Company registration number 03630812 (England and Wales)
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
COMPANY INFORMATION
Directors
Mr MJ Thorpe
Mr WK Pearson
Mr D Beeckman
(Appointed 31 August 2023)
Mr MJ Lorimer
(Appointed 31 August 2023)
Ms LJ Barry
(Appointed 31 August 2023)
Mr S Suri
(Appointed 31 August 2023)
Mr R Mills
(Appointed 1 January 2024)
Secretary
Mr MJ Lorimer
Company number
03630812
Registered office
Animal Friends House
The Crescent, Sun Rise Way
Solstice Park
Amesbury
Wiltshire
SP4 7QA
Auditor
Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 7
Independent auditor's report
8 - 10
Profit and loss account
11
Statement of comprehensive income
12
Balance sheet
13
Statement of changes in equity
14
Notes to the financial statements
15 - 30
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Business review
Animal Friends Insurance was founded in 1998, this year celebrating its 25th anniversary. We are a leading UK specialist provider with pet insurance as our core product, that champions animal welfare, offering a variety of multi-award winning, comprehensive insurance products to around 1 million pets across multiple channels. Our founders had a clear strategic vision to create a better life for every animal, we use our brand voice to advocate for change in animal welfare, we encourage our colleagues to volunteer time to animal charities and to date we have donated more than £7m to over 700 animal charities.
Animal Friends has driven innovation in our customer journey, and developed market leading technological capabilities, delivering class leading claims processing and policy servicing. We continue to take a customer centric approach to our products, our services and our platforms and evolve a customer ecosystem to better support pet owners and their needs directly and through strategic partnerships.
In August this year, Animal Friends Investments Limited (which wholly owns Animal Friends Insurance Services Limited) was acquired by Pinnacle Pet Group Limited, a leading pan-European pet insurance provider, from Correlation One Holdings. This represents a great opportunity to support the next phase of our growth journey, continuing to be strategically aligned to the founding principles.
Results and performance
In 2023, the business maintained strong performance in a highly competitive market. The profit on ordinary activities after taxation for the year ended 31 December 2023 was £4,679,995 (£11,950,108 before charging for exceptional items related to staff costs associated with the acquisition of Animal Friends this year), in 2022 this was £4,919,654 (£16,442,076 before charging for exceptional items related to customer remediation payments). Revenue increased by 5% in 2022 to £64,900,648 (2022: £61,715,865).
At the end of the year, the business had net assets of £6,405,545 (2022: £4,725,550).
Strategy
Animal Friends Insurance strives to maintain a customer centric approach to our products, our services, and our platforms to continually drive innovation and adapt to our customers’ needs in an ethical and sustainable way. By understanding and adapting to the demands of our customers’ cats, dogs and horses, and the broader changes in the insurance, pet, and veterinary markets, we aim to deliver class leading products and services directly and through strategic partnerships to deliver an excellent customer experience.
Our innovative approach, high product standards and investment in claims automation has supported our growth journey so far and we continue to deliver on our key strategic aims:
create a better life for every animal by championing animal welfare, conservation and lobbying for change;
be a market leading brand;
take a customer centric approach and a personalise the customer journey;
take a digital first approach to the entire customer journey;
driving ethical and sustainable success;
drive innovation in products and services in the pet insurance market;
playing our part in protecting the environment;
maintaining an equitable and diverse culture, enabling every colleague to reach their potential.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
The principal risk facing the Company is that of conduct risk related to its regulated activities. The business mitigates this risk through a series of robust internal controls, regular internal review of processes, conducting external risk assurance reviews and maintaining a pro-active relationship with the Financial Conduct Authority.
There is a risk of business disruption through failure of key systems or in the event of disaster. This risk is mitigated by a Business Continuity Management System and dual run systems. We actively and carefully assess the effectiveness of the business’s risk management with actions and a mitigation plan to minimise disruption to our key operations and continue to successfully meet the certification requirements for relevant ISO standards in relation to Information Security.
Statement by the Directors in performance of their statutory duties in accordance with s172(1) Companies Act 2006
Our people
People are a key factor for our business to succeed. We are proud of the average length of service of our employees. We intend to retain people for the long term and our recruitment strategy is based on offering long careers in fairly paid and stable jobs.
We encourage our employees to have both fulfilling careers and balanced lives. We look to our employees to contribute ideas for our future growth, and share the rewards of the business where we are profitable, primarily through our discretionary annual bonus scheme.
Business relationships
We value long term relationships with our suppliers and customers and many of our relationships span years and some span decades. We employ robust "know your customer" and "know your supplier" processes across our operations, and we are typically cautious when entering into new relationships. We ensure compliance with the most up to date environmental and social responsibility (ESR) standards required by the industries in which we operate.
Community, environment and reputation
We believe that a positive and strong culture is the best way to ensure a high level of professional conduct when it comes to health and safety, environment, regulations or business dealings.
Capital allocation and long-term decisions
The directors reviews the financial budgets on a monthly basis, together with resource plans and investment decisions. In making decisions concerning the business plan and future strategy, the directors have regard to a variety of matters including the interests of stakeholders, long term consequences of our capital allocation (such expenditure needed to ensure our long- term viability whilst maintaining adequate liquidity), and reputation.
Decisions on the level of dividend take into account the general profitability, liquidity and funding needs of the company.
The directors believe that they have acted in a way which they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1) (a-f) of the Companies Act 2006 in the decisions taken during the year ended 31st December 2023.
Mr R Mills
Director
19 September 2024
ANIMAL FRIENDS INSURANCE SERVICES 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.
Principal activities
The principal activity of the company continued to be that of insurance mediation of dog, cat and equine insurance policies. As outlined in our mission statement, a share of profit was donated to animal charities.
Exceptional expenditure
The profit on ordinary activities after taxation for the year ended 31 December 2023 was £4,679,995, being £11,950,108 before charging an exceptional item of £7,270,113. This amount relates to staff costs associated with the acquisition of Animal Friends in the reporting year.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £3,000,000 (2022: £3,600,000). The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year were as follows:
Mr MJ Thorpe
Mr WK Pearson
Mr D Beeckman
(Appointed 31 August 2023)
Mr MJ Lorimer
(Appointed 31 August 2023)
Ms LJ Barry
(Appointed 31 August 2023)
Mr S Suri
(Appointed 31 August 2023)
Mr R Mills
(Appointed 1 January 2024)
Mr J Marx
(Resigned 31 August 2023)
Mr GK Chadwick
(Resigned 31 August 2023)
Mr NG Kohler
(Resigned 31 August 2023)
Ms AR Thomas
(Resigned 31 August 2023)
Financial instruments
Credit risk
The Company’s principal assets are cash deposits and trade debtors. The credit risk associated with cash deposits is limited as the accounts are held with a major UK high street bank only. The principal credit risk arises therefore from trade debtors.
Liquidity risk
The company seeks to manage financial risk by ensuring sufficient working capital is available to meet both
The company policy during the year was unchanged to hold cash balances in readily accessible treasury deposits.
Interest rate risk
Interest rates started continued to increase in the current year. As a result, interest income on the Company’s cash deposits increased marginally in the year. However, the potential loss of such income is not material to the financial integrity of the business. The Company has no borrowings and is therefore not susceptible to interest rate fluctuations.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Reserving risk
The Company maintains reserves which are released against the future costs of servicing insurance policies incepted in prior underwriting periods. Notably the business holds reserves for:
Policy administration; the Company incurs costs over the policy year to administer the policy. The reserve is released to income against those costs;
Commission clawback; where policies cancel mid-term, and the Company returns a pro-rata element of its commission income associated with those cancellations; this return is met via a release from the expected commission clawback reserve.
There is a risk that these reserves are insufficient to meet the forecast requirements.
Foreign currency risk
The company does not materially transact foreign currency business.
Research and development
Research and development activities were undertaken in the year, representing the ongoing development of online customer claims, customer service platforms and new products.
Diversity and inclusion
At AFI we are committed to equity of opportunity for all our people. We value diversity, we recognise that people have different needs and we strive to create an inclusive environment where everyone feels valued, accepted and supported to succeed at work. Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The Company's policy is to consult and discuss with employees, through colleague engagement forums and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
Auditor
In accordance with the company's articles, a resolution proposing that Bright Grahame Murray be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
Statement of carbon emissions compliant with UK legislation set out in the Streamlined Energy and Carbon Reporting (SECR), 21 January 2021 covering energy use and associated greenhouse gas emissions relating to gas, electricity and transport, intensity ratios and energy efficiency actions.
The latest emissions data includes Well to Tank (WTT) and Transmission and Distribution (T&D).
WTT accounts for the upstream emissions associated with extraction, refining and transportation of raw fuel sources prior to combustion (gas, fuel) or for use in the generation of electricity.
T&D accounts for the emissions associated through grid energy loss which occurs in getting the electricity from the powerplant to your sites.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
155,309
164,663
- Electricity purchased
135,935
104,959
- Fuel consumed for transport
39,357
40,514
330,601
310,136
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
40.00
35.00
- Fuel consumed for owned transport
13.00
13.00
53.00
48.00
Scope 2 - indirect emissions
- Electricity purchased
30.00
31.00
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the Company
-
-
Total gross emissions
83.00
79.00
Intensity ratio
kgCO2e per sqft
4.1
3.92
Quantification and reporting methodology
ESOS methodology (as specified in Complying with the Energy Savings Opportunity Scheme version 6, published by the Environment Agency, 21.01.21) used in conjunction with Government GHG reporting conversion factors.
For carbon only related matters, the SECR methodology as specified in "Environmental reporting guidelines: including Streamlined Energy and Carbon Reporting and greenhouse gas reporting" was used in conjunction with Government GHG reporting conversion factors.
The calculations have been approved by a PAS51215 compliant body.
Data estimation
December for Amesbury Building Gas 1 & 2 contained 13 days of data this was expanded to 31 days.
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in kilogrammes CO2e per square foot, the recommended ratio for the sector.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Measures taken to improve energy efficiency
Management are committed to responsible carbon management and will practice energy efficiency throughout the organisation, wherever it is cost effective. Management recognises that climate change is one of the most serious environmental challenges currently threatening the global community and understand it has a role to play in reducing greenhouse gas emissions.
Management have implemented the policies below for the purpose of increasing the businesses energy efficiency in the relevant financial year.
Lowered office ceiling height to reduce the energy required to heat space
Installed LED lighting when replacing old bulbs
Installed heat reflective blinds
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements
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.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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.
Going Concern
The directors consider it appropriate to adopt the going concern basis in preparing these financial statements. Further commentary in this regard is set out in note 1.2 to the financial statements.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
On behalf of the board
Mr R Mills
Director
19 September 2024
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ANIMAL FRIENDS INSURANCE SERVICES LIMITED
- 8 -
Opinion
We have audited the financial statements of Animal Friends Insurance Services 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 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.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ANIMAL FRIENDS INSURANCE SERVICES LIMITED
- 9 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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.
In identifying and addressing risks of material misstatement in respect of irregularities, including fraud and noncompliance with laws and regulations, our procedures included the following:
We obtained an understanding of laws and regulations that affect the company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws and regulations that we identified included the UK Companies Act, tax legislation, employment legislation, health and safety and Financial Conduct Authority.
We enquired of the directors, reviewed correspondence with HMRC and reviewed directors meeting minutes for evidence of non-compliance with relevant laws and regulations. We also reviewed controls the directors have in place to ensure compliance.
We gained an understanding of the controls that the directors have in place to prevent and detect fraud. We enquired of the directors about any incidences of fraud that had taken place during the accounting period.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ANIMAL FRIENDS INSURANCE SERVICES LIMITED
- 10 -
The risk of fraud and non-compliance with laws and regulations and fraud was discussed within the audit team and tests were planned and performed to address these risks. We identified the potential for fraud in the following areas: revenue recognition, related parties outside normal course of business and management override.
We reviewed financial statements disclosures and tested to supporting documentation to assess compliance with relevant laws and regulations discussed above.
We enquired of the directors about actual and potential litigation and claims.
We performed analytical procedures to identify any unusual or unexpected relationships that might indicate risks of material misstatement due to fraud.
Reviewing correspondence between the Company and Financial Conduct Authority (FCA) in relation to compliance with laws and regulations.
In addressing the risk of fraud due to management override of internal controls, we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.
Due 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, 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 fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.
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.
Robert Moore (Senior Statutory Auditor)
For and on behalf of Bright Grahame Murray
Chartered Accountants
Statutory Auditor
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
25 September 2024
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
Turnover
3
64,900,648
61,715,865
Cost of sales
(23,953,002)
(21,554,767)
Gross profit
40,947,646
40,161,098
Administrative expenses
(27,861,017)
(22,684,695)
Other operating income
3
89,317
41,298
Exceptional items
4
(7,270,113)
(11,522,422)
Operating profit
5
5,905,833
5,995,279
Interest receivable and similar income
3, 9
256,682
33,330
Interest payable and similar expenses
10
(2,437)
(3,534)
Profit before taxation
6,160,078
6,025,075
Tax on profit
12
(1,480,083)
(1,105,421)
Profit for the financial year
4,679,995
4,919,654
The profit and loss account has been prepared on the basis that all operations are continuing operations.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
£
£
Profit for the year
4,679,995
4,919,654
Other comprehensive income
Revaluation of tangible fixed assets
(970,589)
Tax relating to other comprehensive income
149,216
Other comprehensive income for the year
(821,373)
Total comprehensive income for the year
4,679,995
4,098,281
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
3,006,425
1,851,298
Tangible assets
14
3,436,705
3,670,321
Investments
15
100
100
6,443,230
5,521,719
Current assets
Debtors
17
8,993,303
7,274,840
Cash at bank and in hand
20
10,796,581
6,515,617
19,789,884
13,790,457
Creditors: amounts falling due within one year
18
(17,797,457)
(12,836,617)
Net current assets
1,992,427
953,840
Total assets less current liabilities
8,435,657
6,475,559
Creditors: amounts falling due after more than one year
19
(15,039)
(29,091)
Provisions for liabilities
Clawback provisions
21
1,892,071
1,668,197
Deferred tax liability
22
123,002
52,721
(2,015,073)
(1,720,918)
Net assets
6,405,545
4,725,550
Capital and reserves
Called up share capital
25
100
100
Revaluation reserve
157,148
157,148
Profit and loss reserves
6,248,297
4,568,302
Total equity
6,405,545
4,725,550
The financial statements were approved by the board of directors and authorised for issue on 19 September 2024 and are signed on its behalf by:
Mr R Mills
Director
Company registration number 03630812 (England and Wales)
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
100
1,228,288
2,998,881
4,227,269
Year ended 31 December 2022:
Profit
-
-
4,919,654
4,919,654
Other comprehensive income:
Revaluation of tangible fixed assets
-
(970,589)
-
(970,589)
Tax relating to other comprehensive income
-
149,216
149,216
Total comprehensive income
-
(821,373)
4,919,654
4,098,281
Dividends
11
-
-
(3,600,000)
(3,600,000)
Transfers
-
(249,767)
249,767
-
Balance at 31 December 2022
100
157,148
4,568,302
4,725,550
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
4,679,995
4,679,995
Dividends
11
-
-
(3,000,000)
(3,000,000)
Balance at 31 December 2023
100
157,148
6,248,297
6,405,545
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
1
Accounting policies
Company information
Animal Friends Insurance Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is Animal Friends House, The Crescent, Sun Rise Way, Solstice Park, Amesbury, Wiltshire, SP4 7QA.
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 modified to include the revaluation of freehold properties. 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;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Correlation One Investments Limited. These consolidated financial statements are available from the registered office of that company.
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 represents commissions received from the sale of insurance policies. Commissions are recognised at the inception of the policy, as the insurance is arranged and placed, and are adjusted for commissions refundable in event of policy cancellation. Commissions earned in respect of newly written policies are not recognised until the 14-day cooling off period has expired. Provisions are maintained to meet potential subsequent bad debts and commission clawbacks for policies that could cancel in the future. Trade debtors are shown net of any provision for bad debts. Additional provisions are maintained to meet the costs of post placement services for claims handling and premium administration. These are included in ‘technical reserves’.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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 if the fair value can be measured reliably.
Amortisation 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:
Development costs
3-4 years straight line
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:
Freehold land and buildings
4 - 50 years staight line
Fixtures and fittings
2 - 4 years straight line
Motor vehicles
3 years 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.
Included within freehold land and buildings is land which is not depreciated.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.8
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.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
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.
1.9
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.
1.10
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 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.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
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 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.
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.
1.11
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
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.
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.
1.13
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.16
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.
1.17
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
1.19
Insurance debtors and creditors
The company acts as an agent of insurance companies in broking and administering insurance products and is liable as a principal for premiums due to those underwriters. The company has followed generally accepted accounting practice for insurance brokers by showing debtors, creditors and cash balances relating to insurance business as assets and liabilities of the company itself. Revenue is recognised on such agency arrangements as set out in the turnover accounting policy.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Intangible and tangible fixed assets
Determining whether there are indicators of impairment of the company's intangible and tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Clawback provision
At each year end, a provision is made in respect of active policies that may be cancelled before the end of their term, resulting in the payment of refunds. Assumptions regarding dropout rates are made by the directors when computing this provision.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Intangible fixed assets
Intangible assets are amortised on a straight-line basis over their estimated useful economic lives. This is reviewed annually by the directors with the estimate based on a variety of factors such as the expected useful life of cash generating units to which the assets are attributed and any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses.
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In re-assessing asset lives, factors such as technical innovation, product life cycles and maintenance programmes are taken into account.
Technical reserves creditor
Each year end, the company makes a provision in respect of income deferred at that date to match against future costs, such as claims and customer resolutions. The provision is calculated using an estimate of future costs based on historical averages.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Commission receivable
64,900,648
61,715,865
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
64,900,648
61,715,865
2023
2022
£
£
Other revenue
Interest income
256,682
33,330
Grants received
89,317
41,298
4
Exceptional items
2023
2022
£
£
Expenditure
Customer remediation payments
-
11,522,422
Staff costs
7,270,113
-
7,270,113
11,522,422
The profit after tax is stated after charging exceptional expenditure relating to staff costs associated with the acquisition Animal Friends Insurance Services. The prior year exceptional charge relates to voluntary remediation payments made to customers affected by historical, likely unfair contract terms.
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(89,317)
(41,298)
Depreciation of owned tangible fixed assets
261,886
399,730
Depreciation of tangible fixed assets held under finance leases
33,530
29,140
Profit on disposal of tangible fixed assets
-
(31,839)
Amortisation of intangible assets
685,786
453,881
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
6
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
32,500
29,500
For other services
Taxation compliance services
45,577
46,742
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Finance & administration
218
176
Sales
82
71
Claims
174
107
Customer service
93
108
Total
567
462
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
21,764,181
17,350,406
Social security costs
1,663,002
1,678,724
Pension costs
734,265
564,742
24,161,448
19,593,872
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
271,500
253,800
Company pension contributions to defined contribution schemes
21,720
16,200
293,220
270,000
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 1).
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Directors' remuneration
(Continued)
- 24 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
219,833
253,800
Company pension contributions to defined contribution schemes
17,587
16,200
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
145,488
33,149
Other interest income
111,194
181
Total income
256,682
33,330
10
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
2,437
3,154
Other interest
380
2,437
3,534
11
Dividends
2023
2022
£
£
Final paid
3,000,000
3,600,000
12
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,545,085
1,318,985
Adjustments in respect of prior periods
(135,283)
(107,875)
Total current tax
1,409,802
1,211,110
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Taxation
(Continued)
- 25 -
Deferred tax
Origination and reversal of timing differences
(122,842)
(66,005)
Adjustment in respect of prior periods
193,123
(39,684)
Total deferred tax
70,281
(105,689)
Total tax charge
1,480,083
1,105,421
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
6,160,078
6,025,075
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
1,448,850
1,144,764
Tax effect of expenses that are not deductible in determining taxable profit
2,034
136,177
Tax effect of income not taxable in determining taxable profit
(21,008)
Adjustments in respect of prior years
(135,283)
(107,875)
Permanent capital allowances in excess of depreciation
(363)
(12,120)
Deferred tax adjustments in respect of prior years
193,123
(39,684)
Effect of rate change on deferred tax
(7,270)
(15,841)
Taxation charge for the year
1,480,083
1,105,421
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2023
2022
£
£
Deferred tax arising on:
Revaluation of property
-
(149,216)
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
13
Intangible fixed assets
Development costs
£
Cost
At 1 January 2023
3,809,848
Additions - internally developed
1,840,913
At 31 December 2023
5,650,761
Amortisation and impairment
At 1 January 2023
1,958,550
Amortisation charged for the year
685,786
At 31 December 2023
2,644,336
Carrying amount
At 31 December 2023
3,006,425
At 31 December 2022
1,851,298
Intangible asset additions in the year represent capitalised staff costs in relation to the ongoing development of online customer claims platforms.
14
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost or valuation
At 1 January 2023
3,183,000
2,146,846
118,378
5,448,224
Additions
61,800
61,800
At 31 December 2023
3,183,000
2,208,646
118,378
5,510,024
Depreciation and impairment
At 1 January 2023
1,760,113
17,790
1,777,903
Depreciation charged in the year
49,009
212,877
33,530
295,416
At 31 December 2023
49,009
1,972,990
51,320
2,073,319
Carrying amount
At 31 December 2023
3,133,991
235,656
67,058
3,436,705
At 31 December 2022
3,183,000
386,733
100,588
3,670,321
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Tangible fixed assets
(Continued)
- 27 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
67,058
100,588
Depreciation charge for the year in respect of leased assets
33,530
29,140
During the prior year, freehold land and buildings were revalued to £3,183,000 based on a professional valuation carried out by Myddleton & Major, an independent firm.
The historic cost of freehold land and buildings at 31 December 2023 is £2,973,470 (2022: £2,973,470)
Included within freehold land and buildings is land at a valuation of £423,000 (2022: £350,000) which is not depreciated.
15
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
16
100
100
16
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Animal Friends Limited
The Crescent, Sun Rise Way, Solstice Park, Amesbury, Wiltshire, SP4 7QA
Ordinary
100
17
Debtors
2023
2022
Amounts falling due within one year:
£
£
Corporation tax recoverable
3,157,022
705,065
Amounts owed by group undertakings
3,000,000
5,000,000
Prepayments and accrued income
2,836,281
1,569,775
8,993,303
7,274,840
Amounts due from the parent company are interest-free and repayable on demand.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
18
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
20
14,052
13,146
Trade creditors
1,554,123
1,587,483
Other taxation and social security
1,641,813
1,421,191
Technical reserves creditor
3,647,172
3,643,315
Other creditors
8,310,255
5,305,668
Accruals
2,630,042
865,814
17,797,457
12,836,617
Included in other creditors at the year-end were amounts totalling £8,310,255, representing cash and other assets held on behalf of insurer (2022: £5,288,346).
19
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
20
15,039
29,091
20
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
14,052
13,146
In two to five years
15,039
29,091
29,091
42,237
Finance lease payments represent rentals payable by the company for certain motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
21
Provisions for liabilities
2023
2022
£
£
Clawback provision
1,892,071
1,668,197
A provision is maintained to meet potential commission clawbacks for policies that could cancel in the future.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Provisions for liabilities
(Continued)
- 29 -
Movements on provisions:
Clawback provision
£
At 1 January 2023
1,668,197
Additional provisions in the year
223,874
At 31 December 2023
1,892,071
22
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
87,180
16,206
Revaluations
52,382
52,382
Retirement benefit obligations
(16,560)
(15,867)
123,002
52,721
2023
Movements in the year:
£
Liability at 1 January 2023
52,721
Charge to profit or loss
70,281
Liability at 31 December 2023
123,002
23
Cash and cash equivalents
2023
2022
£
£
Cash at bank and in hand
2,486,326
1,227,271
Insurance bank accounts
8,310,255
5,288,346
10,796,581
6,515,617
Cash at bank and in hand includes both insurer monies held in trust and operational monies. Insurer monies include unsettled premiums and claims and commission not yet transferred into the operational bank accounts.
ANIMAL FRIENDS INSURANCE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
24
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
734,265
564,742
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.
25
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
26
Operating lease commitments
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
14,646
34,046
Between two and five years
10,985
25,535
25,631
59,581
27
Ultimate controlling party
The company's immediate parent undertaking is Pinnacle Pet Group Limited. Pinnacle Pet Holdings Limited is the smallest and largest group of group accounts which are prepared, of which the company is a member. Copies of the group accounts can be found on Companies House.
As at the year end the ultimate controlling parent company was Jab Pet Holdings Limited.
The previous ultimate controlling parent company was Correlation Investments Limited, a company incorporated in Guernsey, whose ultimate controlling party was the Carena II Trust, incorporated in Liechtenstein.
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