Synergy_Financial_Product - Accounts

The director presents the strategic report for the year ended 30 June 2020.

The principal activity of the company is the provision of packaged protection and investment related products.

The company has managed to control costs by outsourcing its administration and is generating new revenue by investing in marketing and new product development. During the year the company has developed new go-to-market strategies including provision of a white labelled service provision to start up investment providers. This will improve the company’s new business prospects as it looks to extend the existing customer base.

The company continued to generate turnover on the existing books for protection and investment products. The sustainability of profits is, to a large extent, a function of the number of customers and the assets under management.

Turnover for the year was £1,525,030 (2019: £1,632,034). The company has managed to return to profit of £4,585 (2019: £33,186) by focusing on cost management and new product development.

The company continues to maintain a healthy balance sheet with a cash balance at 30 June 2020 of £1,076,424 (2019: £949,329).

The company's activities expose it to a number of risks including financial risk, credit risk, liquidity risk and regulatory risk.

The company receives commission from insurers for the sale of protection products. Should these policies lapse within a six-year timeframe, a proportion of the commission is repayable. The company has no contractually determined cash flows and so interest rate risk is normal. The company is not exposed to currency risk. No hedging techniques are employed.

The company’s risk management objectives and policies aim to mitigate specific financial risks where there is a possibility that any financial risk may lead to material changes in the company’s financial performance, position or cash flow. The company has limited exposure to financial risk through its financial assets and financial liabilities.

Cash is held in major UK banks in an attempt to mitigate credit risk and regular reviews of the bank ratings are conducted by management. At the balance sheet date, the maximum exposure to credit risk is limited to the carrying amount of each financial asset/liability in the balance sheet. Management review the level of outstanding debt to manage credit risk effectively.

The company manages liquidity risk by maintaining sufficient funds in cash held in major UK banks to meet liabilities in a timely and orderly manner.

Our business and products are regulated by the Financial Conduct Authority in the UK, and we are therefore exposed to the risk of not complying with regulatory requirements, regulatory change or regulators’ expectations. Failing to properly manage regulatory risk, including the handling of client money, may result in regulatory sanctions being imposed and could harm our reputation. We therefore monitor the regulatory environment on an on-going basis and our own internal controls have been designed to counter such risk. Management receive regular reports on compliance which include results from compliance reviews on specific topics, suggestions for improvements of systems and information on customer complaints. We also engage external specialists where appropriate to review elements of our controls in this area.

The director presents his annual report and financial statements for the year ended 30 June 2020.

The principal activity of the company continued to be that of the provision of packaged protection and investment related products.

The director has reviewed the forecasts and projections of Synergy Financial Products Limited, taking into account the existing business and the revenue generated from the new plan. The forecasts show the business is likely to break even in the next year. He has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The director has considered the key risks and uncertainties surrounding the company in reaching this decision. Thus, he continues to adopt the going concern basis in preparing the annual financial statements.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 8.

No ordinary dividends were paid. The director does not recommend payment of a final dividend.

Moore Kingston Smith LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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.

Details of the company's unaudited Pillar 3 disclosures, required under section 11 of the Financial Services Authority's Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU), can be found at the following web address: www.sfpl.co.uk.

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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. He is 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.

We have audited the financial statements of Synergy Financial Products Limited (the 'company') for the year ended 30 June 2020 which comprise the Profit And Loss Account, the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including 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 30 June 2020 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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 director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the director has 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.

Other information

The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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 Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the Strategic Report and the Director's Report have been prepared in accordance with applicable legal requirements.

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 and the Director's Report.

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 director's remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the Director's Responsibilities Statement, the director is 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 director is 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 director either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• 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. 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.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our work, for this report, or for the opinions we have formed.

The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.

Synergy Financial Products Limited is a private company limited by shares incorporated in England and Wales. The registered office is Centrium 1, Griffiths Way, St Albans, Hertfordshire, United Kingdom, AL1 3AW.

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 pound.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

In March 2020, the World Health Organization designated an outbreak associated with the novel coronavirus known as COVID-19 as a pandemic. As a result of this outbreak, governments, businesses and other organizations throughout the world have closed offices, instituted travel restrictions, and implemented other measures in an effort to reduce the potential spread of COVID-19. These restrictions and closures could negatively impact the company’s ability to offer its services, and the demand for the company’s services could soften due to the economic uncertainty resulting from the outbreak. While the duration and severity of this pandemic is uncertain, management currently does not believe that the pandemic will have a materially adverse effect on the company’s financial condition or results of operationstrue.

At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

Turnover represents the amounts (excluding value added tax) derived from the provision of services to customers. It is recognised as it is earned.

All turnover is derived from commission and fees receivable on product design, marketing, underwriting and administration of protection and investment related products.

The company receives commission from insurers on the sale of protection products. Should these policies lapse within a set timeframe, a proportion of commission is repayable. A provision is made for the amounts expected to be repaid, based on expected lapse rates. The company also receives fees in the form of dealing and administrative charges levied on the plan holder and commission rebates from investment managers.

All sales are made in the United Kingdom.

The purchase cost of the ISA book of business plus attributable acquisition costs has been capitalised, and is being amortised to nil by equal annual instalments over its useful life, which has been estimated at 15 years.

Development expenditure in respect of software is written off, except where the director is satisfied as to the technical, commercial and financial viability of the project. In this case, the expenditure is capitalised and amortised over the period during which the company is expected to benefit. The amortisation method used is the straight line method, which is amortised to nil by equal annual instalments over the period.

Development expenditure cost includes irrecoverable VAT. The director considers that the inclusion of irrecoverable VAT in the development expenditure on software more accurately measures the cost of the software.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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:

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.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

Cash at bank and in hand 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.

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.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

In the application of the company’s accounting policies, the director is 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.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value. See note 10 for the carrying amount of the intangible assets and note 1.4 for the useful economic lives for each class of asset.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The director is considered to be key management personnel.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 30 June 2020 are as follows:

In accordance with Companies Act 2006 s405(2), Synergy Financial Products Limited has excluded its subsidiary undertakings from consolidation. Both companies were dormant during the year and so the directors do not consider the subsidiaries to be material for the purpose of giving a true and fair view of the accounts of Synergy Financial Products Limited.

For the financial year ended 30 June 2020 both subsidiaries are entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

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.

During the year the company entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

Management, staff and other support services have been provided by Outsourced Professional Administration Limited and Pandora Software Solutions Limited, these constitute related parties under FRS102, Section 33. The transactions with these related parties have been stated above.