Company Registration No. SC230167 (Scotland)
POLICY SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
POLICY SERVICES LIMITED
COMPANY INFORMATION
Directors
Mr P Craddock
(Appointed 30 April 2020)
Mrs K Dorrian
Mr K Dorrian
Mr P Edwards
(Appointed 30 April 2020)
Mr B Galvin
(Appointed 30 April 2020)
Mrs G Glen
(Appointed 1 May 2020)
Mr J Hill
(Appointed 29 June 2020)
Secretary
St. James's Place Corporate Secretary Limited
Company number
SC230167
Registered office
Oracle Campus
Blackness Road
Linlithgow
West Lothian
EH49 7BF
Auditor
Thomson Cooper
3 Castle Court
Carnegie Campus
Dunfermline
Fife
KY11 8PB
Business address
Oracle Campus
Blackness Road
Linlithgow
West Lothian
EH49 7BF
Bankers
The Royal Bank of Scotland (Linlithgow)
55 High Street
Linlithgow
EH49 7ED
Solicitors
Addleshaw Goddard
Exchange Tower
19 Canning Street
Edinburgh
EH3 8EH
POLICY SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Profit and loss account
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 23
POLICY SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2020
- 1 -
The directors present the strategic report for the year ended 31 March 2020.
Fair review of the business
The Directors are pleased with the key trends in the company’s accounts for the year ended 31 March 2020, with an increase in turnover to £20,082,497 (2019 - £19,471,472). Whilst there is a loss for the year, this is due to a provision for potentially underpaid regulatory fees (see note 16) of £2,794,664 of which £2,407,440 related to prior periods. This has resulted in a loss for the year of £1,487,644 (2019 - profit of £1,318,346).
The company’s main activities still centre around servicing the financial advice needs its clients, transferred from ex-Independent Financial Advisers.
As always, Policy Services continues to work in a heavily regulated environment under the FCA, and compliance continues to be central to our organisation and culture and helps us in many of the initiatives we have undertaken.
Principal risks and uncertainties
The principal risks that we face as a business include:
Market Performance – Our turnover is dependent upon the strengths of the financial markets. As always this is an ever-changing market and something which we monitor and evaluate regularly to ensure adequate resource for any anticipated changes.
Competitive Performance – While Policy Services operates in a competitive and small market, research on our competitors is needed to ensure that our service stays ahead.
Changes in Regulations – A key concern and risk for Policy Services is any changes in regulation which have a major impact on the company. In this financial year there has been no major changes in the industry.
Liquidity Risk – Ensuring that we always have the relevant capital for the business is a key factor for us. The FCA capital adequacy rules mean that this is something we always monitor and ensure is in place to ensure operation.
Advice quality - We recognise our responsibility to ensure the advice we give our clients demonstrates an understanding of their needs/goals and their attitude to risk, whilst managing potential conflicts of interest as they are identified. The additional scrutiny that SMCR brings will be managed via enhanced procedures, training and monitoring
Data integrity - We recognise our on-going requirement to ensure compliance with the General Data Protection Regulations, and maximise the positive interaction with our clients through the careful collection, storage and management of appropriate customer data.
Covid-19
The impacts of COVID-19, and the wider measures taken to help protect the spread of COVID-19 will inevitably have an impact on the business. Like many businesses, Policy Services has worked swiftly to enable business processes to continue with all employees working remotely.
These changes have been successfully implemented, and the company has been able to maintain its services to customers. Company revenues are largely driven by a mixture of initial fees and commission and ongoing fees and commission. The fall in markets means that there will inevitably be an impact on future ongoing fees and commission, though the business is still able to operate and generate revenues. However, the current challenges do not impact on the longer term customer need for the services of Policy Services. In fact, the company has a key role to play in supporting customers through these challenging times. This gives the Directors the confidence that the business can come through the current short term challenges posed by the spread of COVID-19, and continue to grow in the medium term. This issue and the resulting actions taken is a post balance sheet event and has had no impact on the reported results of the company.
POLICY SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 2 -
Key performance indicators
- Financial Key Performance Indicators
2020 2019
Turnover £20,082,497 £19,471,472
Turnover Growth 3.14% (3.66%)
Gross (Loss)/Profit (£921,370) £2,440,318
Gross Profit (excluding exceptional item) £1,486,070
£2,440,318
Other information and explanations
Looking ahead we are confident of the continued growth of Policy Services in the coming financial year and look forward to the challenges ahead.
Section 172(1) Statement
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefit of its members as a whole. In doing this section 172 requires a director to have regard, amongst other matters, to the:
• likely consequences of any decisions in the long-term;
• interests of the company’s employees;
• need to foster the company’s business relationships with suppliers, customers and others;
• impact of the company’s operations on the community and environment;
• desirability of the company maintaining a reputation for high standards of business conduct, and
• need to act fairly as between members of the company.
In discharging our section 172 duties we have regard to the factors set out above. We also have regard to other factors which we consider relevant to the decision being made. Those factors, for example, include the interests and views of our key stakeholders. We acknowledge that every decision we make will not necessarily result in a positive outcome for all of our stakeholders. By considering the company’s purpose, vision and values together with its strategic priorities and having a process in place for decision-making, we do, however, aim to make sure that our decisions are consistent and predictable.
As is normal for organisations, authority for day-to-day management of this company other wholly-owned subsidiaries is delegated to executives. The boards of each company then engage management in setting, approving and overseeing execution of the business strategy and related policies, where relevant to that company. Throughout the year we, as a Board, review matters such as financial and operational performance, key risks, governance and regulatory compliance and the impact of decisions and policies affecting our key stakeholders.
The views of and the impact of the company’s activities on the key stakeholders are an important consideration for the Directors when making relevant decisions. Our governance framework is designed to provide opportunities for the Board to consider and discuss reports and decision-making papers which are sent in advance of each periodic Board meeting. The information contained therein, together with presentations to the Board, provide the insight necessary to understand the interests and concerns of key stakeholders and other relevant factors when making decisions.
Mr P Craddock
Director
31 March 2021
POLICY SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2020
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2020.
Principal activities
The principal activity of the company continued to be that of providing financial advisory services.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr P Craddock
(Appointed 30 April 2020)
Mrs K Dorrian
Mr K Dorrian
Mr P Edwards
(Appointed 30 April 2020)
Mr B Galvin
(Appointed 30 April 2020)
Mrs G Glen
(Appointed 1 May 2020)
Mr J Hill
(Appointed 29 June 2020)
Mr D Ness
(Resigned 30 April 2020)
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £29,510. The directors do not recommend payment of a final dividend.
Qualifying third party indemnity provisions
St. James's Place plc ("SJP"), the ultimate parent company, has taken out insurance covering Directors and Officers against liabilities they may incur in their capacity as Directors or Officers of SJP or its subsidiaries.
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.
POLICY SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 4 -
On behalf of the board
Mr P Craddock
Director
31 March 2021
POLICY SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF POLICY SERVICES LIMITED
- 5 -
Opinion
We have audited the financial statements of Policy Services Limited (the 'company') for the year ended 31 March 2020 which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 March 2020 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
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. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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' r
eport 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.
POLICY SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF POLICY SERVICES LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where 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 directors' 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'
r
esponsibilities
s
tatement, 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 for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Croxford (Senior Statutory Auditor)
for and on behalf of Thomson Cooper, Statutory Auditors
Dunfermline
31 March 2021
POLICY SERVICES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2020
- 7 -
2020
2019
Notes
£
£
Turnover
3
20,082,497
19,471,472
Cost of sales
(21,003,867)
(17,031,154)
Gross (loss)/profit
(921,370)
2,440,318
Administrative expenses
(912,662)
(796,736)
Operating (loss)/profit
5
(1,834,032)
1,643,582
Interest receivable and similar income
8
12,854
8,337
Interest payable and similar expenses
9
(248)
(245)
(Loss)/profit before taxation
(1,821,426)
1,651,674
Tax on (loss)/profit
10
333,782
(333,328)
(Loss)/profit for the financial year
(1,487,644)
1,318,346
The profit and loss account has been prepared on the basis that all operations are continuing operations.
POLICY SERVICES LIMITED
BALANCE SHEET
AS AT
31 MARCH 2020
31 March 2020
- 8 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
12
120,115
69,729
Current assets
Stocks
13
12,338
18,500
Debtors
14
1,486,560
837,004
Cash at bank and in hand
3,905,338
3,263,060
5,404,236
4,118,564
Creditors: amounts falling due within one year
15
(2,451,942)
(2,382,903)
Net current assets
2,952,294
1,735,661
Total assets less current liabilities
3,072,409
1,805,390
Provisions for liabilities
Provisions
16
2,794,664
-
Deferred tax liability
17
-
10,491
(2,794,664)
(10,491)
Net assets
277,745
1,794,899
Capital and reserves
Called up share capital
19
60
60
Profit and loss reserves
20
277,685
1,794,839
Total equity
277,745
1,794,899
The financial statements were approved by the board of directors and authorised for issue on 31 March 2021 and are signed on its behalf by:
Mr P Craddock
Director
Company Registration No. SC230167
POLICY SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 April 2018
60
1,450,817
1,450,877
Year ended 31 March 2019:
Profit and total comprehensive income for the year
-
1,318,346
1,318,346
Dividends
11
-
(974,324)
(974,324)
Balance at 31 March 2019
60
1,794,839
1,794,899
Year ended 31 March 2020:
Loss and total comprehensive loss for the year
-
(1,487,644)
(1,487,644)
Dividends
11
-
(29,510)
(29,510)
Balance at 31 March 2020
60
277,685
277,745
POLICY SERVICES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2020
- 10 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
1,162,618
1,600,501
Interest paid
(248)
(246)
Income taxes paid
(337,243)
(339,961)
Net cash inflow from operating activities
825,127
1,260,294
Investing activities
Purchase of tangible fixed assets
(76,191)
(12,163)
Proceeds from other investments and loans
(90,002)
2,029
Interest received
12,854
8,337
Net cash used in investing activities
(153,339)
(1,797)
Financing activities
Dividends paid
(29,510)
(974,324)
Net cash used in financing activities
(29,510)
(974,324)
Net increase in cash and cash equivalents
642,278
284,173
Cash and cash equivalents at beginning of year
3,263,060
2,978,887
Cash and cash equivalents at end of year
3,905,338
3,263,060
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
- 11 -
1
Accounting policies
Company information
Policy Services Limited is a
private
company
limited by shares
incorporated in Scotland.
The registered office is
Oracle Campus, Blackness Road, Linlithgow, West Lothian, EH49 7BF.
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 a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
At the date of the approval of the accounts, the directors are aware of the potential impact on the company of Covid-19. As the country is still in the midst of the pandemic it is therefore not possible to assess the potential impact. The directors are actively taking all steps to mitigate any impact the virus may have on the company.
The directors have considered a period of 12 months from the date of approval of the financial statements.
1.3
Turnover
Turnover represents
fees and commission received or
receivable on financial service
s
products.
Fees and commission
is accounted
for on the earlier of the date of receipt or when the right to income arises.
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.
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
10.00% Straight Line
Fixtures, fittings & equipment
20.00% Reducing Balance
Computer equipment
33.33% Straight Line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
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.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 12 -
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.
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
.
1.6
Stocks
Stocks are stated at the lower of cost and
n
e
t realisable value.
1.7
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.
1.8
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.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts 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
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 though 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.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 14 -
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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 i
s
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.
1.12
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
, where material
.
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.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 15 -
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.15
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.
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.
Accrued Commission
Determining accrued income at the year end
requires a
level of
estimation
.
The value requires the
directors
to estimate
f
uture cash flows expected to arise from
existing policies and is based on historical information to establish a reliable estimate
. The
value o
f
accrued income
at the reporting end date was £
799,279 (2019 - £706,050).
Provisions
A provision for liability is held for potentially underpaid regulatory fees as disclosed in
n
ote 1
6
. The matter is ongoing and the Directors are currently working with both the previous Management team and the FCA to resolve. A provision is held based on Management expectations on the probability of the potential liability crystalising.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover analysed by class of business
Commission income
20,082,497
19,471,472
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
3
Turnover and other revenue
(Continued)
- 16 -
2020
2019
£
£
Other significant revenue
Interest income
12,854
8,337
2020
2019
£
£
Turnover analysed by geographical market
United Kingdom
20,082,497
19,471,472
4
Exceptional item
2020
2019
£
£
Cost of sales
Exceptional item - Regulatory fees
2,407,440
-
5
Operating (loss)/profit
2020
2019
Operating (loss)/profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
22,230
18,960
Depreciation of owned tangible fixed assets
25,805
25,147
Operating lease charges
88,682
87,242
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Directors
3
3
Support staff
4
3
Administration
56
58
Total
63
64
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
6
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
1,828,497
1,518,423
Social security costs
176,084
147,729
Pension costs
54,991
43,388
2,059,572
1,709,540
7
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
350,634
362,837
Company pension contributions to defined contribution schemes
14,683
11,733
365,317
374,570
Remuneration disclosed above include the following amounts paid to the highest paid director:
2020
2019
£
£
Remuneration for qualifying services
161,875
163,655
Company pension contributions to defined contribution schemes
6,133
4,800
8
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
12,854
8,337
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
12,854
8,337
9
Interest payable and similar expenses
2020
2019
£
£
Other finance costs:
Other interest
248
245
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 18 -
10
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
(321,144)
321,156
Adjustments in respect of prior periods
5,490
12,989
Total current tax
(315,654)
334,145
Deferred tax
Origination and reversal of timing differences
9,739
(817)
Tax losses carried forward
(27,867)
-
Total deferred tax
(18,128)
(817)
Total tax (credit)/charge
(333,782)
333,328
The actual (credit)/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:
2020
2019
£
£
(Loss)/profit before taxation
(1,821,426)
1,651,674
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(346,071)
313,818
Tax effect of expenses that are not deductible in determining taxable profit
6,787
10,392
Group relief
-
(5,281)
Permanent capital allowances in excess of depreciation
(9,739)
2,227
Other permanent differences
12
-
Under/(over) provided in prior years
5,490
12,989
Deferred Tax
9,739
(817)
Taxation (credit)/charge for the year
(333,782)
333,328
11
Dividends
2020
2019
£
£
Interim paid
29,510
974,324
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 19 -
12
Tangible fixed assets
Leasehold improvements
Fixtures, fittings & equipment
Computer equipment
Total
£
£
£
£
Cost
At 1 April 2019
51,513
35,388
173,829
260,730
Additions
-
5,894
70,297
76,191
At 31 March 2020
51,513
41,282
244,126
336,921
Depreciation and impairment
At 1 April 2019
15,172
15,764
160,065
191,001
Depreciation charged in the year
5,152
3,029
17,624
25,805
At 31 March 2020
20,324
18,793
177,689
216,806
Carrying amount
At 31 March 2020
31,189
22,489
66,437
120,115
At 31 March 2019
36,341
19,624
13,764
69,729
13
Stocks
2020
2019
£
£
Stationery stock
12,338
18,500
14
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
807,929
769,080
Corporation tax recoverable
497,741
-
Other debtors
90,077
75
Prepayments and accrued income
83,176
67,849
1,478,923
837,004
Deferred tax asset (note 17)
7,637
-
1,486,560
837,004
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 20 -
15
Creditors: amounts falling due within one year
2020
2019
£
£
Trade creditors
2,196,583
2,022,565
Corporation tax
-
155,156
Other taxation and social security
75,420
76,661
Other creditors
33,836
9,772
Accruals and deferred income
146,103
118,749
2,451,942
2,382,903
16
Provisions for liabilities
2020
2019
£
£
Regulatory fees
2,794,664
-
Movements on provisions:
Regulatory fees
£
Provided in the year
2,794,664
A provision for liability is held when it is probable that there will be an outflow of economic benefit, which can be measured reliably.
A provision for liability of £2,794,664 is held for potentially underpaid regulatory fees as at 31 March 2020. The Directors are currently working with both the previous Management team and the FCA to resolve the matter.
This matter is expected to be resolved during the year ended 31 March 2022, with settlement of any agreed liability occurring within the same year.
Of this potential underpayment, £387,224 related to the year ended 31 March 2020 with the remainder of £2,407,440 relating to prior years. The amount relating to earlier years is shown as an Exceptional Item - see note 4.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 21 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
Assets
Assets
2020
2019
2020
2019
Balances:
£
£
£
£
Accelerated capital allowances
-
10,491
(20,229)
-
Tax losses
-
-
27,866
-
-
10,491
7,637
-
2020
Movements in the year:
£
Liability at 1 April 2019
10,491
Credit to profit or loss
(18,128)
Asset at 31 March 2020
(7,637)
The deferred tax asset and liability have been netted off.
The deferred tax asset is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
The deferred tax
liability
is expected to reverse within
36
months
and relates to accelerated capital allowances that are expected to mature within the same period
.
18
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
54,991
43,388
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.
Included in other creditors is £nil (2019 - £8,387) payable to the fund at the year end.
19
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
60
60
60
60
The company has one class of ordinary shares. These shares carry voting rights.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 22 -
20
Profit and loss reserves
2020
2019
£
£
At the beginning of the year
1,794,839
1,450,817
(Loss)/profit for the year
(1,487,644)
1,318,346
Dividends declared and paid in the year
(29,510)
(974,324)
At the end of the year
277,685
1,794,839
21
Financial commitments, guarantees and contingent liabilities
The company can suffer clawbacks from commissions received at any time. The company has no control over these and they cannot be easily quantified. However, these are monitored closely by the directors. The provision made in the financial statements represents the clawbacks the directors are aware of at the
approval of the financial statements
.
22
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:
2020
2019
£
£
Between two and five years
708,089
1,067,652
In over five years
186,168
360,429
894,257
1,428,081
23
Events after the reporting date
On 31 March 2021 the company issued shares to the value of £2,999,940 to provide additional working capital.
24
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2020
2019
£
£
Aggregate compensation
409,721
420,742
Other information
In accordance with section 33.1A of FRS 102, the company is not required to make disclosure of transactions between members of the group.
POLICY SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 23 -
25
Ultimate controlling party
In the two years ended 31 March 2020 the company's immediate parent company was Virtue Money Limited and its ultimate parent company SJP Legacy Holdings Ltd (formerly Policy Services Holdings Limited), a company incorporated in Scotland.
The parent company of the largest group in which the results of the company are consolidated is that headed by SJP Legacy Holdings Ltd. The address of the registered office is Oracle Campus, Blackness Road, Linlithgow, West Lothian, EH49 7BF.
On 30 April 2020, the entire share capital of the ultimate parent company SJP Legacy Holdings Ltd was purchased by St James's Place Wealth Management Group Limited, a subsidiary of St. James's Place Plc and it is therefore now considered the ultimate parent company.
26
Cash generated from operations
2020
2019
£
£
(Loss)/profit for the year after tax
(1,487,644)
1,318,346
Adjustments for:
Taxation (credited)/charged
(333,782)
333,328
Finance costs
248
245
Investment income
(12,854)
(8,337)
Depreciation and impairment of tangible fixed assets
25,805
25,147
Increase in provisions
2,794,664
-
Movements in working capital:
Decrease/(increase) in stocks
6,162
(15,000)
(Increase)/decrease in debtors
(54,176)
53,285
Increase/(decrease) in creditors
224,195
(106,513)
Cash generated from operations
1,162,618
1,600,501
27
Analysis of changes in net debt
2020
£
Opening net funds
Cash at bank and in hand
3,263,060
Changes in net debt arising from:
Cash flows of the entity
642,278
Closing net funds as analysed below
3,905,338
Closing net funds
Cash at bank and in hand
3,905,338
2020-03-31
2019-04-01
false
CCH Software
CCH Accounts Production 2020.310
Mr P Craddock
Mrs K Dorrian
Mrs K Dorrian
Mr K Dorrian
Mr P Edwards
Mr B Galvin
Mrs G Glen
Mr J Hill
St. James's Place Corporate Secretary Limited
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