Warranty Services Limited - Accounts to registrar (filleted) - small 18.2

REGISTERED NUMBER: SC205797 (Scotland)

Financial Statements for the Year Ended 31 December 2017

for

Warranty Services Limited

Page

Company Information

1

Balance Sheet

2

Notes to the Financial Statements

3

DIRECTORS:

Mr J M Brettell

Miss F E Michie

Mr P B Wakefield

Mr A F Wilson

SECRETARY:

Mrs L E Wilson

REGISTERED OFFICE:

4 Forbes Drive

Heathfield Industrial Estate

Ayr

KA8 9FG

REGISTERED NUMBER:

SC205797 (Scotland)

INDEPENDENT AUDITORS:

PricewaterhouseCoopers LLP

141 Bothwell Street

Glasgow

G2 7EQ

FIXED ASSETS

Intangible assets

4

126,980

253,960

Tangible assets

5

64,544

76,474

Investments

6

62,000

50,000

253,524

380,434

CURRENT ASSETS

Debtors

7

2,952,880

3,081,656

Cash at bank

1,035,545

851,873

3,988,425

3,933,529

CREDITORS

Amounts falling due within one year

8

922,744

893,927

NET CURRENT ASSETS

3,065,681

3,039,602

TOTAL ASSETS LESS CURRENT LIABILITIES

3,319,205

3,420,036

CREDITORS

Amounts falling due after more than one year

9

(1,539,752

)

(1,739,588

)

PROVISIONS FOR LIABILITIES

11

(7,026

)

(8,654

)

NET ASSETS

1,772,427

1,671,794

CAPITAL AND RESERVES

Called up share capital

12

9,000

9,000

Share premium

13

6,630

6,630

Capital redemption reserve

13

500

500

Retained earnings

13

1,756,297

1,655,664

SHAREHOLDERS' FUNDS

1,772,427

1,671,794

The financial statements have been prepared and delivered in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

In accordance with Section 444 of the Companies Act 2006, the Profit and Loss Account has not been delivered.

The financial statements were approved by the Board of Directors on 29 March 2018 and were signed on its behalf by:

Miss F E Michie - Director

1.	STATUTORY INFORMATION

Warranty Services Limited is a private company, limited by shares , registered in Scotland. 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 the provisions of Section 1A "Small Entities"

of 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 and on a going concern basis.

The directors have a reasonable expectation that the company has adequate resources to continue in operational

existence for the foreseeable future. The company therefore continues to adopt the going concern basis in

preparing its financial statements.

Significant judgements and estimates

The preparation of the Financial Statements requires management to make judgements, estimates and

assumptions that affect the application of the accounting policies and reported amounts of assets, liabilities,

income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on

an ongoing basis and revisions to estimates are recognised in the period in which the estimate is revised and in

any future periods affected.

Deferred revenue

Deferred revenue is calculated using the current costs of handling claims forecast over the life of the policies and

discounted back to present value. The assumptions used in the calculation are the growth in the costs over the

life of the policies, the run off of the policies and the discount factor applied.

Turnover/revenue recognition

Turnover represents commission receivable for administering insurance policies on behalf of Guarantee

Protection Insurance Limited and is recognised at the time of inception of the policy.

A portion of the commission received is recognised at the time of inception of the policy, reflecting the

administration service provided for set up, whilst an element of the commission is deferred and released to the

profit and loss account over the life of the policies for the administration of the claims handling services yet to be

delivered. This amount is included within deferred revenue.

Deferred revenue

A deferral of revenue is included for the administration of future claims handling costs yet to be delivered and is

deferred over the period of the life of the policies. The methodology used and assumptions are further explained

within the use of estimates and judgements policy note.

Intangible assets

Intangible assets relate to the volume of customer relationships acquired with the acquisition of a business which

took place in 2001. Previously the amortisation policy was to amortise the asset evenly over twenty years,

however this changed in 2015 and the policy now is to amortise the asset evenly over five years.

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less accumulated amortisation and accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Improvements to property

-

in accordance with the property

Fixtures and fittings

-

20% on cost

Computer equipment

-

33% on cost

Investments in associates

Investments in fellow subsidiaries are recognised at cost.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Profit and Loss Account,

except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Pension costs and other post-retirement benefits

The company makes contributions into a UK defined contribution pension scheme. Contributions payable are

charged to profit or loss in the period to which they relate.

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 rates of exchange ruling

at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 36 (2016 - NIL ) .

4.	INTANGIBLE ASSETS

Other

intangible

assets

£

COST

At 1 January 2017

and 31 December 2017

1,656,248

AMORTISATION

At 1 January 2017

1,402,288

Charge for year

126,980

At 31 December 2017

1,529,268

NET BOOK VALUE

At 31 December 2017

126,980

At 31 December 2016

253,960

5.	TANGIBLE FIXED ASSETS

Improvements

Fixtures

to

and

Computer

property

fittings

equipment

Totals

£

£

£

£

COST

At 1 January 2017

42,245

35,331

66,051

143,627

Additions

-

1,204

11,235

12,439

At 31 December 2017

42,245

36,535

77,286

156,066

DEPRECIATION

At 1 January 2017

5,632

11,299

50,222

67,153

Charge for year

4,225

6,777

13,367

24,369

At 31 December 2017

9,857

18,076

63,589

91,522

NET BOOK VALUE

At 31 December 2017

32,388

18,459

13,697

64,544

At 31 December 2016

36,613

24,032

15,829

76,474

6.	INVESTMENTS

Investments

in fellow

subsidiaries

£

COST

At 1 January 2017

50,000

Additions

12,000

At 31 December 2017

62,000

NET BOOK VALUE

At 31 December 2017

62,000

At 31 December 2016

50,000

During the year under review the company acquired 12 £1,000 preference shares in Kinnell Corporate Limited, a

fellow subsidiary company. This was in addition to the 50 £1,000 preference shares it acquired in the same

company in 2015.

Preference shares are cumulative, redeemable and have a coupon of 8%.

7.

DEBTORS

2017

2016

£

£

Amounts falling due within one year:

Trade debtors

343,249

375,441

Amounts owed by group undertakings

-

30,618

Other debtors

-

28,399

Claims debtor

91,786

101,037

Tax

-

14,311

Debtors control

17,596

40,302

Employee loan

-

15,697

Prepayments and accrued income

38,190

38,266

490,821

644,071

Amounts falling due after more than one year:

Amounts owed by group undertakings

2,462,059

2,437,585

Aggregate amounts

2,952,880

3,081,656

Interest at the rate of 1% per annum is applied to the balance owed by group undertakings, calculated on a

monthly basis and added to the loan.

8.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

£

£

Trade creditors

292,036

304,721

Amounts owed to group undertakings

180,000

180,000

Tax

137,983

97,566

Social security and other taxes

25,427

28,169

VAT

25,188

18,253

Deferred revenue

96,955

89,494

Accruals and deferred income

165,155

175,724

922,744

893,927

9.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2017

2016

£

£

Amounts owed to group undertakings

1,101,425

1,288,989

Deferred revenue

438,327

450,599

1,539,752

1,739,588

Interest payable on amounts owed to group undertakings is charged at 1% per annum and based on the current

repayment profile will be repaid in full by the year ending 31 December 2025. The Directors are of the opinion

that the fair value of amounts owed to group undertakings does not materially differ from that disclosed in these

financial statements.

10.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2017

2016

£

£

Within one year

49,019

52,726

Between one and five years

186,486

191,221

In more than five years

116,329

160,612

351,834

404,559

The amounts above represent the total payable over the entire period of each lease agreement.

11.	PROVISIONS FOR LIABILITIES

2017

2016

£

£

Deferred tax

Accelerated capital allowances

7,709

9,423

Other timing differences

(683

)

(769

)

7,026

8,654

Deferred

tax

£

Balance at 1 January 2017

8,654

Credit to Profit and Loss Account during year

(1,628

)

Balance at 31 December 2017

7,026

12.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2017

2016

value:

£

£

9,000

Ordinary

1

9,000

9,000

13.

RESERVES

Capital

Retained

Share

redemption

earnings

premium

reserve

Totals

£

£

£

£

At 1 January 2017

1,655,664

6,630

500

1,662,794

Profit for the year

550,633

550,633

Dividends

(450,000

)

(450,000

)

At 31 December 2017

1,756,297

6,630

500

1,763,427

14.	DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006

The Report of the Auditors was unqualified.

Christopher Meyrick (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

15.	RELATED PARTY DISCLOSURES

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party

transactions with wholly owned subsidiaries within the group or the ultimate parent company Kinnell Holdings

Limited.

At 31 December 2017, an amount of £2,462,059 (2016: £2,437,585) was due from Kinnell Holdings Limited, the

company's ultimate parent company. This loan is disclosed within amounts due from group undertakings at note

13 to these financial statements and is due after more than one year. Warranty Services Limited is also due £Nil

(2016: £4,976) from Kinnell Holdings Limited and is included within other debtors due within one year.

Guarantee Protection Insurance Limited is the immediate parent company of Warranty Services Limited. At 31

December 2017, Warranty Services Limited owed Guarantee Protection Insurance Limited £181,235 (2016:

£244,544) for premiums administered on their behalf and this is included with trade creditors. Warranty Services

Limited was also due £91,786 (2016: £101,037) from Guarantee Protection Insurance Limited in respect of a

claims debtor and a further balance of £Nil (2016: £977). These amounts are included within other debtors due

within one year. In addition, at 31 December 2017, Warranty Services Limited owed Guarantee Protection

Insurance Limited £1,281,425 (2016: £1,468,989) for loans made and expenses paid on its behalf. This is

included within other creditors, £180,000 (2016: £180,000) due within one year and £1,101,425 (2016:

£1,288,989) due after one year.

The Remedial Company Limited is a company owned by Kinnell Holdings Limited. At 31 December 2017, the

company owed Warranty Services Limited £Nil (2016: £30,618) for loan monies advanced and disclosed as

amounts owed by group undertakings due within one year. Added to this was a further amount due of £Nil (2016:

£567) from The Remedial Company Limited and shown within trade debtors. Furthermore, at 31 December

2017, Warranty Services Limited owed The Remedial Company Limited £6,885 (2016: £862) which was

included within trade creditors.

Confederation Holdings Limited is a company owned by Kinnell Holdings Limited. At 31 December 2017, the

company owed Warranty Services Limited £Nil (2016: £164) which was included within trade debtors.

Furthermore, at 31 December 2017, Warranty Services Limited owed Confederation Holdings Limited £1,079

(2016: £1,168) which was included within trade creditors.

Kinnell Corporate Limited is a company owned by Kinnell Holdings Limited. At 31 December 2017, Warranty

Services Limited was owed £6,120 (2016: £11,462) from Kinnell Corporate Limited which was included within

the balance entitled debtors control.

Certass Limited is a related party of the Kinnell Holdings Limited group due to common control. Included

within other debtors at the year end were amounts due from Certass Limited of £11,476 (2016: £22,156).

Included within trade creditors at the year end were amounts due to Certass Limited of £1,680 (2016: Nil).

During the year, the company made sales to the value of £335,205 (2016: £287,728) to Certass Limited and

incurred expenses to the value of £69,463 (2016: £125,243) from Certass Limited.

16.	ULTIMATE CONTROLLING PARTY

Guarantee Protection Insurance Limited, a company registered in England and Wales is the parent company of

Warranty Services Limited. The ultimate controlling party is Kinnell Holdings Limited as the parent company of

Guarantee Protection Insurance Limited.

Kinnell Holdings Limited is a company registered in Scotland, SC295513. P Dawson is considered to be the

ultimate controlling party due to his majority shareholding in Kinnell Holdings Limited.