Aventum_Group_Limited - Accounts

The directors present the strategic report for the year ended 30 June 2021.

Welcome to our 2021 annual report.

In the period this report relates to, the world remained in the grip of a global pandemic and businesses were being heavily disrupted. So, it’s with great pleasure that we share another exceptional set of results that demonstrate the strength and depth of Aventum Group, as well as its exciting trajectory.  The headline figures are impressive – a 29% increase in turnover to £26.8m, and 55% increase in EBITDA before exceptional items to £9.4m; however, equally impressive is the development of the Group’s capabilities and reach over this period, as we continue our mission to build the world’s leading independent speciality (re)insurance Group.

As outlined in last year’s report, our ability to be agile and quickly react to an ever-changing world, enabled us to capitalise on opportunities that many of our larger and less nimble competitors could not. Additionally, our business went through the largest change in its 25-year history as we brought together all our speciality trading platforms under one common holding company, culminating in the launch of Aventum Group.

It should be noted that this first set of consolidated accounts does not fully reflect the scale or profitability of the new Aventum Group. Whilst all of the Group’s entities are now included within the Group Statement of Financial Position on pages 17 and 18, the profit attributable to our Imperium and Novus businesses is largely excluded from the Group Income Statement on pages 14 and 15, because these entities were incorporated into the Group just 5 days before the financial year end. The combined EBITDA excluding exceptional items for the year ended 30th June 2021 was £15.7m generated on group income of £44.9m when viewed as a consolidation retrospectively. The combined Aventum Group is therefore expected to report a substantially higher profit in next year’s accounts when all entities are fully included.

Looking ahead, the group plans to continue its expansion into new lines of business and territories across both its underwriting and broking platforms.  Our focus remains firmly on ‘specialty' business, where we can add value to the distribution chain and generate favourable margins versus our peers.  Whilst M&A continues to be highly fashionable within our sector, we have adopted a more capital-efficient partnership model, ‘Synergy’, to fuel organic growth and enable us to diversify into accretive and often uncorrelated lines of business.  

This approach, together with our highly entrepreneurial ethos and investments in people and technology, has seen the business transform into THE alternative, privately owned platform for talented brokers, underwriters and operational staff.

The market generally remains in a hard cycle, with rates continuing to rise. The Decile 10 exercise initiated by Lloyds of London in 2018, saw the start of a firm rate cycle across global lines of Property and Casualty with continued momentum throughout 2021; something that we envisage will continue in the medium term.

As a speciality (re)insurance group, Aventum  are market leaders in finding solutions for their global client base and employ some of the market's brightest and best talent. Significant investment in IT and analytics continued throughout the reporting period, to ensure that we can harness the power of data and ensure the best outcomes for clients.

Our approach

The Board recognises that the group faces a wide range of risks from the environment in which it does business. The governance, risk management and internal control framework ensure that appropriate arrangements are in place to manage, mitigate, monitor and report those risks effectively.

The key business risks and uncertainties affecting the group are considered to relate to financial risks, being liquidity risk, currency risk, credit risk and regulatory risk, as well as Brexit.

Regulatory Risk

The group is regulated by the Financial Conduct Authority (FCA). The risk and compliance functions are represented on the Board and have established a framework to ensure compliance with all regulatory requirements.

Brexit

Since the balance sheet date the UK has successfully negotiated an exit deal. Whilst this has provided some stability and certainty there are still implications for the industry generally and the ability of UK companies to service the European market.

To ensure the continuity of the Group's business it has taken steps during the year to establish European trading platform solutions.

Credit risk

Credit risk is the risk that a counterparty will be unable to pay amounts in full when due. The main areas where the company is exposed to credit risk are amounts due from clients and cash deposits.

The credit risk associated with cash deposits is limited as the accounts are held with a major UK high street bank only. The principal credit risk arises therefore from trade debtors.

The board of directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 30 June 2021. In doing so, the board of directors have regard (amongst other matters) to:

• The likely consequences of any decisions in the long term;

• The interests of the Company’s employees;

• The need to foster the Company’s business relationships with suppliers, clients and others;

• The impact of the Company’s operations on the community and the environment;

• The desirability of the Company maintaining a reputation for high standards of business conduct; and

• The need to act fairly as between members of the Company.

Long-term consequences of decisions

All decisions made by the Group are done so with the objective of further enhancing the overall success of the business and with due regard given to the interests of a wide range of key stakeholders. Long-term growth in a responsible, sustainable way is of upmost importance to the Group. The board routinely considers the long-term effects of its decisions and makes its decisions in line with its strategic objectives.

Key stakeholders

The board has identified the below groups as its key stakeholders and the manner in which the board engages with each stakeholder group is outlined, taking consideration for the issues which are significant to each stakeholder.

Employees

The board understands that its people are its biggest asset and fundamental to the success of the business. The board recognises that this success results from employees who are engaged and passionate about their work, which is why the Group promotes an inclusive, entrepreneurial culture that inspires employees to perform to their highest standard, whilst making a real contribution to the long-term success of the Group.

Teams are encouraged to hold regular meetings to ensure that performance, initiatives and insights are shared and discussed with the wider team. The board feels this creates a more inclusive environment, with increased collaboration, where each employee has a voice. Promoting active involvement in the success and strategic direction of the business across all team members is key to success.

The health and well-being of employees is of particular importance for the Group, which is why all employees have access to the Group’s Wellbeing Centre. Here, employees have access to a variety of different wellbeing tools, including workout classes, healthier eating recipes and much more. During the financial period, the global outbreak of the COVID-19 virus was at its peak. As a result of this, the board put in place a number of measures specifically designed to ensure that employees were, and continue to be, protected as far as possible from the risk of exposure to COVID-19 as a result of their work for the Group.

On behalf of the board

The directors present their annual report and financial statements for the year ended 30 June 2021.

The principal activity of the parent company is that of a holding company which received dividends from its operating subsidiaries and associates.

The principal activity of Aventum Group Limited (“the group”) continues to be of retail and wholesale insurance broking, reinsurance broking and underwriting.

The results for the year are set out on pages 15 to 16.

Ordinary dividends were paid amounting to £5,250,502 (2020: £520,000).

Dividends of £Nil were declared post year end.

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

In accordance with the company's articles, a resolution proposing that Saffery Champness LLP be reappointed as auditor of the group 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 auditor of the company 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 auditor of the company is aware of that information.

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

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

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Aventum Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2021 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the group and of the parent company's affairs as at 30 June 2021 and of the group's 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 group and parent 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 group's and parent 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 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.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent 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 parent 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.

Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation and The Financial Services and Markets Act 2000, on which The Financial Conduct Authority (FCA) Handbook is based.

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.

A group subsidiary is regulated by the FCA. We discussed the subsidiary's authorisation and permitted activities with the CF10a and obtained evidence of this from the FCA register. We obtained additional evidence about compliance by reviewing the breaches registers that have to be maintained under the CASS handbook, correspondence with the FCA and the results of the testing of compliance with the FCA client assets "CASS" rules, which is a separate assurance assignment.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £5,236,744 (2020 - £2,115,000 profit).

Aventum Group Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is 4th Floor, 34 Lime Street, London, EC3M 7AT.

The group consists of Aventum Group Limited and all of its subsidiaries.

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 Group. Monetary amounts in these financial statements are rounded to the nearest £.

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

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The group financial statements consist of the financial statements of the parent company Aventum Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 30 June 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover represents commissions associated with the placement of insurance contracts net of commission payable to other directly involved parties. Commission is recognised when the income is earned, at the later of the policy inception date or when the policy placement has been confirmed and the placement services are substantially complete.

A proportion of income is deferred over the period of the underlying contracts where there is an on-going contractual obligation for maintaining and servicing the contacts over the period. Any adjustments to commissions arising from premium adjustments are recognised as and when they are notified by third parties.

Profit commission arising from the placement of insurance contracts is recognised when the right to such profit commission is established through a contract, but only to the extent that a reliable estimate of the amount can be made and has been agreed with counterparties.

The fair value of consideration takes into account pay away and introducer commissions payable to other brokers. This is a change in policy from the prior year, resulting in a restatement of the comparative results,  following a review by the Board who consider this to be more appropriate for the business and in line with industry standards.

Goodwill arising on the acquisition of subsidiary undertakings represents the excess of the fair value of the consideration over the fair value of the identifiable assets and liabilities acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Intangible assets includes patent and licence fees paid in advance for the use of trade marks and technology. Such assets are defined as having finite useful lives and the costs are amortised on a straight line basis over their estimated useful lives of 10 years. Also included is computer software developed by the Group. Such assets are defined as having finite useful lives and the costs are amortised on a straight line basis over their estimated useful lives of 5 years.

Intangible assets are stated at cost less amortisation and are reviewed for impairment whenever there is an indication that the carrying value may be impaired.

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 recognised in the group income statement.

Interests in subsidiaries and associated 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 group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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.

The group 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.

Basic financial instruments

Basic financial instruments are initially recognised at transaction price in the group’s Statement of Financial Position when the group becomes party to the contractual provision of the instruments.

Basic financial assets, which include debtors, are initially measured at transaction price and assessed at the end of each reporting period for objective evidence of impairment. Financial assets classified as receivable within one year are not amortised.

Other financial assets 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 the profit and loss.

Basic financial liabilities, including creditors and bank loans, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Financial liabilities, typically trade creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Financial liabilities are derecognised when the group’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group 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 group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.

The costs of short-term employee benefits are recognised as a liability and an expense.

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 group 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.

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 leased asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

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.

Insurance intermediary debtors and creditors

As Insurance intermediary's we act as agents in placing the insurable risks of our clients and, as such are not liable as principals for amounts arising from these transactions, with no material economic benefits derived from holding such funds. In recognition of this relationship, debtors and creditors from insurance transactions are not included as an asset or liability of the group.

The net amount that will be receivable by the group from the fiduciary accounts, representing only that element of the insurance debtors and fiduciary cash that is brokerage, commissions or fees due to the group, is shown under debtors.

In the application of the group’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.

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.

The group has an obligation to provide certain services following the placement of insurance policies, for example handling any claim made on policies. The cost of these services depend on a number of factors, including the number of claims received and the nature and complexity of claims. Management estimate these factors in determining the appropriate deferral of income to match against these costs of delivering the post placement services. The assumptions reflect historical experience and current trends.

The total turnover of the group has been derived from its principal activity.

Government grants received are for interest payments covered relating to the Coronavirus business interruption loan (CBIL) as included in creditors.

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

Their aggregate remuneration comprised:

The number of directors in the group for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2020: 4)

During the year a company within the group hived down a trading division to a wholly owned subsidiary. This subsidiary was subsequently disposed in the reporting period. Details of the transaction are held within note 27.

Of the charge to current tax in relation to discontinued operations, £0 relates to tax on profits and £0 arose on disposal.

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 2021 are as follows:

Registered office addresses (all UK unless otherwise indicated):

Included in bank loans is a Coronavirus Business Interruption Loan (CBIL) received as a result of the pandemic. The loan has an initial capital repayment holiday of 6 months and the loan is interest free for the first 12 months. The interest rate for the loan is applied at the rate of 1.47% per annum. The loan is secured by way of an unlimited debenture over the company's assets.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

£17,594 of the deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

Included within the deferred tax movement is £13,000 relating to the enacted tax rate change from 19% to 25%.

The group 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.

At the year end the amount due was £38,422 (2020: £70,375).

On 15 July 2020, the company issued 23,608 £1.00 Ordinary shares at a market price of £300 per share which were not fully paid.

On 25 June 2021, the company's £1.00 Ordinary share capital was sub-divided into £0.01 Ordinary shares.

Each of the shares has full rights in the company with respect to voting, dividends and distributions.

Insurance cash is held in separately designated bank accounts and client monies are held in bank accounts under non-statutory trust deeds.

On 24 January 2021 the group disposed of its 100% holding in Direct Corporate Risks Limited. Included in these financial statements are profits of £4,091,295 arising on disposal of Direct Corporate Risks Limited.

The company has provided a guarantee, by way of fixed and floating charge over its assets, to the banker of a commonly controlled company over a loan facility for £550,000 (2020: £550,000). The loan is repayable by way of instalments over 6 years ending 8 June 2026.

The company has provided an unconditional guarantee over all financial costs, debts and expenses of a commonly controlled company in the event it may not be able to fulfil its financial obligations.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

On 14 July 2021 the company's subsidiary, Consilium Insurance Brokers Limited, deregistered as a public company and reregistered as a private company on the same day.

The following amounts were outstanding at the reporting end date:

The company has taken advantage of the exemption available in section 33.1A of FRS 102 from the requirement to disclose transactions with group companies where they are wholly owned.

During the year funding was made available to a connected company based in the US amounting to £3,872,238 (2020: £3,226,591) of which interest was charged at 4.5% of £173,653 (2020: £91,055). This company was acquired in June 2021 and is disclosed in note 26.

During the year management charges of £93,297 (2020: £nil) were charged to European connected companies.

During the year management charges of £1,421,159 (2020: £60,000) were charged to UK connected companies.

As part of standard industry arrangement, the company may introduce and facilitate the placing of insurance business alongside other related parties in the Group. These arrangements are contracted independently and generate commission from the end insuring parties who are not considered to be a related for disclosure purposes.

The board consider that the directors are the key management personnel and therefore no additional disclosure has been made as director’s remunerations is disclosed in note 6.

The ultimate controlling party of the company is D Bearman given his shareholding in the company.

A material prior year adjustment was made to reflect an overstatement in income and debtors in the prior year which were caused by an under recognition of insurance related expense of £797,415 and bad debt of £79,443.

The impact of the prior year adjustment on the comparative figures is detailed below:

On review, a prior year understatement of fees payable to introducers were identified by management.

An adjustment has been made to correct this by recognising the fee, therefore removing the overstatement of revenue and debtors in the prior year.