Company Registration No. 07963594 (England and Wales)
WARRANTYWISE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 APRIL 2023
30 April 2023
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WARRANTYWISE LIMITED
COMPANY INFORMATION
Directors
L Whittaker
N Ashworth
A Hall
A Diggins
A Keenan
S Dudhia
(Appointed 16 November 2022)
K Shackleton
(Appointed 16 November 2022)
R Taylor
(Appointed 17 November 2022)
Company number
07963594
Registered office
The Rocket Centre
Trident Way
Trident Park
Blackburn
Lancashire
BB1 3NU
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WARRANTYWISE LIMITED
CONTENTS
Page
Strategic report
3 - 4
Directors' report
1 - 2
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Balance sheet
10
Notes to the financial statements
11 - 22
WARRANTYWISE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -
The directors present their annual report and financial statements for the year ended 30 April 2023.
Principal activities
The principal activity of the company was the provision of motor vehicle warranty plans.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £1,566,676. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
L Whittaker
N Ashworth
A Hall
A Diggins
A Keenan
S Dudhia
(Appointed 16 November 2022)
K Shackleton
(Appointed 16 November 2022)
R Taylor
(Appointed 17 November 2022)
Auditor
PM+M Solutions for Business LLP, is deemed to be reappointed under section 487 (2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
WARRANTYWISE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
On behalf of the board
L Whittaker
Director
14 November 2023
WARRANTYWISE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
The directors present the strategic report for the year ended 30 April 2023.
Fair review of the business
The principal activity of the company is the provision of extended motor vehicle warranty plans to individuals and motor vehicle dealers across the UK und the Warrantywise brand. These warranty plans cover the repair costs in the event the vehicle suffers a breakdown during the period of cover.
The extended warranty plans cover motor vehicles where the manufacturer warranty has expired and include popular makes and models, such as Ford Focus and Volkswagen Golf, to prestige manufacturers including Lamborghini and Ferrari.
Warranty plans are sold directly to customers either on-line or by dedicated sales representatives. In the case of motor vehicle dealers, the warranty plans administered b the company are written directly between the dealer the customer. All repairs for both direct customers and motor vehicle dealer are handled by the dedicated customer service teams.
Business performance
Warrantywise has experienced a remarkable year of business performance. The company has demonstrated consistent growth in terms of both revenue and profit during the financial year 2022/23. Turnover has seen a significant increase of 18%, and pretax profit has also witnessed substantial growth.
In the backdrop of a relatively flat used car market in 2023, it is noteworthy that this situation has translated into a positive trend for our B2C business. Consumers, on average, retain their vehicles for longer durations, which has contributed to the continued growth of our B2C segment. This growth has continued even in the face of the ongoing challenges posed by the cost of living crisis. With the average age of cars in the UK now reaching 8 years, there is an increasing demand for warranty services.
Warrantywise has remained committed to its expansion strategy by channeling investments into marketing, technology, and data solutions. These strategic investments have laid the foundation for our growth path. Furthermore, we are pleased to report an increase in our workforce, with employee numbers rising from 126 to 142, signifying our dedication to building a robust and agile team capable of driving our future success.
Principal risks and uncertainties
The directors consider the principal risks and uncertainties facing the business to be:
Credit Risk
Credit risk is the risk that a customer or provider fails to perform its financial obligations.
The company’s principal financial assets are bank balances and trade and other receivables. The company’s exposure to credit risk is mitigated by the limited concentration across its motor vehicle dealers. In addition, the financial position of the company’s banking providers is periodically reviewed to ensure they are appropriate.
Liquidity Risk
Liquidity risk is the risk that the company is unable to meets its financial obligations as they fall due.
The company’s exposure to liquidity risk is mitigated by the regular monitoring of forecast and actual cash flows and maintaining adequate cash reserves, in particular with regards to expected future warranty claims.
Commercial Risk
Commercial risks include macro-economic conditions and competitive factors that may impact the company’s financial performance.
The company regularly reviews and, where appropriate, updates its vehicle warranty plan terms to ensure they meet changing requirements of customers and their vehicles, for example the increasing move to electric vehicles. The company remains aware of macro-economic conditions and regularly reviews key financial performance measures to identify any emerging trends.
WARRANTYWISE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 4 -
Key performance indicators
The directors use the following key financial performance measures to monitor performance:
2023 2022
Turnover £17,218,438 £14,744,546
Profit before taxation £2,793,891 £1,789,841
Future developments
The directors are confident that the company will continue to maintain and improve performance through its leading warranty cover, strong relationships with motor vehicle dealers and continued investment in its people.
L Whittaker
Director
14 November 2023
WARRANTYWISE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WARRANTYWISE LIMITED
- 5 -
Opinion
We have audited the financial statements of Warrantywise Limited (the 'company') for the year ended 30 April 2023 which comprise the statement of income and retained earnings, the balance sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 April 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
WARRANTYWISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WARRANTYWISE LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
WARRANTYWISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WARRANTYWISE LIMITED
- 7 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the Company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
WARRANTYWISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WARRANTYWISE LIMITED
- 8 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher Johnson FCA
Senior Statutory Auditor
For and on behalf of PM+M Solutions for Business LLP
14 November 2023
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WARRANTYWISE LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 30 APRIL 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
17,218,438
14,601,238
Cost of sales
(10,097,458)
(9,453,950)
Gross profit
7,120,980
5,147,288
Administrative expenses
(4,337,621)
(3,389,419)
Other operating income
30,194
Operating profit
4
2,783,359
1,788,063
Interest receivable and similar income
7
10,532
1,778
Profit before taxation
2,793,891
1,789,841
Tax on profit
8
(352,585)
(329,220)
Profit for the financial year
2,441,306
1,460,621
Retained earnings brought forward
2,291,878
2,480,331
Dividends
9
(1,566,676)
(1,649,074)
Retained earnings carried forward
3,166,508
2,291,878
The statement of income and retained earnings has been prepared on the basis that all operations are continuing operations.
WARRANTYWISE LIMITED
BALANCE SHEET
AS AT
30 APRIL 2023
30 April 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
10
1,200,000
1,500,000
Other intangible assets
10
30,623
29,825
Total intangible assets
1,230,623
1,529,825
Tangible assets
11
1,289,242
1,137,635
2,519,865
2,667,460
Current assets
Debtors
12
12,510,642
6,645,013
Cash at bank and in hand
2,081,092
3,996,211
14,591,734
10,641,224
Creditors: amounts falling due within one year
13
(9,914,845)
(8,443,062)
Net current assets
4,676,889
2,198,162
Total assets less current liabilities
7,196,754
4,865,622
Creditors: amounts falling due after more than one year
14
(3,873,265)
(2,471,434)
Provisions for liabilities
Deferred tax liability
15
156,881
102,210
(156,881)
(102,210)
Net assets
3,166,608
2,291,978
Capital and reserves
Called up share capital
18
100
100
Profit and loss reserves
3,166,508
2,291,878
Total equity
3,166,608
2,291,978
The financial statements were approved by the board of directors and authorised for issue on 14 November 2023 and are signed on its behalf by:
L Whittaker
Director
Company Registration No. 07963594
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 11 -
1
Accounting policies
Company information
Warrantywise Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Rocket Centre, Trident Way, Trident Park, Blackburn, Lancashire, BB1 3NU.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
The financial statements of the company are consolidated in the financial statements of Wise Group Holdings Limited. These consolidated financial statements are available from its registered office, The Rocket Centre, Trident Park, 3 Trident Way, Blackburn, Lancashire, BB1 3NU.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for the provision of vehicle warranties and associated administrative services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of the unincorporated business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
4% Straight Line
Plant and equipment
10% Straight Line
Fixtures and fittings
25% Straight Line
Computers
33.3% Straight Line
Motor vehicles
25% Straight Line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 13 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Cash at bank and in hand
Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
There are no key estimates included in the financial statements but other estimations included within the financial statements are described below.
Management charge depreciation on fixed assets based on the expected useful life.
Management charge amortisation on goodwill of trade purchased.
Management recognise accruals based on expected costs to be incurred.
Management calculate an amount for deferred income to recognise income in line with recognition of costs.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 16 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Warranty Sales
17,207,069
14,571,171
Inspection Services
11,369
30,067
17,218,438
14,601,238
2023
2022
£
£
Other revenue
Interest income
10,532
1,778
JRS Grant
-
30,194
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
21,750
20,000
Depreciation of owned tangible fixed assets
226,872
208,379
Profit on disposal of tangible fixed assets
(58,472)
(17,480)
Amortisation of intangible assets
300,000
300,000
Operating lease charges
180,506
162,255
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Sales and Administration
142
126
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,584,251
3,995,886
Social security costs
475,991
383,543
Pension costs
81,732
72,516
5,141,974
4,451,945
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 17 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
339,623
310,341
Company pension contributions to defined contribution schemes
5,982
5,219
345,605
315,560
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
84,792
116,662
Company pension contributions to defined contribution schemes
2,178
661
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
9,429
1,778
Other interest income
1,103
Total income
10,532
1,778
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
418,762
371,131
Adjustments in respect of prior periods
(120,848)
(92,199)
Total current tax
297,914
278,932
Deferred tax
Origination and reversal of timing differences
54,671
50,288
Total tax charge
352,585
329,220
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
8
Taxation
(Continued)
- 18 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
2,793,891
1,789,841
Expected tax charge based on the standard rate of corporation tax in the UK of 19.49% (2022: 19.00%)
544,529
340,070
Tax effect of expenses that are not deductible in determining taxable profit
6,798
28,309
Tax effect of income not taxable in determining taxable profit
(116)
Adjustments in respect of prior years
(120,848)
(92,199)
Group relief
(143,115)
(22,919)
Remeasurement of deferred tax for changes in tax rates
12,044
24,530
Fixed asset differences
53,293
51,429
Taxation charge for the year
352,585
329,220
9
Dividends
2023
2022
£
£
Final paid
1,566,676
1,649,074
10
Intangible fixed assets
Goodwill
Other intangible assets
Total
£
£
£
Cost
At 1 May 2022
3,000,000
29,825
3,029,825
Additions
798
798
At 30 April 2023
3,000,000
30,623
3,030,623
Amortisation and impairment
At 1 May 2022
1,500,000
1,500,000
Amortisation charged for the year
300,000
300,000
At 30 April 2023
1,800,000
1,800,000
Carrying amount
At 30 April 2023
1,200,000
30,623
1,230,623
At 30 April 2022
1,500,000
29,825
1,529,825
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 19 -
11
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 May 2022
825,844
5,086
285,230
175,503
269,877
1,561,540
Additions
148,111
6,768
27,263
52,780
312,511
547,433
Disposals
(7,311)
(34,493)
(246,291)
(288,095)
At 30 April 2023
973,955
11,854
305,182
193,790
336,097
1,820,878
Depreciation and impairment
At 1 May 2022
71,341
850
177,046
83,260
91,408
423,905
Depreciation charged in the year
36,101
664
55,423
54,909
79,775
226,872
Eliminated in respect of disposals
(7,311)
(32,977)
(78,853)
(119,141)
At 30 April 2023
107,442
1,514
225,158
105,192
92,330
531,636
Carrying amount
At 30 April 2023
866,513
10,340
80,024
88,598
243,767
1,289,242
At 30 April 2022
754,503
4,236
108,184
92,243
178,469
1,137,635
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,993,616
1,433,027
Unpaid share capital
100
100
Amounts owed by group undertakings
6,011,557
1,027,411
Other debtors
2,365,288
4,067,377
Prepayments and accrued income
140,081
117,098
12,510,642
6,645,013
Included within other debtors are amounts owed by related party companies, see note 21 for details.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 20 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
404,199
421,553
Corporation tax
7,709
74,295
Other taxation and social security
801,777
647,234
Deferred income
17
8,139,841
6,858,639
Other creditors
252,581
239,607
Accruals and deferred income
308,738
201,734
9,914,845
8,443,062
Included within other creditors are loans owed to related parties, see note 25 for details.
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Deferred income
17
3,873,265
2,471,434
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
161,075
102,210
Short term timing differences
(4,194)
-
156,881
102,210
2023
Movements in the year:
£
Liability at 1 May 2022
102,210
Charge to profit or loss
54,671
Liability at 30 April 2023
156,881
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
81,732
72,516
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. The amount due to the scheme at the year end totalled £16,775 (2022: £16,154 ).
17
Deferred income
2023
2022
£
£
Deferred income
12,013,106
9,330,073
Deferred income is included in the financial statements as follows:
Current liabilities
8,139,841
6,858,639
Non-current liabilities
3,873,265
2,471,434
12,013,106
9,330,073
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and not fully paid
Ordinary Shares of £1 each
100
100
100
100
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
182,500
182,500
Between two and five years
547,500
730,000
730,000
912,500
20
Events after the reporting date
Subsequent to the balance sheet date, with effect from 1 May 2023, all new private warranty sales are made through a new fellow subsidiary Warrantywise UK Limited.
WARRANTYWISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 22 -
21
Related party transactions
Included within other debtors are amounts owed by related party companies amounting to £2,201,152 (2022: £3,881,695). The amounts owed are not subject to any formal agreement.
22
Directors' transactions
Included within other debtors are amounts totalling £103,801 (2022 - Nil) that were owed by directors of the company. Interest was charged at 2% on these balances The maximum amount owed to the company during the year by these directors was £114,316.
During the year, advances were made to other directors. These were repaid in the year and the maximum outstanding amount was £1,566,676 (2022 - £1,649,074).
23
Ultimate controlling party
The company is controlled by its ultimate parent company Wise Group Holdings Limited.
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