MSL Legal Expenses Ltd - Limited company accounts 20.1
MSL Legal Expenses Ltd - Limited company accounts 20.1
REGISTERED NUMBER: |
STRATEGIC REPORT, |
REPORT OF THE DIRECTORS AND |
AUDITED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
FOR |
MSL LEGAL EXPENSES LTD |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
Page |
Company Information | 1 |
Strategic Report | 2 | to | 4 |
Report of the Directors | 5 | to | 6 |
Report of the Independent Auditors | 7 | to | 10 |
Statement of Comprehensive Income | 11 |
Balance Sheet | 12 |
Statement of Changes in Equity | 13 |
Notes to the Financial Statements | 14 | to | 22 |
MSL LEGAL EXPENSES LTD |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
DIRECTORS: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditor and |
Chartered Accountants |
123 Wellington Road South |
Stockport |
Cheshire |
SK1 3TH |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
The directors present their strategic report for the year ended 31st December 2021. |
REVIEW OF BUSINESS |
The company is a specialist provider of legal expenses insurance, assistance insurance and claims handling services. |
The primary business generated by the company is in relation to Before the Event ('BTE') legal expenses insurance and associated claims handling services. |
The company continued to operate within COVID government guidelines with a home working environment during the first half of the year before gravitating to a hybrid working model in the second half, with colleagues now working at least 50% of the time in the office. |
The impact of the pandemic continued during the 1st half of the year due primarily to the significant reduction of traffic on the roads leading to fewer accidents, culminating in a fall of 13.6% in income. |
As anticipated, the implementation of the Civil Liability Act 2018 ("CLA") on 31 May 2021 (see Regulatory Risk section below for further information) resulted in a reduction in the volume and value of minor personal injury 'whiplash' claims with BTE legal expenses polices now including cover for these and the premiums being adjusted accordingly. |
The company balance sheet reserves increased in 2021, and the trade debtors reduced by 5.4% (2020: 27.9%). |
Following a full review of the business the Board will continue to monitor and adjust the reserves accordingly. The Board consider the current level of reserves on the balance sheet to be adequate. |
Colleague levels within the company are continually reviewed to ensure maximum efficiency whilst maintaining high levels of customer service and the average colleague numbers reduced to 37 (2020: 50). |
The company continues to focus on key areas of income generation and cost control. While, as detailed below, the COVID-19 pandemic and related factors have stalled growth plans for the early part of 2021, the company has continued a pattern of growth in the business as market conditions allow in 2022. |
Finally, we would like to thank our customers and colleagues for their ongoing support of the business and their contribution towards its success. |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
PRINCIPAL RISKS AND UNCERTAINTIES |
Reserving risk |
The company's approach to reserving is based on regular evaluations of historical claims development by type of risk and by major business partner. Previous patterns are used to evaluate expected ultimate claims costs and account profitability with closer monitoring of newer products and partners or those where recent historical patterns give cause for concern. Reserving rates are reviewed regularly by the Board and adjusted as necessary to ensure reserve adequacy. |
Credit risk |
The risks considered are that a bank or other counterparty defaults on amounts held for or due to the company. The company's exposure to credit risk has been assessed in the context of the credit worthiness of the relevant counterparties and is controlled and managed accordingly. The company's debtor balances are analysed and reviewed on a monthly basis and the outstanding debt due has increased in line with management expectation. |
Liquidity risk |
Liquidity is not a significant risk to the company; and cash flow projections indicate an expectation that the group can continue to operate within its available banking facilities. |
Regulatory risk |
The government has introduced the Civil Liability Act, which was implemented on 31st May 2021 and is designed to disincentivise minor, potentially exaggerated and fraudulent Road Traffic Accident related whiplash claims by: |
1. the introduction of a tariff of fixed compensation for pain, suffering and loss of amenity for claims with an injury duration of between 0 and 24 months; |
2. providing the judiciary with the facility to both decrease the amount awarded under the tariff in cases where there may be contributory negligence or to increase the award (with increases capped at no more than 20%) in exceptional circumstances; |
3. introducing a ban on both the offering, payment and requesting of offers to settle claims without medical evidence; and |
4. increasing the small claims limit for Road Traffic Accident related personal injury claims to £5,000. |
The changes will have a significant and material effect in relation to the company's Road Traffic Accident business. The company has been aware of and recognised, for some considerable time, this emerging risk and consequently, in line with its strategic direction, has implemented revised commercial terms with all relevant business partners, which are currently operating in line with forecasts and are continually monitored closely. |
FINANCIAL KEY PERFORMANCE INDICATORS |
The company's income reduced for the year by 13.6% to £4.09m (2020: £4.73m). The company has not lost any major existing clients with the reduction in income being largely due to reduced volumes of road traffic accident claims because of the COVID-19 pandemic. |
The profit for the year, after taxation but before dividends, amounted to £0.08m (2020: Loss £0.03m). |
The shareholders' funds of the company were £1.53m at 31st December 2021 (2020: £1.52m). |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
FUTURE DEVELOPMENTS & GOING CONCERN |
The financial statements for the company are prepared on a going concern basis in accordance with UK Generally Accepted Accounting Standards. |
The Board remain alive to further disruption arising from the COVID-19 pandemic but is cautiously optimistic we are now over the worst and is pleased that the company met its COVID adjusted budgeted profit target in the year. |
As noted above The Civil Liability Act has now been implemented effective 31 May 2021. The company will continue to develop new products and strategies in order to ensure that it is well placed to overcome the challenges posed by the CLA. The company's most recent financial forecasts (including the budget for 2022) account for the impact of the CLA and the company is currently on track to deliver budgeted profit in 2022. |
Other than the implementation of the CLA, which the Board believes does not constitute an adjusting event, the Board is not aware of any other material post-balance sheet events. |
ON BEHALF OF THE BOARD: |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
The directors present their report with the financial statements of the company for the year ended 31st December 2021. |
PRINCIPAL ACTIVITY |
The principal activity of the company is the underwriting of legal expenses insurance and associated claims handling including first notification of loss, personal injury, medical reporting, rehabilitation, credit hire, credit repair and uninsured loss recovery. |
DIVIDENDS |
The total distribution of dividends for the year ended 31st December 2021 will be £ |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1st January 2021 to the date of this report. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
AUDITORS |
The auditors, Allens Accountants Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MSL LEGAL EXPENSES LTD |
Opinion |
We have audited the financial statements of MSL Legal Expenses Ltd (the 'company') for the year ended 31st December 2021 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 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 31st December 2021 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MSL LEGAL EXPENSES LTD |
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 Report of the Directors. |
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 Statement of Directors' Responsibilities set out on page five, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MSL LEGAL EXPENSES LTD |
Auditors' 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 a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Extent to which the audit was considered capable of detecting irregularities, including fraud |
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. |
Identifying and assessing potential risks related to irregularities |
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: |
- the nature of the industry and sector, control environment and business performance including the design of the company's remuneration policies, key drivers for the directors' remuneration, bonus levels and performance targets; |
- results of our enquiries of management and the board of directors about their own identification and assessment of the risks of irregularities; |
- any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to: |
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; |
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; |
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; |
- the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. |
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. |
We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and tax legislation. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty. |
Audit response to risks identified |
Our procedure to respond to risks identified included the following: |
- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; |
- enquiring of management and the board of directors concerning actual and potential litigation and claims; |
- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; |
- in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MSL LEGAL EXPENSES LTD |
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Use of our 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 a Report of the Auditors 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. |
for and on behalf of |
Statutory Auditor and |
Chartered Accountants |
123 Wellington Road South |
Stockport |
Cheshire |
SK1 3TH |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
STATEMENT OF COMPREHENSIVE |
INCOME |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
2021 | 2020 |
Notes | £ | £ |
TURNOVER | 3 |
Administrative expenses |
12,137 | (280,081 | ) |
Other operating income | 4 |
OPERATING PROFIT/(LOSS) | 6 | ( |
) |
Interest receivable and similar income |
124,456 | (7,143 | ) |
Interest payable and similar expenses | 7 |
PROFIT/(LOSS) BEFORE TAXATION | ( |
) |
Tax on profit/(loss) | 8 |
PROFIT/(LOSS) FOR THE FINANCIAL YEAR |
( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
BALANCE SHEET |
31ST DECEMBER 2021 |
2021 | 2020 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 10 |
CURRENT ASSETS |
Debtors | 11 |
Cash in hand |
CREDITORS |
Amounts falling due within one year | 12 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 16 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 17 |
Retained earnings | 18 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1st January 2020 |
Changes in equity |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 31st December 2020 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31st December 2021 |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
1. | STATUTORY INFORMATION |
MSL Legal Expenses Ltd is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Going concern |
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and will continue to have the support of the group. The directors have reached this conclusion giving due consideration to the projected future performance of the company and any potential risk that might impact the company's ability to meet its required solvency levels. For this reason, they continue to adopt the going concern basis in preparing the financial statements. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows; |
• | the requirement of paragraph 3.17(d); |
• | the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c). |
Consolidated accounts for the ultimate parent of the group, Drive Further Limited, can be obtained from the company's registered office. |
Significant judgements and estimates |
Preparation of the financial statements requires management to make significant judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses for the year. However, the nature of estimation means that actual outcomes could differ from those 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 if revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
The following judgements have had the most significant effect on amounts recognised in the financial statements. |
Bad and doubtful debts |
A key area involving management judgement and estimate is in determining the provision for bad and doubtful debts for medical, rehabilitation and hire income debts due. |
Legal expenses claims reserve |
Management judgement and estimate are significant in determining both the level of claims likely to be received on the legal expense insurance products sold, together with ultimate costs to be paid per claim. |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
2. | ACCOUNTING POLICIES - continued |
Revenue recognition |
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration receivable and represents the total amount receivable by the company for services provided in the normal course of business, excluding value added tax and trade discounts. The following criteria must also be met before revenue is recognised: |
Rendering of services |
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: |
- the amount of revenue can be measured reliably; |
- it is probable that the Company will receive the consideration due under the contract; |
- the stage of completion of the contract at the end of the reporting period can be measured reliably; and |
- the costs incurred and the costs to complete the contract can be measured reliably. |
Tangible fixed assets |
Fixtures & fittings | - |
Tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. |
At each reporting date fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss. |
If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. |
Debtors |
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest rate method, less any impairment. |
Cash and cash equivalents |
Cash and cash equivalents comprise cash at bank and on hand, demand deposits deposits with banks and other short term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings or current liabilities. |
Creditors |
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method. |
Interest bearing borrowings |
Interest bearing borrowing are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in the statement of comprehensive income over the period of the borrowings, together with any interest and fees payable, using the effective interest method. |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
2. | ACCOUNTING POLICIES - continued |
Government grants |
Government grants are recognised on the accrual model and are measured at fair value of the asset receivable. Grants are classified as relating either to income or to assets. Grants related to other income are recognised in profit or loss over the period in which related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred. |
Financial instruments |
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. |
The company enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties, together with loans to and from related parties. |
Debt instruments (other than those wholly repayable or receivable in one year), including loans and other accounts receivable and payable, are initially measured at present value of future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable in one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of cash or other consideration, expected to be paid or received. |
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence if impairment is found, an impairment loss is recognised in the statement of comprehensive income. |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Hire purchase and leasing commitments |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
3. | TURNOVER |
The turnover and profit (2020 - loss) before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
2021 | 2020 |
£ | £ |
4. | OTHER OPERATING INCOME |
2021 | 2020 |
£ | £ |
Government grant income | 87,637 | 272,938 |
87,637 | 272,938 |
Government grant income is from claims made during the year under the Coronavirus Job Retention Scheme. |
5. | EMPLOYEES AND DIRECTORS |
2021 | 2020 |
£ | £ |
Wages, salaries and social security costs | 1,256,576 | 1,638,794 |
Other pension costs | 28,059 | 50,448 |
1,284,635 | 1,689,242 |
The average monthly number of employees during the year was as follows: |
2021 | 2020 |
Office and administration | 36 | 46 |
Sales and marketing | 1 | 4 |
37 | 50 |
2021 | 2020 |
£ | £ |
Directors' remuneration |
Directors' pension contributions to money purchase schemes |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
6. | OPERATING PROFIT/(LOSS) |
The operating profit (2020 - operating loss) is stated after charging: |
2021 | 2020 |
£ | £ |
Hire of plant and machinery |
Depreciation - owned assets |
Auditors' remuneration |
Other operating leases |
7. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2021 | 2020 |
£ | £ |
Bank interest |
8. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2021 | 2020 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax |
Tax on profit/(loss) |
UK corporation tax has been charged at 19% . |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2021 | 2020 |
£ | £ |
Profit/(loss) before tax | ( |
) |
Profit/(loss) multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Capital allowances in excess of depreciation | ( |
) | - |
Total tax charge | 24,488 | 6,684 |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
9. | DIVIDENDS |
2021 | 2020 |
£ | £ |
Interim |
10. | TANGIBLE FIXED ASSETS |
Fixtures |
& fittings |
£ |
COST |
At 1st January 2021 |
Additions |
At 31st December 2021 |
DEPRECIATION |
At 1st January 2021 |
Charge for year |
At 31st December 2021 |
NET BOOK VALUE |
At 31st December 2021 |
At 31st December 2020 |
11. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2021 | 2020 |
£ | £ |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Directors' current accounts |
Prepayments and accrued income |
12. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2021 | 2020 |
£ | £ |
Bank loans and overdrafts (see note 13) |
Trade creditors |
Amounts owed to group undertakings |
Corporation Tax |
Social security and other taxes |
VAT |
Other creditors |
Directors' current accounts |
Accruals and deferred income |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
13. | LOANS |
An analysis of the maturity of loans is given below: |
2021 | 2020 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank overdrafts |
14. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
2021 | 2020 |
£ | £ |
Within one year |
Between one and five years |
15. | SECURED DEBTS |
The following secured debts are included within creditors: |
2021 | 2020 |
£ | £ |
Bank overdrafts |
The company's bankers hold a fixed and floating charge over all assets of the company. |
The company has given an unlimited cross company guarantee dated 2 June 2016 to the company's bankers in respect of all group undertakings. |
16. | PROVISIONS FOR LIABILITIES |
2021 | 2020 |
£ | £ |
Deferred tax |
Accelerated capital allowances | 23,268 | 12,610 |
Legal expenses policy |
claims | 305,107 | 200,076 |
Deferred | Other |
tax | provisions |
£ | £ |
Balance at 1st January 2021 |
Provided during year |
Balance at 31st December 2021 |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
16. | PROVISIONS FOR LIABILITIES - continued |
Provisions for claims outstanding are determined on an aggregate basis with estimates being made on information available at the time. The basis of determining the provision incorporates the use of case estimates, average claim payments and average claim settlements. |
Although provisions for claims are based upon the information currently available, subsequent information and events may show the ultimate liability to be greater, or less, than the amount provided. The methods used and estimates made are continually reviewed and any resulting adjustments will be reported in the year of settlement or re-appraisal. |
17. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2021 | 2020 |
value: | £ | £ |
Ordinary | £1 | 50,000 | 50,000 |
18. | RESERVES |
Retained |
earnings |
£ |
At 1st January 2021 |
Profit for the year |
Dividends | ( |
) |
At 31st December 2021 |
19. | ULTIMATE PARENT COMPANY |
Drive Further Limited is regarded by the directors as being the company's ultimate parent company. |
20. | CONTINGENT LIABILITIES |
The company is a member of a group registration for Value Added Tax purposes. Under the terms of the registration, each member is jointly and severally liable for the Value Added Tax liability for all members. |
The group liability at the year end was £36,636 (2020 £271,251). |
The company is also party to a cross guarantee given in respect of the group overdraft facility, which at the year end totalled £1,078,793 (2020 £1,222,032). |
MSL LEGAL EXPENSES LTD (REGISTERED NUMBER: 02210857) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31ST DECEMBER 2021 |
21. | DIRECTORS' ADVANCES, CREDITS AND GUARANTEES |
The following advances and credits to a director subsisted during the years ended 31st December 2021 and 31st December 2020: |
2021 | 2020 |
£ | £ |
Balance outstanding at start of year |
Amounts advanced |
Amounts repaid | ( |
) | ( |
) |
Amounts written off | - | - |
Amounts waived | - | - |
Balance outstanding at end of year |
22. | RELATED PARTY DISCLOSURES |
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 wholly owned subsidiaries within the group. |
2021 | 2020 |
£ | £ |
Sales |
Costs |
Amount due from related party |
During the year, a total of key management personnel compensation of £ |
23. | POST BALANCE SHEET EVENTS |
While it is not considered to be an adjusting post balance sheet event, the Directors have focussed considerable time and attention in 2021 and continuing into 2022 on issues arising from the Covid-19 pandemic and related Government regulations and guidance. With a focus on colleague safety and an efficient use of IT and communications systems, the company's business has successfully transitioned to an operational model with colleagues working from home wherever possible. Appropriate use of the Government's job retention scheme has been made to reduce net operating costs in line with reduced customer demand in order to minimise the financial impact of the pandemic on the business. |
The directors continue to monitor the position and as circumstances and guidance evolve will continue to make appropriate changes to operational practices in the company. |
24. | ULTIMATE CONTROLLING PARTY |
The ultimate controlling party is |