AUB Group Limited Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2023

27 OTHER POLICIES (CONTINUED) Deferred acquisition costs

Deferred customer acquisition costs represent costs associated with acquiring a new customer contract where a relationship is bound by contractual agreement. The costs are capitalised only when they are determined to be recoverable per the customer contract. Deferred acquisition costs are amortised over the term of the customer contract. Deferred revenue from contracts with customers Revenue from broking and agency activities are partially (1%, 2022: 1%) deferred for premium settlement and claims handling services (1.5%, 2022: 1.5%) and cancellations (5%, 2022: 5%). The amount of deferral is based on historic data (on time and cost such activities) adjusted for any forward looking anticipated changes, and margin on service of a standalone service (based on available external data). The revenue is recognised over time, generally 90 days for premium settlement, and within 12 months for claims handling. Dividends Received The Group recognises dividends received within the Consolidated Statement of Cash Flows as cash from operating activities. The Group’s strategy involves investing into other businesses (see Note 7). Cash flows from the Group’s investment in associates is derived in the form of dividends received. As the Group intends to hold such businesses for the long term, dividends from associates represents operating cash flows from the Group’s equity investments. The parent actively monitors dividend payout ratios compared to net profits generated by each business in which the parent has a direct investment. Leases The Group has entered into leases for premises, car parking and fixed assets for varying periods of up to seven years. The lease contracts are recognised on the balance sheet at commencement of the lease, with the exception of short-term leases not exceeding 12 months and leases of low-value assets. The Group applied practical expedients and the exemptions to short-term leases and low-value underlying assets available in the accounting standard. Pursuant to some of its lease agreements, the Group has the option to renew the lease for a period of up to ten years. The Group has no restrictions placed upon the lessee by entering into these leases. The Group applies judgement and considers all relevant factors in assessing whether it is reasonably certain to exercise an option. This assessment is performed periodically, and when the Group is reasonably certain to exercise an option to extend the duration of a lease, that option is then taken into account in calculating or recalculating the right-of-use asset and lease liability. Where the Group sub leases a premises, it derecognises the right of use asset and immediately recognising a lease net investment asset representing the net present value of all future net cash flows expected from the sub lease. Any gain or loss is charged against profit and loss. Other taxes Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST)/Value Added Tax (VAT) except: – when the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and – receivables and payables, which are stated with the amount of GST included. The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Consolidated Statement of Financial Position. Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST/VAT component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the taxation authority. Non-controlling Interests This is measured at their proportionate share of the identifiable net assets and proportion of goodwill.

AUB GROUP ANNUAL REPORT 2023

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