Kingsbridge Risk Solutions Limited - Limited company accounts 20.1

REGISTERED NUMBER: 04122238 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Period 1 February 2020 to 31 December 2020

for

Kingsbridge Risk Solutions Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

14

DIRECTORS:

J D R Twining

J D Boast

M A Castellucci

W McKernan

G McKernan

K Stephens

P R Havenhand

R A Styring

REGISTERED OFFICE:

9 Miller Court

Severn Drive Tewkesbury Business Park

Tewkesbury

Gloucestershire

GL20 8DN

REGISTERED NUMBER:

04122238 (England and Wales)

SENIOR STATUTORY AUDITOR:

Charles Hinitt FCCA

AUDITORS:

Charles Hinitt & Associates Limited

Chartered Certified Accountants &

Statutory Auditors

48 Belle Vue Terrace

Malvern

Worcestershire

WR14 4QG

BANKERS:

The Royal Bank of Scotland Plc

PO Box 412

62/63 Threadneedle Street

London

EC2R 8LA

SOLICITORS:

Morgan, Lewis & Bockius UK LLP

Condor House

5-10 St. Paul's Churchyard

London

EC4M 8AL

The directors present their strategic report for the period 1 February 2020 to 31 December 2020.

REVIEW OF BUSINESS

Kingsbridge Group Limited was incorporated on 12 January 2016. On 31st May 2016 Kingsbridge Group acquired the business of the Kingsbridge group of companies which has been operating since 2001. The main trading company is Kingsbridge Risk Solutions Limited.

Kingsbridge is a leading corporate insurance broker providing tailored insurance and IR35 consulting solutions to independent contractors, freelancers and recruitment companies and specialty insurance broking services to corporate clients across a number of industries and insurance classes.

During the year, the Kingsbridge Group was acquired by NSM Insurance Group, This acquisition allows the business to continue investing in developing its people and systems and in broadening and improving its offering to ensure that its products meet its customers' needs and provide value for money, building on the acquisitions made in previous years and its innovative new IR35 offering. Kingsbridge's unique platform of brands, distribution channels and platforms positions it in an unrivalled position with which to tackle the fundamental long term trend from permanent to flexible employment, both in the UK and internationally.

The business has offices in Tewkesbury, Liverpool and London and employs around 94 people.

KEY PERFORMANCE INDICATORS

Kingsbridge Risk Solutions Limited KPI's are based on an 11 month period compared with that of a full year in the prior period and would therefore be expected to have reduced. However there were additional external economic pressures on the business due to the impact of Covid-19 and the disruption caused by UK Government-imposed restrictions during the majority of the period. The Company also incurred additional one-off costs in the period arising from the acquisition by NSM Insurance Group. Revenue for the 11 month period has therefore reduced to £12,481k and the reported profit has reduced to £3,687k.

PRINCIPLE RISKS AND UNCERTAINTIES

Market

The market has been impacted by a number of material changes over the last 12 months including Brexit, changes to IR35 legislation and the Covid-19 pandemic. These changes have caused disruption to our markets and while over the longer term we expect our markets to recover, the long term impact of these changes and on the broader UK economy remains uncertain. The Group seeks to minimise these risks through the careful control of costs, product and service innovation to generate new revenue opportunities and investment into sales and marketing.

Competitive

The Group operates in competitive markets where customers' insurance requirements are driven by the specific risks in their respective industries. The Group has an ethos of high service delivery and ensures that it's product offering is competitive and appropriate to the business sectors in which it operates.

Legislative & regulatory

Kingsbridge Risk Solutions is directly regulated by the FCA in respect of its insurance activities. There is a risk that a change in regulations or tax legislation could have a detrimental effect on the Group. The Group treats compliance as a high priority and keeps up to date with recent developments in regulatory guidance and relevant legislation so as to proactively plan and to minimise their impact and identify any opportunities that might result from it.

Interest and Inflation rate risk

An element of the group's borrowing is linked to LIBOR (Replaced with SONIA 1st January 2022) and so the group is exposed to fluctuations in interest rates in line with Monetary Policy. The company reviews this exposure at board level in conjunction with forecasted cash flows. The Bank of England project that CPI inflation is expected to peak in 2022 at 5%, 3 points higher than target. Base rate interest has yet to be increased to mitigate the expected rise in inflation though it is expected that this will change, moving into the next 24 months.

ON BEHALF OF THE BOARD:

J D R Twining - Director

21 December 2021

The directors present their report with the financial statements of the company for the period 1 February 2020 to 31 December 2020.

PRINCIPAL ACTIVITIES

The principal activities of the company in the period under review were those of insurance broking, risk consulting, risk financing and risk management advice.

DIVIDENDS

No dividends will be distributed for the period ended 31 December 2020.

DIRECTORS

J D R Twining has held office during the whole of the period from 1 February 2020 to the date of this report.

Other changes in directors holding office are as follows:

M J Ratcliffe - resigned 2 November 2020

T A Wynne - resigned 7 April 2020

J D Boast - appointed 7 April 2020

M A Castellucci - appointed 7 April 2020

W McKernan - appointed 7 April 2020

G McKernan - appointed 7 April 2020

K Stephens - appointed 7 April 2020

L Green - appointed 28 May 2020 - resigned 18 November 2020

P R Havenhand and R A Styring were appointed as directors after 31 December 2020 but prior to the date of this report.

A G M Stevens ceased to be a director after 31 December 2020 but prior 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

J D R Twining - Director

21 December 2021

Opinion

We have audited the financial statements of Kingsbridge Risk Solutions Limited (the 'company') for the period ended 31 December 2020 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 31 December 2020 and of its profit for the period 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.

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 four, 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.

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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect immaterial misstatements in respect of irregularities, including fraud .

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.

Charles Hinitt FCCA (Senior Statutory Auditor)

for and on behalf of Charles Hinitt & Associates Limited

Chartered Certified Accountants &

Statutory Auditors

48 Belle Vue Terrace

Malvern

Worcestershire

WR14 4QG

21 December 2021

TURNOVER

3

12,480,814

16,381,410

Cost of sales

1,019,474

1,526,293

GROSS PROFIT

11,461,340

14,855,117

Administrative expenses

7,871,809

7,482,383

3,589,531

7,372,734

Other operating income

105,045

219,818

OPERATING PROFIT

5

3,694,576

7,592,552

Interest receivable and similar income

5,908

12,510

3,700,484

7,605,062

Interest payable and similar expenses

7

13,846

2,383

PROFIT BEFORE TAXATION

3,686,638

7,602,679

Tax on profit

8

336,045

632,118

PROFIT FOR THE FINANCIAL PERIOD

3,350,593

6,970,561

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

3,350,593

6,970,561

FIXED ASSETS

Intangible assets

9

185,531

67,681

Tangible assets

10

149,509

216,417

Investments

11

279,221

110,001

614,261

394,099

CURRENT ASSETS

Debtors

12

45,196,709

22,253,302

Cash at bank and in hand

13

6,984,324

7,471,911

52,181,033

29,725,213

CREDITORS

Amounts falling due within one year

14

25,036,417

5,727,166

NET CURRENT ASSETS

27,144,616

23,998,047

TOTAL ASSETS LESS CURRENT LIABILITIES

27,758,877

24,392,146

PROVISIONS FOR LIABILITIES

17

42,499

26,361

NET ASSETS

27,716,378

24,365,785

CAPITAL AND RESERVES

Called up share capital

18

15,002

15,002

Retained earnings

19

27,701,376

24,350,783

SHAREHOLDERS' FUNDS

27,716,378

24,365,785

The financial statements were approved by the Board of Directors and authorised for issue on 21 December 2021 and were signed on its behalf by:

J D R Twining - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 February 2019

15,002

17,380,222

17,395,224

Changes in equity

Total comprehensive income

-

6,970,561

6,970,561

Balance at 31 January 2020

15,002

24,350,783

24,365,785

Changes in equity

Total comprehensive income

-

3,350,593

3,350,593

Balance at 31 December 2020

15,002

27,701,376

27,716,378

Cash flows from operating activities

Cash generated from operations

1

273,911

(2,904,893

)

Interest paid

(13,193

)

-

Interest element of hire purchase payments paid

(653

)

(2,383

)

Tax paid

(398,662

)

(822,998

)

Net cash from operating activities

(138,597

)

(3,730,274

)

Cash flows from investing activities

Purchase of intangible fixed assets

(182,402

)

(124,213

)

Purchase of tangible fixed assets

(65,563

)

(84,407

)

Purchase of fixed asset investments

(269,220

)

-

Sale of intangible fixed assets

63,930

273,539

Sale of tangible fixed assets

48,975

2,200

Sale of fixed asset investments

42,344

-

Interest received

5,908

12,510

Net cash from investing activities

(356,028

)

79,629

Cash flows from financing activities

Capital repayments in year

(7,750

)

(28,795

)

Amount introduced by directors

16,000

8,000

Net cash from financing activities

8,250

(20,795

)

Decrease in cash and cash equivalents

(486,375

)

(3,671,440

)

Cash and cash equivalents at beginning of period

2

7,470,699

11,142,139

Cash and cash equivalents at end of period

2

6,984,324

7,470,699

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Profit before taxation

3,686,638

7,602,679

Depreciation charges

89,824

117,718

Loss/(profit) on disposal of fixed assets

51,949

(2,200

)

Finance costs

13,846

2,383

Finance income

(5,908

)

(12,510

)

3,836,349

7,708,070

Increase in trade and other debtors

(22,959,406

)

(10,893,361

)

Increase in trade and other creditors

19,396,968

280,398

Cash generated from operations

273,911

(2,904,893

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Period ended 31 December 2020

31.12.20

1.2.20

£

£

Cash and cash equivalents

6,984,324

7,471,911

Bank overdrafts

-

(1,212

)

6,984,324

7,470,699

Year ended 31 January 2020

31.1.20

1.2.19

£

£

Cash and cash equivalents

7,471,911

11,204,918

Bank overdrafts

(1,212

)

(62,779

)

7,470,699

11,142,139

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.2.20

Cash flow

At 31.12.20

£

£

£

Net cash

Cash at bank and in hand

7,471,911

(487,587

)

6,984,324

Bank overdrafts

(1,212

)

1,212

-

7,470,699

(486,375

)

6,984,324

Debt

Finance leases

(7,750

)

7,750

-

(7,750

)

7,750

-

Total

7,462,949

(478,625

)

6,984,324

1.	STATUTORY INFORMATION

Kingsbridge Risk Solutions Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Preparation of consolidated financial statements

The financial statements contain information about Kingsbridge Risk Solutions Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its ultimate holding company White Mountains Insurance Group Limited, Hanover, New Hampshire, USA.

Turnover

Turnover represents net invoiced sales of services and is shown gross of introducer commission. The majority of the services of the company are not subject to VAT, however under a group registration, during the 2020 period the company began operating a VAT account under partial exemption.

Goodwill

Goodwill representing the excess of the purchase price over the fair value of the net assets of businesses acquired has been amortised by equal annual instalments over its expected useful economic life of ten years.

Intangible fixed assets

Amortisation is provided at the following rates in order to write off each asset over its estimated useful life :

Domain Names - 10% on cost

Development costs - 50% on cost

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

33% on cost

Financial instruments

Basic financial instruments are recognised at amortised cost.

Non-basic financial instruments are initially recorded at cost and thereafter at fair value with changes recognised in the profit and loss.

Taxation

Taxation for the period 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 period 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.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

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.

Income recognition

The company recognises profit sharing arrangements with underwriters of insurance policies to the extent that it can reasonably estimate those which will be due after more than one year.

Full provision of the taxation due on this income is included within these accounts.

Client monies held in non-statutory trust bank accounts

As required by the FCA, the company hold funds on behalf of its clients within non-statutory trust client bank accounts. These monies do not belong to the company. However, as the client and underwriter debtor and creditor balances are included as assets and liabilities, the company considers it necessary to include on its balance sheet cash balances held within the non-statutory client bank accounts.

Going concern

The Directors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. In satisfaction of this responsibility the Directors have also considered the Company’s ability to meet its liabilities as they fall due.

The Directors have also paid special attention to the recent COVID-19 outbreak and the potential associated impact on the Company.

The Directors have therefore reviewed the current and future financial position of the Company, its cash flows, and its liquidity position, specifically in respect of the above and the potential disruption to the business arising from a prolonged period of economic downturn, and any impact that this may have on the future of the industry both on the markets specifically targeted by the company and the industry as a whole.

Although it is not possible to reliably forecast the length or severity of the COVID-19 outbreak, at the date of approval of the financial statements, the Directors were confident that the existing reserves and support from within the White Mountains Insurance Group together with external facilities will provide sufficient headroom to meet the forecast cash requirements that may arise from a downturn in activity as a result of the COVID-19 pandemic.

As such, the Directors consider that it is appropriate to prepare the financial statements on the going concern basis.

3.

TURNOVER

The turnover and profit before taxation are attributable to the principal activities of the company.

An analysis of turnover by class of business is given below:

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Commissions

12,480,814

16,381,410

12,480,814

16,381,410

4.	EMPLOYEES AND DIRECTORS

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Wages and salaries

4,696,459

3,608,060

Social security costs

338,124

341,730

Other pension costs

199,594

202,043

5,234,177

4,151,833

The average number of employees during the period was as follows:

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

Sales

44

33

Administration

50

52

94

85

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Directors' remuneration

565,833

655,800

Information regarding the highest paid director is as follows:

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Emoluments etc

334,866

196,400

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Other operating leases

132,239

157,164

Depreciation - owned assets

89,203

90,443

Depreciation - assets on hire purchase contracts

-

26,596

Loss/(profit) on disposal of fixed assets

51,949

(2,200

)

Goodwill amortisation

622

678

Auditors' remuneration

115,216

108,990

6.	EXCEPTIONAL ITEMS

Period

1.2.20

to

Year Ended

31.12.20

31.1.20

£

£

Development costs write off

(63,930

)

(273,642

)