidiary which is a
\n
party\u00a0to the transaction is wholly owned by such a member.
\n
\u2022
The requirements of paragraphs 45(b) and 46-52 of IFRS 2
\n
\u2018Share-based Payment\u2019.
\n
b) Investments in subsidiaries
\n
Investments in subsidiaries are accounted for at cost less a
\n
provision\u00a0for impairment and are reviewed for impairment when
\n
events or changes in circumstances indicate the carrying value
\n
may\u00a0not be recoverable.
\n
c) Debtors
\n
Trade and other debtors are initially recognised at fair value and,
\n
where the time value of money is material, subsequently measured
\n
at\u00a0amortised cost using the e\ufb00ective interest rate (
EIR
) method.
\n
Provision for impairment is made using the simpli\ufb01ed approach set
\n
out in IFRS 9, whereby no credit loss allowance is recognised on initial
\n
recognition, and then at each subsequent reporting date the loss
\n
allowance will be the present value of the expected cash \ufb02ow shortfalls
\n
over the remaining life of the debtors (i.e. lifetime expected credit
\n
losses (
ECLs
)). Balances are written o\ufb00 when the probability of
\n
recovery is assessed as being remote.
\n
Amounts due from Group undertakings are classi\ufb01ed as debtors.
\n
They have no \ufb01xed date of payment and are payable on demand.
\n
The\u00a0amounts due from Group undertakings are disclosed at
\n
amortised cost.
\n
d) Deferred tax
\n
Deferred tax is provided on temporary di\ufb00erences between the tax
\n
bases of assets and liabilities and their carrying amounts for \ufb01nancial
\n
reporting purposes at the reporting date.
\n
Deferred tax liabilities are recognised for all taxable temporary
\n
di\ufb00erences and deferred tax assets are recognised to the extent that
\n
it is probable that taxable pro\ufb01t will be available against which the
\n
deductible temporary di\ufb00erences, and the carry forward of unused
\n
tax credits and unused tax losses, can be utilised.
\n
The carrying amount of deferred tax assets is reviewed at each
\n
reporting date and reduced to the extent that it is no longer probable
\n
that su\ufb03cient taxable pro\ufb01t will be available to allow all or part of the
\n
deferred tax asset to be utilised. Unrecognised deferred tax assets
\n
are reassessed at each reporting date and are recognised to the
\n
extent that it has become probable that future taxable pro\ufb01ts will
\n
allow the deferred tax asset to be recovered.
\n
Deferred tax assets and liabilities are measured at the tax rates that
\n
are expected to apply in the year when the asset is realised or the
\n
liability is settled, based on tax rates (and tax laws) that have been
\n
enacted or substantively enacted at the reporting date. Deferred
\n
tax\u00a0is charged or credited in the income statement, except when it
\n
relates to items charged or credited in other comprehensive income
\n
(
OCI
), in which case the deferred tax is dealt with in OCI.
\n
Deferred tax assets and deferred tax liabilities are o\ufb00set if a legally
\n
enforceable right exists to set o\ufb00 current tax assets against current
\n
tax liabilities and the deferred taxes relate to the same taxable entity
\n
and the same taxation authority.
\n
e) Share-based payments
\n
The Company provides bene\ufb01ts to employees (including Directors)
\n
of Saga plc and its subsidiary undertakings, in the form of share-based
\n
payment transactions, whereby employees render services as
\n
consideration for equity instruments (equity-settled transactions).
\n
The cost of equity-settled transactions is measured by reference to
\n
the fair value on the grant date and is recognised as an expense over
\n
the relevant vesting period, ending on the date on which the employee
\n
becomes fully entitled to the award.
\n
Fair values of share-based payment transactions are calculated
\n
using\u00a0Black-Scholes and Monte Carlo modelling techniques.
\n
In valuing equity-settled transactions, assessment is made
\n
of\u00a0any\u00a0vesting conditions to categorise these into market
\n
performance\u00a0conditions, non-market performance conditions
\n
and\u00a0service conditions.
Notes to the Company \ufb01nancial statements continued
\n
206
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
1.1 Accounting policies
continued
\n
Where the equity-settled transactions have market performance
\n
conditions (that is, performance which is directly or indirectly linked
\n
to\u00a0the share price), the fair value of the award is assessed at the time
\n
of\u00a0grant and is not changed, regardless of the actual level of vesting
\n
achieved, except where the employee ceases to be employed prior
\n
to\u00a0the vesting date.
\n
For service conditions and non-market performance conditions,
\n
the\u00a0fair value of the award is assessed at the time of grant and is
\n
reassessed at each reporting date to re\ufb02ect updated expectations
\n
for the level of vesting. No expense is recognised for awards that
\n
ultimately do not vest.
\n
At each reporting date prior to vesting, the cumulative expense is
\n
calculated, representing the extent to which the vesting period has
\n
expired and, in the case of non-market conditions, the best estimate
\n
of the number of equity instruments that will ultimately vest or, in the
\n
case of instruments subject to market conditions, the fair value on
\n
grant adjusted only for leavers. The movement in the cumulative
\n
expense since the previous reporting date is recognised in the
\n
income statement, with the corresponding increase in share-based
\n
payments reserve.
\n
Upon vesting of an equity instrument, the cumulative cost in the
\n
share-based payments reserve is reclassi\ufb01ed to reserves.
\n
f) Financial instruments
\n
i) Financial assets
\n
On initial recognition, a \ufb01nancial asset is classi\ufb01ed as either amortised
\n
cost, fair value through other comprehensive income (
FVOCI
) or fair
\n
value through pro\ufb01t and loss (
FVTPL
). The classi\ufb01cation of \ufb01nancial
\n
assets is based on the business model in which a \ufb01nancial asset is
\n
managed, and its contractual cash \ufb02ow characteristics.
\n
The Company measures all \ufb01nancial assets at fair value at each
\n
reporting date, other than those instruments measured at
\n
amortised\u00a0cost.
\n
The Company\u2019s \ufb01nancial assets at amortised cost include amounts
\n
due from Group undertakings. The Company does not hold any
\n
\ufb01nancial assets classi\ufb01ed as FVOCI or FVTPL.
\n
Financial assets at amortised cost
\n
Initial recognition and measurement
\n
A \ufb01nancial asset is classi\ufb01ed at amortised cost if it meets both of the
\n
following conditions and is not elected to be designated as FVTPL:
\n
\u2022
It is held within a business model whose objective is to hold assets
\n
to collect contractual cash flows.
\n
\u2022
Its contractual terms give rise on specified dates to cash flows
\n
that are solely payments of principal and interest on the principal
\n
amount\u00a0outstanding.
\n
Subsequent measurement
\n
These assets are subsequently measured at amortised cost using
\n
the\u00a0EIR method. The amortised cost is reduced by impairment losses
\n
(see\u00a0(ii) below). Impairment losses are recognised in pro\ufb01t or loss as
\n
they are incurred. Any gain or loss on derecognition is recognised
\n
in\u00a0pro\ufb01t or loss immediately.
\n
Derecognition
\n
A \ufb01nancial asset is derecognised when the rights to receive cash
\n
\ufb02ows\u00a0from the asset have expired or when the Company has
\n
transferred substantially all the risks and rewards relating to
\n
the\u00a0asset\u00a0to a third party.
\n
ii) Impairment of financial assets
\n
The ECL impairment model applies to \ufb01nancial assets measured
\n
at\u00a0amortised cost and debt investments at FVOCI.
\n
The Company measures loss allowances at an amount equal to
\n
12-month ECLs, except for trade receivables and contract assets
\n
that\u00a0result from transactions within the scope of IFRS 15.
\n
When determining whether the credit risk of a \ufb01nancial asset has
\n
increased signi\ufb01cantly since initial recognition and when estimating
\n
ECLs, the Company considers reasonable and supportable
\n
information that is relevant and available without undue cost or
\n
e\ufb00ort.\u00a0This includes both quantitative and qualitative information and
\n
analysis, based on the Company\u2019s historical experience and informed
\n
credit assessment and including forward-looking information.
\n
Measurement of ECLs
\n
ECLs are measured as a probability-weighted estimate of credit
\n
losses. Credit losses are measured as the probability of default in
\n
conjunction with the present value of the Group\u2019s exposure. Loss
\n
allowances for ECLs on \ufb01nancial assets measured at amortised cost
\n
are deducted from the gross carrying amount of the assets, with a
\n
corresponding charge to the income statement.
\n
iii) Financial liabilities
\n
Initial recognition and measurement
\n
All \ufb01nancial liabilities are classi\ufb01ed as \ufb01nancial liabilities at amortised
\n
cost on initial recognition.
\n
All \ufb01nancial liabilities are recognised initially at fair value and,
\n
in\u00a0the\u00a0case of loans and borrowings, net of directly attributable
\n
transaction costs.
\n
The Company\u2019s \ufb01nancial liabilities comprise loans and borrowings.
\n
Subsequent measurement
\n
After initial recognition, interest-bearing loans and borrowings and
\n
other payables are subsequently measured at amortised cost using
\n
the EIR method. Amortised cost is calculated by taking into account
\n
any discount or premium on acquisition and fees or costs that are an
\n
integral part of the EIR. The EIR amortisation is included in \ufb01nance
\n
costs in the income statement.
\n
Derecognition
\n
A \ufb01nancial liability is derecognised when the obligation under the
\n
liability is discharged or cancelled or expires.
\n
When an existing \ufb01nancial liability is replaced by another from the
\n
same lender on substantially di\ufb00erent terms, or the terms of an
\n
existing liability are substantially modi\ufb01ed, such an exchange or
\n
modi\ufb01cation is treated as a derecognition of the original liability and
\n
the recognition of a new liability. The di\ufb00erence in the respective
\n
carrying amounts is recognised in the income statement.
\n
g) Audit remuneration
\n
Amounts receivable by the Company\u2019s auditor and its associates
\n
in\u00a0respect of services to the Company and its associates, other than
\n
the\u00a0audit of the Company\u2019s \ufb01nancial statements, have not been
\n
disclosed as the information is required instead to be disclosed on
\n
a\u00a0consolidated basis in the consolidated \ufb01nancial statements.
Saga plc
Annual Report and Accounts 2023
207
\n
Strategic report
Financial statements
Additional information
Governance
\n
1.2 Significant accounting judgements, estimates and assumptions
\n
The preparation of \ufb01nancial statements requires the Company to select accounting policies and make estimates and assumptions that a\ufb00ect
\n
items reported in the primary Company \ufb01nancial statements and Notes to the Company \ufb01nancial statements.
\n
Significant estimates
\n
All estimates are based on management\u2019s knowledge of current facts and circumstances, assumptions based on that knowledge and
\n
predictions of future events and actions. Actual results may therefore di\ufb00er from those estimates.
\n
The table below sets out those items the Company considers susceptible to changes in critical estimates and assumptions together with the
\n
relevant accounting policy.
\n
Acc. policy
Items involving estimation
Sources of estimation uncertainty
\n
1.1b
Investment in subsidiaries
\n
impairment testing
\n
The Company determines whether investment in subsidiaries needs to be impaired when indicators
\n
of impairment exist. This requires an estimation of the value-in-use of the subsidiaries owned by the
\n
Company. The value-in-use calculation requires the Company to estimate the future cash flows
\n
expected to arise from the subsidiaries, discounted at a suitably risk-adjusted rate in order to
\n
calculate present value.
\n
Sensitivity analysis has been undertaken to determine the effect of changing the discount rate,
\n
the\u00a0terminal value and EBITDA multiple on the present value calculation, which is shown in
\n
Note 2 below.
\n
2 Investment in subsidiaries
\n
\u00a3m
\n
Cost
\n
At 1 February 2021
4,132.7
\n
At 31 January 2022 and 31 January 2023
4,132.7
\n
Amounts provided for
\n
At 1 February 2021 and 31 January 2022
3,580.4
\n
Amounts provided in the year
385.0
\n
At 31 January 2022 and 31 January 2023
3,965.4
\n
Net book value
\n
At 31 January 2023
167.3
\n
At 31 January 2022
552.3
\n
See Note 39 to the consolidated \ufb01nancial statements for a list of the Company\u2019s investments.
\n
The net assets of the Company were in excess of its market capitalisation at 31 January 2023, thus constituting an indicator of impairment.
\n
An\u00a0impairment assessment was therefore performed in which the recoverable amount of the investment was compared to its carrying value.
\n
The recoverable amount of the Company\u2019s investment in subsidiaries has been determined based on a sum-of-the-parts valuation, by deriving
\n
a value-in-use for each of the Group\u2019s businesses, using discounted cash \ufb02ow projections from the Group\u2019s Board-approved \ufb01ve-year plan to
\n
2027/28 for certain parts of the business, and EBITDA multiples to estimate the present value of future dividend streams for other subsidiaries.
\n
For the discounted cash \ufb02ow projections, a terminal value has been calculated using the Gordon Growth Model based on the \ufb01fth year of
\n
those\u00a0projections and an annual growth rate of 2.0% (2022: 2.0%) as the expected long-term average nominal growth rate of the UK
\n
economy. The cash \ufb02ows have then been discounted to present value using a suitably risk-adjusted nominal discount rate relevant to each of
\n
the segments. As at 31 January 2023, the range of pre-tax discount rates used was 13.0% to 14.7% (2022: 9.9% to 11.7%). As per IAS 36.44,
\n
incremental cash \ufb02ows directly attributable to growth initiatives not yet enacted at the balance sheet date have been removed for the purpose
\n
of the value-in-use calculation.
\n
In the current year, the recoverable amount when compared against the carrying value of the investment in subsidiaries resulted in a de\ufb01cit
\n
of\u00a0\u00a3385.0m, therefore management considered it necessary to impair the investment in subsidiaries balance by this amount.
\n
The de\ufb01cit calculated is most sensitive to the EBITDA multiple, the discount rate, and the terminal growth rate assumed. A quantitative
\n
sensitivity analysis for each of these as at 31 January 2023 and its impact on the headroom/(de\ufb01cit) against the carrying value of investment
\n
in\u00a0subsidiaries is as follows:
\n
EBITDA multiple
Pre-tax discount rate
Terminal growth rate
\n
+1x
\n
\u00a3m
\n
\u20131x
\n
\u00a3m
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
+1.0ppt
\n
\u00a3m
\n
\u20131.0ppt
\n
\u00a3m
\n
Impact
86.6
(86.6)
(34.9)
42.8
41.2
(32.6)
Notes to the Company \ufb01nancial statements continued
\n
208
Saga plc
Annual Report and Accounts 2023
\n
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
\n
3 Debtors
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Amounts falling due after more than one year
\n
Amounts due from Group undertakings
521.3
501.8
\n
521.3
501.8
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Amounts falling due within one year
\n
Deferred tax asset
2.0
1.7
\n
Other debtors
1.3
1.3
\n
3.3
3.0
\n
For amounts due from Group undertakings, the expected credit losses are considered to be immaterial.
\n
4 Creditors \u2013 amounts falling due in less than one year
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Other creditors
1.1
2.0
\n
Accrued interest payable
1.8
1.9
\n
2.9
3.9
\n
5 Creditors \u2013 amounts falling due in more than one year
\n
2023
\n
\u00a3m
\n
2022
\n
\u00a3m
\n
Bonds
400.0
400.0
\n
Unamortised issue costs
(2.8)
(3.8)
\n
397.2
396.2
\n
Please refer to Note 30 of the Saga plc consolidated accounts on pages 193-194 for further details relating to the bonds.
\n
6 Called up share capital
\n
Ordinary shares
\n
Number
\n
Nominal
\n
value
\n
\u00a3
\n
Value
\n
\u00a3m
\n
Allotted, called up and fully paid
\n
At 1 February 2021
140,102,227
0.15
21.0
\n
Issue of shares \u2013 12 November 2021
235,044
0.15
0.1
\n
At 31 January 2022 and 31 January 2023
140,337,271
0.15
21.1
\n
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of \u00a30.1m, for transfer into an Employee Bene\ufb01t
\n
Trust to satisfy employee incentive arrangements.
\n
7 Commitments
\n
The Company has provided guarantees for the Group\u2019s bonds, ship debt, RCF and bank overdraft (please refer to Notes 25 and 30 of the
\nSaga\u00a0plc consolidated accounts on pages 185, and 193-194).", "dimensions": { "concept": "ifrs-full:DisclosureOfConsolidatedAndSeparateFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } }, "f28151": { "value": "b) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less a
\n
provision\u00a0for impairment and are reviewed for impairment when
\n
events or changes in circumstances indicate the carrying value
\nmay\u00a0not be recoverable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138004WWUJN94K2LH95", "period": "2022-02-01T00:00:00/2023-02-01T00:00:00" } } } }