Company registration number 02043783 (England and Wales)
TEESSIDE INSURANCE CONSULTANTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
TEESSIDE INSURANCE CONSULTANTS LIMITED
COMPANY INFORMATION
Directors
N Harris
(Appointed 1 August 2024)
L Hughes
J Whittingham
Company number
02043783
Registered office
The Walbrook Building
25 Walbrook
London
EC4N 8AW
Auditor
Azets Audit Services
Wynyard Park House
Wynyard Avenue
Wynyard
Stockton on Tees
TS22 5TB
Business address
2 Kingfisher Court
Kingfisher Way
Bowesfield Park
Stockton on Tees
TS18 3EX
TEESSIDE INSURANCE CONSULTANTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
TEESSIDE INSURANCE CONSULTANTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
REVIEW OF BUSINESS
The principal activity of the Company in the period under review was that of insurance broking. The Company was de-registered with the Financial Conduct Authority (‘FCA’) on 24th January 2023.
The Company is a wholly owned subsidiary of Arthur J. Gallagher & Co., a company incorporated in the United States of America, and is included in the publicly available consolidated financial statements of Arthur J. Gallagher & Co. (“the Group”). The Group's strategic focus continues to be on the organic growth of existing core business and the acquisition of businesses to enhance future turnover and profitability.
The results of the Company for the year ended 31 December 2023 are set out in the financial statements on pages 8 to 21.
The Company’s key performance indicators are turnover and profit before tax. For the year ended 31 December 2023 the Company has recorded a loss before tax of £95,232 compared to the profit before tax of £1,179,174 in 2022.
The business is not impacted materially by the conflict in Ukraine.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's international operations and debt profile expose it to a variety of financial and operational risks including the effects of change in foreign currency exchange rates, counterparty credit risks, compliance risk, liquidity and interest rates. The UK Group's Board of Directors are responsible for setting the UK Group's risk appetite and ensuring that it has an appropriate and effective risk management framework and monitors the ongoing process for identifying, evaluating, managing, and reporting the most material risks. To facilitate this, the UK Group maintains a risk framework, through which the key risks affecting the UK Group are identified, assessed and monitored. Each business entity also undertakes a similar process and these risk profiles help inform the overall risk profile of the UK business. This is reviewed by each business division’s risk and conduct committee and in turn the combined risk profile is overseen by the GGB –UK Risk Committee, which is chaired and attended by independent non-executive members, and reports to the Board of Directors.
The UK Group has in place a risk management programme and policies in the context of the wider Group risk framework. This risk management programme seeks to manage any adverse impact upon the Group caused by the nature of its principal activity.
The approach to the most material risks facing the business is noted below:
Borrowing facilities and liquidity risk
Operations for the Group are financed by a mixture of shareholders' funds, external borrowing facilities, inter-group borrowings and cash reserves. The objective is to ensure a mix of funding methods offering flexibility and cost effectiveness to match the needs of the Group. Forward looking cash flow projections are prepared on a regular basis to assess funding requirements.
Foreign currency risk
The Group's major currency transaction exposure arises in respect of transactions with fellow group undertakings and foreign currency revenue earned in the UK. As a consequence, the Group's results are sensitive to changes in foreign currency exchange rates.
Inflation risk
The business is exposed to the effects of operating in the current high inflation economic environment. This is managed through prudent cost controls operating over suppliers, staffing and other costs.
TEESSIDE INSURANCE CONSULTANTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal Risks and Uncertainties (continued)
Interest rate risk
Interest rates on the Group’s formal intra-group loans are fixed in nature and set in accordance with the wider Group treasury and transfer pricing policies.
Counterparty credit risk
The Group is exposed to credit related losses in the event of non-performance by counterparties to financial assets but mitigates such risk through its policy of selecting only counterparties with high credit ratings or arranging beneficial credit terms in accordance with the Group's investment and counterparty policy
Compliance risk
The Group is exposed to regulatory risk from the potential failure to comply with the relevant laws and regulations for insurance intermediaries. To mitigate this, the Group has a risk and compliance function, comprising members with experience of working at regulators, insurers, brokers and other financial institutions and has a control framework that has been rolled out and embedded within the culture throughout the Group to reduce the risk of non-compliance. Regular assessments by this function, are undertaken within the business, to gain assurance on compliance and monitoring of the compliance and regulatory requirements. The outcomes of these reviews are regularly reported to the Risk Committee and Board of Directors. The Group has a proactive, open relationship with the regulator.
Operational Risk
The Group has identified the key operational risks to which it is exposed, principle among which are errors or omission leading to the incorrect placement of client insurances, the protection of client information, the prevention of cyber and financial crime, suppliers, facilities and IT resilience, M&A, compliance with regulations and not least employees. This also takes into account areas such as ESG. An appropriate control framework has been deployed to manage and mitigate these key operational risks. A broader Operational Resilience Programme is underway to meet the FCA’s operational resilience requirements and builds on the existing measures in place in this respect. There is a defined risk framework for the assessment of the risks through the acquisition of organisations and their integration into the Gallagher organisation. The assessment of risks also includes a regular programme of stress testing and assessments of both the operational and financial resilience of the business
J Whittingham
Director
30 September 2024
TEESSIDE INSURANCE CONSULTANTS 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.
Results and dividends
The results for the year are set out on page 8.
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:
N Harris
(Appointed 1 August 2024)
L Hughes
M Rea
(Resigned 1 August 2024)
J Whittingham
Future developments
The trading activities of the company were transferred to Arthur J. Gallagher Insurance Brokers Limited with effect from November 2022. The activities of the company are winding down on a managed basis.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Employees
The Company is an equal opportunities employer and bases all decisions on individual ability regardless of race, religion, gender, age or disability.
Directors' Indemnity Provisions
The Directors have benefited from qualifying third party indemnity provisions during the financial year and to the date of this report.
TEESSIDE INSURANCE CONSULTANTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
By order of the board
J Whittingham
Director
30 September 2024
TEESSIDE INSURANCE CONSULTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TEESSIDE INSURANCE CONSULTANTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Teesside Insurance Consultants Limited (the 'company') for the year ended 31 December 2023 which comprise 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 loss 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 - Emphasis of Matter
In auditing the financial statements, we have concluded that the directors' decision not to use the going concern basis of accounting in the preparation of the financial statements is appropriate.
We draw attention to note 1.2 in the financial statements, which indicates that the trading activities of the company have been transferred to AJ Gallagher with effect from November 2022. The activities of the company are winding down on a managed basis. Due to this the financial statements have not been prepared on the going concern basis.
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.
TEESSIDE INSURANCE CONSULTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TEESSIDE INSURANCE CONSULTANTS LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
TEESSIDE INSURANCE CONSULTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TEESSIDE INSURANCE CONSULTANTS LIMITED (CONTINUED)
- 7 -
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Graham Fitzgerald BA FCA DChA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
Chartered Accountants and Statutory Auditors
Wynyard Park House
Wynyard Avenue
Wynyard
Stockton on Tees
TS22 5TB
30 September 2024
TEESSIDE INSURANCE CONSULTANTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
612,909
4,149,861
Administrative expenses
(702,540)
(3,020,083)
Other operating income
53,198
Operating (loss)/profit
3
(89,631)
1,182,976
Interest receivable and similar income
6
-
2,138
Interest payable and similar expenses
7
(5,601)
(5,940)
(Loss)/profit before taxation
(95,232)
1,179,174
Tax on (loss)/profit
8
(44,037)
(224,097)
(Loss)/profit for the financial year
(139,269)
955,077
The profit for the year relates entirely to discontinued activities.
TEESSIDE INSURANCE CONSULTANTS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
60,077
162,987
Current assets
Debtors
10
5,498,981
1,660,089
Cash at bank and in hand
134,656
3,085,314
5,633,637
4,745,403
Creditors: amounts falling due within one year
11
(3,972,472)
(3,023,094)
Net current assets
1,661,165
1,722,309
Total assets less current liabilities
1,721,242
1,885,296
Creditors: amounts falling due after more than one year
12
(66,387)
(76,964)
Provisions for liabilities
Deferred tax liability
14
14,208
-
(14,208)
Net assets
1,654,855
1,794,124
Capital and reserves
Called up share capital
16
1,000
1,000
Share premium account
7,125
7,125
Profit and loss reserves
1,646,730
1,785,999
Total equity
1,654,855
1,794,124
The financial statements were approved by the board of directors and authorised for issue on 30 September 2024 and are signed on its behalf by:
J Whittingham
Director
Company registration number 02043783 (England and Wales)
TEESSIDE INSURANCE CONSULTANTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
1,000
7,125
830,922
839,047
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
955,077
955,077
Balance at 31 December 2022
1,000
7,125
1,785,999
1,794,124
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
(139,269)
(139,269)
Balance at 31 December 2023
1,000
7,125
1,646,730
1,654,855
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Teesside Insurance Consultants Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Walbrook Building, 25 Walbrook, London, EC4N 8AW. The principal place of business is 2 Kingfisher Court, Kingfisher Way, Bowesfield Park, Stockton on Tees, TS18 3EX.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with other companies within the group or those concluded under normal market conditions.
The financial statements of the company are consolidated in the financial statements of Arthur J. Gallagher & Co. These consolidated financial statements are available from its registered office.
1.2
Going concern
The company ceased trading on 6th March 2023 when the business and trade was hived up to another group company. It is not intended for the company to re-commence trading in the foreseeable future. The directors have reviewed the going concern basis and have therefore prepared the financial statements on a basis other than going concern. The directors do not consider this has led to any material differences than if they were prepared on a going concern basis.true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
1.4
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.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
10% on cost
Fixtures and fittings
15% reducing balance
Computers
25% on cost
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
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.
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.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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.
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 represents the sum of the tax currently payable and deferred tax.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.8
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.
1.9
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.10
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.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.11
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.
1.12
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 in the period are included in profit or loss.
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.
3
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(3,700)
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
30,000
Depreciation of owned tangible fixed assets
3,308
33,818
Depreciation of tangible fixed assets held under finance leases
20,026
14,440
Profit on disposal of tangible fixed assets
-
(3,475)
Operating lease charges
13,811
101,111
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management and admin
7
4
Sales executives
6
10
Brokers
17
17
Claims
5
4
Total
35
35
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
223,053
1,697,320
Social security costs
20,029
199,523
Pension costs
14,190
165,071
257,272
2,061,914
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
185,126
Company pension contributions to defined contribution schemes
-
16,780
201,906
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2022 - 4).
The Directors were remunerated during the year by a fellow subsidiary within the Group and Arthur J. Gallagher & Co., the ultimate holding company.
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,367
Other interest income
771
Total income
2,138
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
7
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
5,601
5,940
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
53,155
219,325
Adjustments in respect of prior periods
(3,612)
Total current tax
49,543
219,325
Deferred tax
Origination and reversal of timing differences
(5,180)
3,627
Effect of changes in tax rates
(326)
1,145
Total deferred tax
(5,506)
4,772
Total tax charge
44,037
224,097
The Company profits are taxable in the UK under the standard rate of corporation tax, being 23.5% (2022: 19%). The Company is expected to continue to attract the standard rate of UK corporation tax.
On 10 June 2022 the UK Government legislated to increase the main rate of corporation tax to 25% as of 1 April 2023. Following a change in leadership, this increase was then confirmed on 14 October 2022.
The increase in rate has been reflected in the 2023 closing deferred tax asset.
On 11 July 2023 the UK government enacted legislation to implement OECD BEPS Pillar 2. The legislation will be effective for the Group’s financial year beginning 1 January 2024. An assessment of the Group’s potential exposure to Pillar Two income taxes has been undertaken based on the most recent information available regarding the performance of the constituent entities in the Group. Based on the assessment undertaken, this entity and its subsidiaries are not exposed to top up taxes as all Pillar Two effective tax rates are above 15%. Management are not aware of any circumstances under which this might change.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Taxation
(Continued)
- 18 -
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(95,232)
1,179,174
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(22,399)
224,043
Tax effect of expenses that are not deductible in determining taxable profit
61,793
6,293
Adjustments in respect of prior years
(3,612)
Effect of change in corporation tax rate
(326)
1,145
Group relief
(1)
(7,598)
Permanent capital allowances in excess of depreciation
(106)
Depreciation on assets not qualifying for tax allowances
320
Transfer pricing adjustments
8,583
Roundings
(1)
Taxation charge for the year
44,037
224,097
9
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
50,900
80,522
105,599
94,543
331,564
Transfers
(50,900)
(80,522)
(105,599)
(237,021)
At 31 December 2023
94,543
94,543
Depreciation and impairment
At 1 January 2023
18,841
41,640
93,656
14,440
168,577
Depreciation charged in the year
848
722
1,738
20,026
23,334
Transfers
(19,689)
(42,362)
(95,394)
(157,445)
At 31 December 2023
34,466
34,466
Carrying amount
At 31 December 2023
60,077
60,077
At 31 December 2022
32,059
38,882
11,943
80,103
162,987
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Tangible fixed assets
(Continued)
- 19 -
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
60,077
80,103
10
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
794,768
Amounts owed by group undertakings
5,492,200
628,511
Other debtors
19,500
Prepayments and accrued income
217,310
5,492,200
1,660,089
Deferred tax asset (note 14)
6,781
5,498,981
1,660,089
11
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
13
10,577
9,883
Trade creditors
1,553,625
Amounts owed to group undertakings
3,933,457
1,233,483
Corporation tax
3,438
66,255
Other creditors
159,848
Accruals and deferred income
25,000
3,972,472
3,023,094
12
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
13
66,387
76,964
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
13
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
15,484
15,484
In two to five years
72,342
87,826
87,826
103,310
Less: future finance charges
(10,862)
(16,463)
76,964
86,847
Finance lease liabilities are secured against the assets to which they relate.
14
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
-
29,208
(8,219)
-
Short term timing differences - non trading
-
(15,000)
15,000
-
-
14,208
6,781
-
2023
Movements in the year:
£
Liability at 1 January 2023
14,208
Credit to profit or loss
(5,506)
Movement arising from the transfer of trade
(15,485)
Other
2
Asset at 31 December 2023
(6,781)
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
14,190
165,071
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.
TEESSIDE INSURANCE CONSULTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2,000
2,000
1,000
1,000
17
Financial commitments, guarantees and contingent liabilities
Grants receivable may be repayable in part or in full if certain conditions associated with the grants are not met.
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
55,861
Between two and five years
26,141
82,002
19
Directors' transactions
During the year advances of £Nil (2022 - £636) were made to a director. Repayments totalling £Nil (2022 - £61,885) were made by the director in respect of those advances. Annual interest was charged on this loan at the official rate.
20
Ultimate controlling party
The immediate parent company is Erimus Holdings Teesside Limited, a company registered in England and Wales. The largest group of undertakings of which the company is a member and for which financial statements are prepared is headed up by Arthur J. Gallagher & Co., a company incorporated in the United States of America, which is the ultimate holding company. The registered address of Arthur J. Gallagher & Co. is The Corporation Trust Company Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, United States. A copy of these consolidated financial statements is available from the registered office of the Company.
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