MSB_SOLICITORS_LIMITED - Accounts
MSB_SOLICITORS_LIMITED - Accounts
The directors present the strategic report for the year ended 28 February 2023.
Overview of MSB
This strategic plan outlines the key objectives of MSB, the services we deliver and the resources that enable those services. Our brand, core values and an awareness of risk -in whatever form they present - are the key themes running through the document and into all aspects of practice.
MSB, our brand
Primarily we are a law firm and we strive to deliver excellence in legal services to all of our clients.
We recognise as a law firm, we have responsibilities and obligations, these are firstly to our employees and clients and secondly to the wider community we serve.
We recognise our people are our greatest asset. We invest in their training in their health and wellbeing and regularly review and implement bonus and pay rises to ensure that our teams benefits from our profitability. Through our commitment to ESG we give back to our environment and our community and we have made a commitment to making MSB an equitable workplace.
We have started a programme of brand awareness by looking at our vision, mission and values. We will run training and sessions to ensure that that brand awareness is recognised across the organisation.
First and foremost, we are a law firm and we seek to deliver excellence in legal services.
At MSB, we connect and serve people with the lived experience of North West. The MSB story is one of place, people and community evolving through interaction and exchange; our service offer is guided by this.
Income
Our revenue across the last 5 years has risen steadily from £5 million to £9.4 million in 2022/2023.
For the year, 2023/2024 we target to bring in £10.5 million.
Performance & Profitability
The firm’s collective net profitability declined in 2022/2023 due to COVID but more fundamentally due to investment in our support infrastructure by building our Accounts Team; IT Team; Education and Training Team and also due to the recruitment of some Senior Staff whose fee generation would not impact for 12-18 months. 2023/2024 will see a steady incline in the profitability and the latter part of 2023/2024 will see an increase in profitability.
Certain departments continue to perform higher than others being Family; Housing Regeneration and Litigation. Commercial Property is now performing with increased profitability due to the expansion of our Banking and Finance Team. Crime and PI should see an increase in profitability this financial year.
Residential Property should break even. We have closed our Allerton Road offices which will impact profitability in 2023/24 with relocation fees and dilapidations but there will be a positive impact on profitability next year.
Partnership at MSB remains at 19 Partners. We have had one Partner leave, Tracey Quirk, and two new Partners join, John Owens and Andrew Moore. We have full Partner meetings every month and Equity Partner Meetings every 3 months. Our Managing Partner also has one to ones with all Partners and Heads of Department every 6 weeks.
We have a strong emphasis on monitoring performance and profitability and this has been enhanced by the use of different reports via our Proclaim system.
We have changed accountants from BWM to DSG to support us in the management of performance and profitability and we are in the process of the handover. Once we commence the financial year 2024/2025, we will be in a position to really concentrate on reviewing performance and profitability with the correct support structures in place i.e., our own reporting systems and the backup and support of our accountants.
We recruited heavily during the pandemic and we have continued to recruit strategically. In particular, we have had a huge paralegal recruitment drive in which we have taken on 19 new paralegals.
We now have in place career progression paths, we recruit paralegals in May; we recruit trainees in January/February; we recruit for associates and senior associates in May every year; and we recruit for partners every other year in May. This gives all of our employees a clear understanding of what is required of people at different levels and that if they want to progress, we will work with them to ensure that they have the relevant skills.
Objectives
Our overreaching objective
Our overreaching objective is to deliver excellence in legal services to the whole community we serve. Our brand is committed to Access to Justice for all and an equal level of service to all. We are extremely proud that we provide legal services to individuals who may be the most vulnerable or individuals of ultra-net worth. In respect of our services to businesses, we look to nurture and provide support to new and up and coming businesses as well as providing legal services to National and International Corporations.
We recognise that we can only reach that level of excellence by ensuring our teams trained to the highest of standards and that their physical and emotional wellbeing is supported at all times. In order to promote that we have employed a Head of People who will oversee our Learning and Development and our HR. Our Learning and Development Team has expanded from one part-time worker to a full time trainer and assistant. Further we have taken on a Consultant to deliver management and soft skills training once a month. We recognise that our teams needs a proper working environment conducive to team working, which also allows people to work independently. We have closed our Allerton Road offices as it was no longer fit for purpose and moved our Residential Property Team to 4 St Paul’s Square.
We have expanded our Manchester office from a 6 desk space to a 22 desk space. We are currently looking for new office space in Chester and in Widnes.
We have made some tactical recruitments but our model still remains firmly based upon organic growth and the training of the new generation of lawyers. In our Summer paralegal recruitment we have taken on 19 new paralegals and 9 new trainees meaning that we now have 22 trainees.
We are open to expansion by acquisition and merger but the fit would have to be right and we are not actively seeking this expansion. We have explored several opportunities in the last 12 months but none have felt right for MSB.
Environmental, Social and Governance
We take very seriously our responsibility to protect our environment and give back to the communities we serve and to implement governance that ensures that we do what we say we do. As a firm we have made a firm commitment to be an equitable employer and thus contributing towards an equitable society. We have an ESG committee which is broken down into sub-committees; environmental, race, gender, LGBTQ+, disability and wellness, supporting families. Our main committee meets every 2 months and our sub committees meet monthly.
ESG and commitment to equity is considered in all that we do and runs through the very core of MSB.
Our strategy for business development and the core principles on which we base it, include:
Being true to our brand and values: MSB means something better
Excellence in client care
Investment in our people
ESG and Commitment to Equity
Performance and profitability
Training and Creating a Culture in which people recognise joint responsibility for Business Development
A constant evaluation of risk is embedded in the organization as we realise the impact risk can have. On an operational level it is built into our practices and procedures, from the opening of a new matter right the way through to the closure of a file. From a strategic level again it is embedded in our practices and procedures and is constantly reviewed in internal meetings of the management, minimum being every partners’ meeting.
Organisational objectives
Examples of specific organisational objectives that are supported through continued investment in people and internal support systems include:
2023/24
To raise the profile and reputation of all of our teams. In particular to firmly establish MSB as a firm of the North West as opposed to a firm of Liverpool. We have a strong connection with our Marketing Company who have supported us through the last 5 years of growth. They know our business; they know our industry and the have formulated strategic plans for each separate department.
We wish to expand our Cheshire and Manchester offices. We wish to obtain a shop front in Cheshire to house a Family and Property Team. In Manchester we wish to move out of the serviced offices into an office of our own.
We hope to obtain a Legal Aid contract for Family in Chester and open an office in Chester.
Whilst we are looking at external marketing, we also wish to look internally to do a full analysis of our client base and how those clients can become firmly clients of the firm and generate work in different departments.
Our intention is to close our Wavertree office. In 2024 we will look at various options with regards to office space for the firm as a whole.
We have maintained our Legal 500, Chambers and Partners and Times recognition. There are 22 Solicitors recognised in Legal 500 and Chambers and Partners and we wish to build on that in other Departments across the firm.
We have employed a Head of People and will be introducing a new HR system across the firm.
We have appointed a Head of Business Development in the Family Team. We would wish to expand that across the firm and look at either within teams or an overall Business Development Manager. Business Development needs to run through the organisation and everyone needs to take responsibility.
We have introduced an extensive training programme. We need to evaluate who is using this training and make sure that training forms part of our culture and that everyone receives the training they need.
Our teams are our priority and we will be introducing an extensive physical and mental well-being programme that supports each and every member of our team to maximise their physical and mental well-being. This will start in January with the introduction of Medicash.
With the expansion of our IT team, we have plans for an overhaul to our IT systems which will support the growth of the firm.
Ten trainees will qualify. We would like to see them all retain positions in the firm as Newly Qualified.
We wish to obtain Cyber Essentials Plus.
We wish to obtain Investors in People Accreditation.
In the past we have put ourselves forward for various awards. In 2023/2024 we wish to concentrate on recognition by way of Accreditation.
Consideration of risks against set objectives
It is important that as a firm we move forward as one and that all of our teams have a role to play in the profitability of MSB as a firm.
Expansion carries financial commitment over a longer term than serviced offices. Also we are new to both markets and therefore there maybe issues with recruitment and retention of staff. It is important that we have a clear articulation of our brand so that these two new offices remain part of brand MSB.
There are massive opportunities in Cheshire and Manchester for us to expand our services. We need to look at how we can optimise our search engine so that people searching within these areas come through and that all of our services are promoted from these offices.
We will need to obtain premises recruit staff and market our services to ensure we have referrals of work.
Cross referral of work always carries the risk of ensuring that the standard of service is the same across the firm so that clients are retained.
The risk of failing to capture internal referrals is that clients become clients of particular Fee Earners as opposed to clients of the firm and this can have a hard hitting impacts on the firm if a particular lawyer moves taking the client with them. Further if the client goes to another firm for their services they may give all of their legal work to that firm.
We need to do comparative pricing for the cost of a desk in Wavertree as opposed to the cost of a desk in other office space as the Wavertree office space is relatively cheap. We will further need to pay dilapidations. We further need to consider the risk of moving staff who have worked in a suburb office for many years. Further we will need to evaluate the risk in respect of our client base and ensure that the clients will still come and access our services at the City Centre office.
We need to maintain high levels of service and our reputation so that we maintain our existing rankings but also look to see how we can ensure other departments across the firm obtain rankings within these directories.
The importance of Legal 500 and Chambers and Partners is different for different departments. The impact of obtaining a lower ranking for Family would be significant as within that sector clients and fellow professionals do take notice of ranking. It is also important if our Social Housing team is to grow and in particular conduct work in more areas than just Housing Management, we obtain a higher ranking. In order to do this, we need to act on behalf of these clients in different areas such as development and litigation.
Recruitment and retention of staff are vital to our profitability and growth and an effective approach to HR is vital for this.
As we grow it is important that the culture of the firm runs through the very core of the organisation and is a key factor in attracting talent and retaining talent.
Business Development is not something that comes naturally to everyone and therefore there does need to be emphasis on it, training provided and a buy in. The firm can only grow if we attract new high quality profitable clients. In a busy department there can sometimes be no time to follow up effectively on business development and therefore, there is a need for someone for whom this is their role.
Law is ever changing and it is important if we are to deliver excellence in legal services we are abreast of changes in the law. It is also important that our lawyers learn soft skills to support them in their development. Training needs to be seen as growth and empowerment not something that has to be done mandatory.
We can only maximise output from our teams if they are physically and mentally well. The cost of illness to a business can be catastrophic. If we wish to be proactive as opposed to reactive and ensure that our staff are supported in obtaining the very best physical and mental wellbeing. Over the last few years, particularly during COVID, there has been massive emphasis on physical wellbeing as we believe the two go hand in hand.
If we do not keep up to date with technology, we will not be able to keep up to date with efficiencies and profitability. An effective IT system is crucial to ensure that our teams feel supported and able to work properly. There are also massive issues around IT, fraud and cyber essentials is a requirement of every business.
We have invested time and money in training our Trainees to a high standard. We need to ensure that they see their future is with MSB and that they continue to grow, continue to progress and develop. The danger is that other firms that can offer higher salaries know that we give our Trainees exposure to good quality work and that we give them good training and they are often approached by recruiters.
Cyber security is essential for the affective functioning of our organisation. The danger of not obtaining Cyber Essential Plus is the risk and the vulnerability that we may face in respect of cyber-crime. Also it would impact on our indemnity insurance and tenders.
Our brand prides itself on its investment in its people and therefore it is important that we meet the requirements of investors in people and that we obtain this accreditation to show that we actually do do what we say we do.
Awards can be a useful tool to bring teams together to celebrate success but accreditation show much more fundamental achievements throughout an organisation and would require us to continue meeting high standards.
Resources to meet objectives
Our Brand
We are very proud of our brand and believe that there is an understanding throughout the organisation of what our brand is and what it stands for. We are however doing work across the firm around the values of MSB and how that transpires into our brand.
Our People
Our people are our greatest asset and we want them to feel valued, safe and in an environment that they can be themselves and reach their true potential.
Our Reputation and Expertise
Our reputation in Liverpool is exceptional and we are known as being an all service law firm that provides good legal advice, that we train and support our teams and that we do have a very strong sense of responsibility to give back. This is evidenced by the testimonials from clients and the feedback from our employees.
Also the winning of awards, The Community Impact Award 2023, our Managing Partner winning the Unsung Shero Navajo Award 2023. Our Housing and Regeneration Team won the Liverpool Law Society Outstanding Litigation Team 2023. We are also shortlisted for 3 awards in the Modern Law Awards on 16th November 2023.
We are a tier 1 Legal 500 firm. We are a band 1 Chambers and Partners Firm. We have once again been recognised in the Time 250 Law Firms. Our Family team and Private Client team have appeared for the first time in the Spears high net worth to ultra net worth directory.
We need to ensure that that reputation is built upon and expands across the North West. Our Family team are the only Family team in the North West on the ICACU (international child abduction and contact unit) referral panel. We are regarded as having legal experts in the field of child abduction and in that we can say that our Family Department has a National reputation.
Our Financial Strength and Resilience
Our financial strength is part of our overall resilience and gives the capacity to deliver our objectives.
Our resilience is gained through our profile and market position; the quality of our lawyers, their work, and their reputation; the diversity of the work we do; the durability of the client base; our strength relative to possible competitors.
Our strong financial position can be seen in our management accounts and formal financial reporting mechanisms.
Our Approach to Growth
To meet our objectives, the Partners recognise that the practice must grow in a structured business-like manner and will identify new areas of work and new opportunities.
To ensure that enough time and consideration is given to both consolidation for now and then growth, the Managing Partner, Emma Carey will continue not to conduct any fee earning work and concentrate on the strategic management of the business to deliver our objectives and ensure maximum profitability.
To include:
Business development to ensure profitable and sustainable growth.
Overseeing marketing and PR to raise the profile of the firm and promote the brand.
Strategic succession planning from trainees up to equity partners.
Ensuring the firm maintains core values and principles.
Maximizing the firm’s resources and effectively investing in technology and training.
Management of client relationships.
Developing strategic partnerships with our region’s business and professional community.
Management of the partnership and partnership business through an inclusive approach which embodies mutual respect.
Guiding our ESG policy to ensure it generates a return.
Implementing practices and procedures that promote equality and diversity.
All partners have the responsibility to maximize their fee earning, develop their areas of law, and develop their own reputations and that of the firm.
Services offered by MSB
Our services respond to the needs of our clients, delivered in accordance with our values.
We accept and understand that the level of profit for each service, over and above base cost, will vary as the markets we serve shift and flex. MSB is a team, and each section acts in support of the others. That does not mean that all services are not under constant review by partners, but the inclusion of a service in the MSB offer is not based upon profitability alone, but to ensure that we meet the evolving needs of our many clients.
The service offers:
Bridging finance work
Commercial Litigation
Commercial property
Criminal work
Debt Recovery
Employment work
Family work
Personal Injury Litigation
Probate, Wills and Court of Protection work
Residential conveyancing
Social Housing
Client groups served by MSB
We have an enviable client portfolio, and we value it.
We place great emphasis on the continual review of our portfolio in order to evaluate and establish what a good client is, especially in respect of issues such as reputation, risk, revenue, source of further work, lifetime value, payment of bills and bad debt, complaints.
For MSB this is critical to stability and growth, both of which are inextricably linked to reputation, hence its place in our approach to risk management.
In addition to the known client list, we have a significant number of people and organisations who regularly refer to us; particularly of note is the high volume of clients we have, who have been referred from other lawyers, and this demonstrates that we are respected within our profession.
Our portfolio of clients can be divided into specific types, within given market sectors and this knowledge ensures that our services are tailored to meet their specific needs, as can be seen in our overall service offer.
How services will be delivered and marketed
Delivery
In response to the growth in numbers and increasing complexity of the organisation, and as part of our approach to consolidation, we have introduced an appropriate formality into the management of the organisation. There is clarity on the key roles and responsibilities for Partners and this is replicated in each position/role at all levels. This clarity of role, purpose and structure is supported through the investment in and development of in-house support that includes human resources, compliance, training & education and IT.
Marketing
The firm’s profile has been enhanced through sustained profile-raising campaigns, sponsorships, advertising and numerous awards. The name of MSB is aligned with various good causes in line with our commitment to giving back to our community. Our ESG activities show how engaged our staff are, not just in the organizational objectives of MSB, but also in its capacity to have a wider positive impact.
The firm will continue to promote itself principally by means of reputation, client satisfaction and by continually building upon the profile that has been established with Agent Marketing, our retained consultants for this work.
Risk: an evaluation of objectives
Risk analysis
In response to the changes in the Solicitors Regulation Authority’s Code of Conduct, our approach has changed from a code-based system to Outcomes Focused Regulation. Essentially the firm is responsible for ensuring that it complies with its regulatory objectives and in doing so has appointed Emma Carey to be its Compliance Officer for Legal Practice and Joanne Dalton to be the Compliance Officer for Finance and Administration. Both parties have considerable experience within the roles they face.
In practice ‘risk’, in its many forms, is discussed at every partner meeting, included on all agendas along with viability, cash flow, objectives, operating practices and profitability.
Internal and external risks
As part of the roles referenced above, the approach taken will ensure that both internal and external risks are considered: internal being risk to the practice for e.g. reputational risk, client risk, and staff risk; external risk will include matters that could adversely impact upon the wellbeing of the business outside the direct control of the firm. Detailed appraisals made of both internal and external risks using many of the available techniques, will give both identification of a risk and direction as to how it can be mitigated.
Further principal risks and uncertainties in the Company are:
Price risk
The company is exposed to price risk on the services it provides. Wherever possible, contracts with suppliers are entered into for the following period to fix the price and mitigate the risk.
Credit risk
The company's principal financial assets are bank balances and cash, trade and other receivables. The company's credit risk is primarily attributed to trade receivables. The amounts presented in the balance sheet are net of allowances or doubtful receivables.
Liquidity risk
The company has funded and intends to continue funding its on-going operations and future developments through
cash generated from operating activities and secured bank borrowings.
Looking to the future
We are a legal firm with a vision and values. All partners are encouraged and expected to think about the next step, something that will take their practice area or team forward to the next level; to run an ethically sound legal firm, that expects its legal services offer to evolve, in a context of each colleague contributing to taking this business forward and in some cases retaining the current position.
We are looking for profitable growth and how we can achieve more with what we have and/or whether we need to be looking to grow or diversify through recruitment. In some departments the concentration may not be an expansion; rather, it may be retention.
Recruitment and retention our vital to growth and the sustainability of the delivery of excellence in legal services. We want people to join MSB and feel they can progress and reach their full potential.
Procedures for regular reporting on performance
Over the past 12 months we have worked hard on our reports to ensure that we can monitor our performance regularly so that we can react to trends. A priority has been to introduce reports that are used by fee earners to increase productivity, performance and profitability. Reports are introduced at a rate that ensures that everybody gets involved, understands them and uses them.
On a daily basis, all partners receive a breakdown of files opened the previous day with cost estimates for those files and the sources of that work. Further a report is sent on a daily basis showing time recording across the firm so that heads of department can monitor their teams.
On a monthly basis a three-month inactivity report is sent to all heads of department. Further on a monthly basis is a report that shows files opened, sources of those files and predicted fees for the month.
Fixed share partners meet every month; equity partners meeting every other month to discuss all aspects of risk, liability, cashflow, organisation objectives, operating practices and profitability.
Training needs
Comprehensive and clear management of accounts and insightful reporting provides data for partners to act upon to ensure that key financial objectives are met. The firm’s accountants, BWM, also provide three-monthly profit, loss and balance sheet projections in enabling partners to balance the information from both internal and an external perspective.
File reviews are carried out across the firm. Annual performance reviews are carried out.
This year has seen the introduction of appraisals for partners. The education and development team has been expanded. Any issues in performance that are identified can be addressed by effective training.
On behalf of the board
The directors present their annual report and financial statements for the year ended 28 February 2023.
The results for the year are set out on page 15.
Ordinary dividends were paid amounting to £709,071. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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.
give a true and fair view of the state of the company's affairs as at 28 February 2023 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
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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' 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.
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 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 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.
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.
Extent to which the audit has considered capable of detecting irregularities, including fraud
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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, Solicitors Regulation Authority rules and regulations, taxation legislation and data protection, anti-bribery, employment and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or 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 company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MSB Solicitors Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4 St Pauls Square, Liverpool, L3 9SJ.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company has taken advantage of the exemption under section 405 of the Companies Act 2006 to exclude its subsidiary as it is dormant and not material for the purposes of showing a true and fair view. This has enabled it to claim exemption from the requirement to prepare consolidated accounts.
The financial statements therefore present information about the company as an individual entity and not about its group.
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern.
Amounts recoverable but not yet invoiced are included within debtors as accrued income.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
At each reporting period end date, the company 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 company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. 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. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
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:
Estimating the stage of contract completion, including estimating the costs still to be incurred, assessing the likely engagement outcome and assessing the recoverability of unbilled amounts for client work requires significant judgement.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
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:
The dividends paid in the year ended 28 February 2023 are split as follows:
The company also has significant holdings in undertakings which are not consolidated:
Barclays bank has a fixed and floating charge over all assets and undertakings of MSB Solicitors Limited covering a bank overdraft totalling £268,511 (2022: £229,113).
Amounts totalling £137,500 (2022: £137,500) within other borrowings in respect of Coronavirus Business Interruption Loan Scheme Loans are secured in full by the UK government.
Amounts totaling £206,250 (2022: £343,750) within other borrowings in respect of Coronavirus Business Interruption Loan Scheme Loans are secured in full by the UK government.
Barclays bank has a fixed and floating charge over all assets and undertakings of MSB Solicitors Limited covering a bank overdraft totalling £268,511 (2022: £229,113).
Amounts totalling £343,750 (2022: £481,250) within other loans in respect of Coronavirus Business Interruption Loan Scheme Loans are secured in full by the UK government.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
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.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The remuneration of key management personnel is as follows.
The following amounts were outstanding at the reporting end date:
Dividends totalling £345,893 (2022 - £279,908) were paid in the year in respect of shares held by the company's directors.
Advances or credits have been granted by the company to its directors as follows: