Company Registration No. 05671105 (England and Wales)
ACTIVE UNDERWRITING SPECIALISTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LB GROUP
1 Vicarage Lane
Stratford
London
E15 4HF
ACTIVE UNDERWRITING SPECIALISTS LIMITED
COMPANY INFORMATION
Directors
Mr S C Gowland
Mr M J Crannis
Mr C W Singh
(Appointed 1 January 2023)
Mr A Morpeth
(Appointed 30 January 2024)
Company number
05671105
Registered office
8 Eagle Court
London
EC1M 5QD
Auditor
LB Group Limited (Stratford)
1 Vicarage Lane
Stratford
London
E15 4HF
ACTIVE UNDERWRITING SPECIALISTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 23
ACTIVE UNDERWRITING SPECIALISTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors have pleasure in presenting their reports together with the audited financial statements for the year ended 31 December 2023.
The principal activity of the company continues to be that of insurance agents.
Key Performance Indicators
The directors consider the following statistics to be the key performance indicators of the company as of the dates and periods indicated.
Year ended Year ended
31 December 31 December
2023 2022
£ £
Turnover 236,160 305,355
Profit/(Loss) before taxation 47,420 66,901
Profit/(Loss) after tax 52,053 66,901
Net current assets 190,942 144,088
Net assets 159,542 107,489
Financial Performance during the Year
The company made a profit of £52,053 during the year under review, compared to a profit of £66,901 in 2022. Net assets as at 31 December 2023 were £159,542 (2022: £107,489).
The insurance business written related specifically to risks associated with amateur sports, personal accident, general liability, property and contingency business.
In 2023 the Company operated under binding authorities with the following syndicates at Lloyds: Antares Underwriting Syndicate 1274. The company also had the following non-Lloyd’s facilities: Allianz Global Limited and National Insurance and Guarantee Corporation Limited. Business from these syndicates / facilities formed the majority of the revenue base in 2023.
Key Developments during the Year
Active Underwriting Specialists Limited shares the same office and resources with a fellow group company, Sportscover Europe Limited. Most shared costs are recharged on a proportional basis. In some instances, the costs that are directly attributable to the company are recharged. The overheads for the year have decreased as the aggregate overheads of Sportscover Europe Limited has decreased.
Sportscover Europe Limited continues to support Active Underwriting Specialists Limited and as at the year end there is monies due from Sportscover Europe Limited.
Future Developments
The company continues to pursue new business opportunities and a disciplined renewal of the current book of business at competitive rates.
The business continues to operate on a Going Concern basis on a cash positive position during this period.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Financial Position at the Balance Sheet Date
The company’s net assets at the year-end increased to £159,542 from £107,489 due to the profit for the year.
Principal Risks and Uncertainties Facing the Company
Management continually monitor the key risks facing the company together with assessing the controls used for managing these risks. The board of directors formally reviews and documents the principal risks facing the business at least annually. These are listed in the Directors’ report.
Mr M J Crannis
Director
11 September 2024
ACTIVE UNDERWRITING SPECIALISTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Company Number
The company registration number is 05671105.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R C Hayes
(Resigned 5 October 2023)
Mr C G Harman
(Resigned 5 October 2023)
Mr S C Gowland
Mr M J Crannis
Mr C W Singh
(Appointed 1 January 2023)
Mr A Morpeth
(Resigned 1 January 2023 and appointed 30 January 2024)
Results and dividends
The audited financial statements and related notes for the year ended 31 December 2023 are set out on pages 11 to 23 The company’s results for the year after taxation was a profit of £52,053 (2022: £66,901).
The directors do not recommend the payment of a dividend (2022: £nil).
Qualifying Third Party Indemnity Provisions
The company has put in place qualifying third party indemnity provisions for all of the directors of Active Underwriting Specialists Limited.
Donations
During the year, the company made £10 donations for charitable or political purposes (2022: £82).
Risk Management
The company is exposed to a variety of financial and non-financial risks. The directors consider the key risks that could impact the business to be as follows:
Operational Risk
Operational risk is effectively managed by the controls and procedures in place at the company. One of the key risks under this heading is the loss of the office environment, which includes the computer systems, and the resulting impact on the company’s ability to continue to trade. The directors have developed a business continuity plan that provides for the company to be fully operational within a 16 hour period in the event that its current offices are no longer available.
Liquidity Risk
In order to ensure that sufficient funds are available for on-going operations and to support future development, the company uses a mixture of group financing and working capital facilities.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Credit Risk
There is a risk that cash is not able to be collected for insurance policies written and as a consequence the company is unable to collect its commissions, which may result in it failing to meet its liabilities. The company manages this risk by only dealing with accredited brokers, who have been through a detailed approval process. Following accreditation, these brokers are also subject to subsequent financial and performance reviews.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
Market risk
Market risk arises from the Group's use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk).
Future developments
Information on future developments in the business of the company has been included in the Strategic Report on page 1.
Auditor
In accordance with the company's articles, a resolution proposing that LB Group Limited (Stratford) be reappointed as auditor of the company will be put at a General Meeting.
All of the directors as at the date of this report have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the company's auditor is unaware.
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.
On behalf of the board
Mr M J Crannis
Director
11 September 2024
ACTIVE UNDERWRITING SPECIALISTS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
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.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ACTIVE UNDERWRITING SPECIALISTS LIMITED
- 6 -
Opinion
We have audited the financial statements of Active Underwriting Specialists Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 31 December 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.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ACTIVE UNDERWRITING SPECIALISTS LIMITED
- 7 -
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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, incorporated the following:
The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
We identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the insurance sector;
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the the regulations set out by the Financial Conduct Authority, Companies Act 2006, taxation legislation, money laundering, and employment legislation;
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, reviewing returns submitted to the FCA and inspecting legal correspondence;
Identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit
ACTIVE UNDERWRITING SPECIALISTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ACTIVE UNDERWRITING SPECIALISTS LIMITED
- 8 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, our work included:
Performance of analytical procedures to identify any unusual or unexpected relationships;
Testing journal entries to identify unusual transactions.
Investigated the rationale behind significant or unusual transactions;
Assessing judgements and assumptions made in determining the accounting estimate to ensure they were not indicative of potential bias; and
Observation and identification of internal controls in place, specifically around payroll and bank transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
Agreeing financial statement disclosures to underlying supporting evidence;
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with the Financial Conduct Authority, submitted FCA returns and the company's compliance advisors
Reviewing correspondence with HMRC and reviewing for evidence of correspondence with legal advisors.
Reviewing minutes of those charged with governance
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Richard Lane
Senior Statutory Auditor
For and on behalf of LB Group Limited (Stratford)
11 September 2024
Chartered Accountants
Statutory Auditor
1 Vicarage Lane
Stratford
London
E15 4HF
ACTIVE UNDERWRITING SPECIALISTS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
236,160
305,355
Cost of sales
(3,774)
(2,111)
Gross profit
232,386
303,244
Administrative expenses
(183,955)
(234,737)
Operating profit
4
48,431
68,507
Interest payable and similar expenses
7
(1,011)
(1,606)
Profit before taxation
47,420
66,901
Tax on profit
8
4,633
Profit for the financial year
52,053
66,901
The notes on pages 16 to 23 form part of these financial statements.
The company had no other recognised gains or losses in the current or proceeding period and therefore no comprehensive income statement has been presented.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
£
£
Profit for the year
52,053
66,901
Other comprehensive income
-
-
Total comprehensive income for the year
52,053
66,901
ACTIVE UNDERWRITING SPECIALISTS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Current assets
Debtors
9
205,081
154,509
Cash at bank and in hand
1,084
30,084
206,165
184,593
Creditors: amounts falling due within one year
10
(15,223)
(40,505)
Net current assets
190,942
144,088
Creditors: amounts falling due after more than one year
11
(31,400)
(36,599)
Net assets
159,542
107,489
Capital and reserves
Called up share capital
15
33,750
33,750
Share premium account
18,900
18,900
Profit and loss reserves
106,892
54,839
Total equity
159,542
107,489
The financial statements were approved by the board of directors and authorised for issue on 11 September 2024 and are signed on its behalf by:
Mr M J Crannis
Director
Company Registration No. 05671105
ACTIVE UNDERWRITING SPECIALISTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
33,750
18,900
(12,062)
40,588
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
66,901
66,901
Balance at 31 December 2022
33,750
18,900
54,839
107,489
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
52,053
52,053
Balance at 31 December 2023
33,750
18,900
106,892
159,542
ACTIVE UNDERWRITING SPECIALISTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
17
(22,790)
2,170
Interest paid
(1,011)
(1,606)
Net cash (outflow)/inflow from operating activities
(23,801)
564
Financing activities
Repayment of bank loans
(5,199)
(4,603)
Net cash used in financing activities
(5,199)
(4,603)
Net decrease in cash and cash equivalents
(29,000)
(4,039)
Cash and cash equivalents at beginning of year
30,084
34,123
Cash and cash equivalents at end of year
1,084
30,084
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information
Active Underwriting Specialists Limited is a private company limited by shares incorporated in England and Wales. The registered office is 8 Eagle Court, London EC1M 5QD.
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.
1.2
Going concern
The directors are confident that the continued support of its partner business, Sportscover Europe Limited, as required for relevant front and back office support, alongside a positive trading forecast has allowed for the Going Concern of the business to be continued. The directors of the business are therefore confident in the Going Concern of the business and its ability to continue trading on an ongoing basis. true
1.3
Turnover
Income represents commission receivable from the placing of insurance business on behalf of insurance companies underwriting the risks. Commission income due for each insurance policy placed is recognised at the commencement of the insurance policy. Commission income is stated net of commissions due back on refunded premiums. Income is wholly attributable to the principal activity of the company.
A part of commission income is deferred as it is probable that the company will be required to render further services during the life of the policy. A claims handling provision has been recognised for probable future claims and will recognised as revenue when the service has been completed.
Assets and liabilities relating to insurance transactions
The company acts as agent in placing the insurance business of its clients and is not generally liable as principal for amounts arising from such transactions. The company is entitled to retain any investment income arising from the cash flows attributable to these transactions and have therefore included debtors, creditors and cash balances relating to insurance transactions within the assets and liabilities of the company. Debtors balances included in respect of insurance transactions are not an indication of credit risk.
1.4
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.5
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.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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 unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. 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.
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, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. 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.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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.
1.6
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.7
Taxation
The tax expense for the period comprises current and deferred tax (when applicable). Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Current tax
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company's subsidiaries operate and generate taxable income.
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.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.8
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.9
Foreign exchange
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency'). The financial statements are presented in ‘sterling', which is the company's functional currency.
Transactions and balances
Foreign currency transactions are translated into the company’s entity's functional currency using the average monthly exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within ‘other operating income or expense'.
1.10
Contributions to the company’s defined contribution pension scheme are charged to profit or loss in the year in which they become payable.
1.11
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. Dividends on shares recognised as liabilities are recognised as expenses and classified within interest payable.
1.12
The Company’s reserves are as follows:
• Called up share capital reserve represents the nominal value of the shares issued.
• The share premium account includes the premium on issue of equity shares, net of any issue costs.
• Profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
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.
Other key sources of estimation uncertainty
• Claims handling provision
The company estimates the amount of income to be deferred to recognise the services which will be rendered over the life of the policy. The services concerned are claims handling. The estimate has been based on salary and related costs of the current claims team and the number of claims processed in the current financial year that relate to policies incepted in previous years. This is an estimate because claims can be made on all lines of business, except for Directors and Officers insurance, after the expiry of the policy. Claims can be made on our largest class of business over three years after the expiration of the policy.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Underwriting services
236,160
305,355
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
236,160
305,355
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange (gains)/losses
3,953
Fees payable to the company's auditor for the audit of the company's financial statements
6,100
5,500
Operating lease charges
4,962
4,752
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
6,100
5,500
For other services
Other taxation services
450
450
All other non-audit services
450
450
900
900
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
3
2
The average number of employees employed by the company were 3 (2022: 2). The services of 15 employees were used by the company (2022: 13 employees), all of whom were employed by a fellow group company, Sportscover Europe Limited. This includes one director, who is also employed by Sportscover Europe Limited.
Their aggregate remuneration comprised of:
2023
2022
£
£
Wages and salaries
108,506
124,083
Social security costs
10,484
13,232
Pension costs
10,359
12,491
129,349
149,806
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
1,011
1,606
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
8
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
(4,633)
The actual (credit)/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
47,420
66,901
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
11,855
12,711
Tax effect of expenses that are not deductible in determining taxable profit
755
Deferred tax adjustments in respect of prior years
(4,633)
Profit offset by losses brought forward
(12,610)
(12,711)
Taxation credit for the year
(4,633)
-
The corporation tax rate changed on 1 April 2023 from 19% to 25%.
9
Debtors
2023
2022
Amounts falling due within one year:
£
£
Other debtors
199,945
154,509
Prepayments and accrued income
503
200,448
154,509
Deferred tax asset (note 13)
4,633
205,081
154,509
10
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
12
6,210
6,210
Trade creditors
13
13
Other creditors
19,871
Accruals and deferred income
9,000
14,411
15,223
40,505
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Creditors: amounts falling due within one year
(Continued)
- 21 -
The company does not have any bank overdraft facility as at 31 December 2023.
11
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
12
31,400
36,599
Amounts included above which fall due after five years are as follows:
Payable by instalments
6,561
14,976
12
Loans and overdrafts
2023
2022
£
£
Bank loans
37,610
42,809
Payable within one year
6,210
6,210
Payable after one year
31,400
36,599
13
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Tax losses
4,633
-
2023
Movements in the year:
£
Liability at 1 January 2023
-
Credit to profit or loss
(4,633)
Asset at 31 December 2023
(4,633)
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
14
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
10,359
12,491
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.
15
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 50p each
67,500
67,500
33,750
33,750
16
Related party transactions
In the prior year, ActiveRisk Limited became the intermediary parent company. The ultimate parent company is Whitburn Capital Limited which is controlled by Steven Gowland.
At the balance sheet date, the following balances were owing from related party companies: Sportscover Europe Limited: £151,690 (2022: £77,734). All related party balances are interest free and are repayable on demand.
Sportscover Europe Limited administers the cash flow for the company, the net amount owing relates to commissions drawn down on behalf of and still payable to the company, less amounts withheld for expenses including recharges for staff costs as per Note 6 and associated administrative costs.
17
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the year after tax
52,053
66,901
Adjustments for:
Taxation credited
(4,633)
Finance costs
1,011
1,606
Movements in working capital:
Increase in debtors
(45,939)
(30,662)
Decrease in creditors
(25,282)
(35,675)
Cash (absorbed by)/generated from operations
(22,790)
2,170
ACTIVE UNDERWRITING SPECIALISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
18
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
30,084
(29,000)
1,084
Borrowings excluding overdrafts
(42,809)
5,199
(37,610)
(12,725)
(23,801)
(36,526)
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