Directors Report 2013

Directors Report 2013 Iris Insurance Brokers Limited Directors Report for the Year Ended 30 September 2013

Directors Report 2013 Contents Who we are 1 Key developments 1 Operational highlights 1 Financial Highlights 2 Market opportunities 4 Company information 4 Independent Auditors Report to the Members of Iris Insurance Brokers Limited 6 Profit and Loss Account for the Year Ended 30 September 2013 9 Balance Sheet as at 30 September 2013 10 Notes to the Financial Statements for the Year Ended 30 September 2013 11 Iris Insurance Brokers Ltd. Blink Intermediary Solutions Southend Office London Office The Baxter Building 7th Floor 80 Baxter Avenue New London House Southend-on-Sea 6 London Street Essex London SS2 6HZ EC3R 7LP Tel: +44 (0) 2031 787872 Fax: +44 (0) 1702 431644 Email: info@irisib.com / info@blinkis.co.uk Web: www.irisib.com / www.blinkis.co.uk 2014 Iris Insurance Brokers Ltd. All rights reserved. Reproduction in whole or in part is strictly prohibited. Blink Intermediary Solutions is a trading name of Iris Insurance Brokers Limited. Iris Insurance Brokers Limited is regulated and authorised by the Financial Conduct Authority. FCA No. 310825 Iris Insurance Brokers is a member of the British Insurance Brokers Association. Iris Insurance Brokers is registered in England and Wales. 4072404

Directors Report 2013 1 Who we are Iris is an independent specialist insurance and reinsurance broker with offices in the heart of the city of London and support office in Southend-on-Sea and Potters Bar. The group concentrates on the provision of wholesale insurance and reinsurance solutions to our business partners. Our teams work in very specialist areas seeking out niche solutions to complex insurance requirements. The provision of these specialist solutions has generated tremendous customer loyalty and provided a platform to expand our business and build on our success of servicing our customers. Key developments Since our establishment in 2000 we wanted to create a stable, efficient and well-funded trading platform to allow our business to grow and attract new teams and business opportunities. The financial year ending September 2013 has been a year of continued growth and an opportunity to build our reserves as some of the more established teams become more profitable. We continue to build our infrastructure in anticipation for continued growth. We have avoided the purchase of any business to date and achieved our results by investing in dedicated teams that supplement our core business. Our total operational divisions have now increased to nine with more staff being recruited into existing divisions and new divisions in the pipe line. Operational highlights Good consolidation across all teams with positive income growth. Staff numbers increased to 38. Two more operational divisions successfully recruited. New office opened in Potters Bar to service our UK broker network branded Blink Extensive IT upgrade completed

Directors Report 2013 2 Financial highlights Maintaining our growth and profitability has been a key challenge but we are pleased to advise excellent results. Our retained fee and commission income has increased 40% in the financial year ending September 2013 to 4,149,598. In our last report and accounts we forecast a fee and commission growth of 40%. Although we achieved this goal, we would have exceeded this figure had the USD exchange rate not moved against us. Our underlying USD income has indeed exceeded expectations which is very encouraging. We are also pleased to report a retained profit before tax of 424,933 being approximately 10% of retained income. Although we do not produce an EBITDA report (which are often very subjective). The board feel the underlying business model produces a profit ratio of between 15% to 20% of retained revenue. We continue to choose a policy of investing some, or all, of our profits each year in growing the company. We have set a goal to achieve a retained commission income of 5,000,000 by the end of our financial year in 2014 and seem well placed to achieve our aim. Year Ending 2007 2008 2009 2010 2011 2012 2013 Fee and commissions income 198,097 248,179 542,497 1,583,828 2,451,331 2,973,806 4,149,598 Increase from last year 14% 25% 119% 192% 55% 21% 40% Profit before tax 13,995 49,568 173,301 387,580 118,457 4,709 424,933 Change from last year 88% 254% 250% 124% -69% -96% 8924% Increase in reserves 151,369 182,871 339,822 609,307 756,256 704,590 1,016,553 Increase from last year 7% 21% 86% 79% 24% -7% 44%

Directors Report 2013 3 Fee and commission income 4,500,000 Fee and commission income 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000-2007 2008 2009 2010 2011 2012 2013 Increase in reserves 1,200,000 Increase in reserves 1,000,000 800,000 600,000 400,000 200,000-2008 2009 2010 2011 2012 2013

Directors Report 2013 4 Market opportunities The board has generated numerous and exciting opportunities in 2013 for both team acquisition and organic market growth. The companies cost base and efficiency to market enables us to offer an attractive home to disaffected teams. Companies looking to form strategic partnerships are attracted by our strong financial performance and independence. We will only consider those partnerships that share our core values of client service and specialist product solution that fit with the company s on-going growth strategy. Disclosure of information to the auditors Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company s auditors are aware of that information. The directors confirm that there is no relevant information that they know of and which they know the auditors are unaware of. Small company provisions This report has been prepared in accordance with the small companies regime under the Companies Act 2006.

Directors Report 2013 5 Market opportunities The directors are responsible for preparing the Directors 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 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 apply them consistently; make judgements and accounting estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue its 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 or the prevention and detection of fraud and other irregularities.

Directors Report 2013 6 Independent Auditors Report to the Members of Iris Insurance Brokers Limited We have audited the financial statements of Iris Insurance Brokers Limited for the year ended 30 September 2013, set out on pages 5 to 13. The financial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard for Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities). 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 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 company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors Responsibilities Statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s (APB s) Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Directors Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Directors Report 2013 7 Independent Auditors Report to the Members of Iris Insurance Brokers Limited (Continued) Matters on which we are required to report by exception 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; or the directors were not entitled to prepare the financial statements and the Directors Report in accordance with the small companies regime. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the company s affairs as at 30 September 2013 and of its profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and

Directors Report 2013 8 Independent Auditors Report to the Members of Iris Insurance Brokers Limited (Continued) Opinion on financial statements (Continued) have been prepared in accordance with the requirements of the Companies Act 2006 Alan Worsdale FCA Senior Statutory Auditor for and on behalf of: Rickard Keen LLP, Statutory Auditor 7 Nelson Street. Southend on Sea, Essex, SS1 1EH 23 June 2014

Directors Report 2013 9 Profit and Loss Account for the Year Ended 30 September 2013 Note 2013 2012 Turnover 4,609,357 3,424,966 Cost of sales (459,759) (451,160) Gross profit 4,1494598 2,973,806 Administrative expenses (3,747,966) (2,992,223) Other operating income 13,301 15,475 Operating profit/(loss) 2 414,933 (2,942) Other interest receivable and similar income 12,536 7,820 Interest payable and similar charges (2,887) (169) Profit on ordinary activities before taxation 424,582 4,709 Tax on profit on ordinary activities 4 (112,619) (6,375) Profit for the financial year 13 311,963 (1,665)

Directors Report 2013 10 Balance Sheet as at 30 September 2013 Note 2013 2012 Fixed assets Tangible assets 5 444,165 451,946 Investments 6 75,505 503 519,670 452,449 Current assets Debtors 7 6,993,316 5,427,968 Cash at bank and in hand 3,383,648 2,538,640 10,376,964 7,966,608 Creditors: Amounts falling due within one year 8 (9,837,114) (7,656,066) Net current assets 539,850 310,542 Total assets less current liabilities 1,059,520 762,991 Creditors: Amounts falling due after more than one year 9 (37,232) (50,116) Provisions for liabilities 10 (5,735) (8,285) Net assets 1,016,553 704,590 Capital and reserves Called up share capital 11 50,000 50,000 Revaluation reserve 13 97,500 97,500 Profit and loss reserve 13 869,053 557,090 Shareholders funds 1,016,553 704,590 These accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies regime under the Financial Reporting Standard for Smaller Entities (effective April 2008). Approved by the Board on 23 June 2014.

Directors Report 2013 11 Notes to the Financial Statements for the Year Ended 30 September 2013 1. Accounting policies Basis of preparation The financial statements have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008). Exemption from preparing group accounts The company is part of a small group. The company has taken advantage of the exemption provided by Section 398 of the Companies Act 2006 and has not prepared group accounts. Turnover Brokerage and commission is recognised at the date that the premium for the policy falls due. Brokerage and commission includes amounts shared with third parties. Depreciation Depreciation is provided on tangible fixed assets so as to write off the cost or valuation, less any estimated residual value, over their expected useful economic life as follows: Office equipment Fixtures and fittings Motor vehicles 15% reducing balance method 3 years straight line basis 25% reducing balance basis Investment properties Certain of the company s properties are held for long-term investment. Investment properties are accounted for in accordance with the FRSSE as follows: No depreciation is provided in respect of leasehold investment properties where the lease has over 20 years to run. This treatment as regards the company s investment properties may be a departure from the requirements of the Companies Act concerning the depreciation of fixed assets. However, these properties are not held for consumption but for investment and the directors consider that systematic annual depreciation be inappropriate. The accounting policy adopted is therefore necessary for the financial statements to give a true and fair view. Depreciation or amortisation is only one of many factors reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or quantified.

Directors Report 2013 12 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 1. Accounting policies (Continued) Fixed asset investments Fixed asset investments are stated at historical cost less provision for any diminution in value. Deferred tax Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes, which have arisen but not reversed by the balance sheet date, except as required by FRSSE. Deferred tax is measured at the rates that are expected to apply in the periods when the timing differences are expected to reverse, based on the tax rates and law enacted at the balance sheet date. Foreign currency Transactions in foreign currencies are recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the closing rates at the balance sheet date. All exchange differences are included in the profit and loss account. Hire purchase and leasing Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term. Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the company, are capitalised in the balance sheet as tangible fixed assets and depreciated over the shorter of the lease term and their useful lives. The capital elements of future obligations under the leases are included as liabilities in the balance sheet. The interest element of the rental obligation is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding. Assets held under hire purchase agreements are capitalised as tangible fixed assets and are depreciated over the shorter of the lease term and their useful lives. The capital element of future finance payments is included within creditors. Finance charges are allocated to accounting periods over the length of the contract and represent a constant proportion of the balance of capital repayments outstanding.

Directors Report 2013 13 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 1. Accounting policies (Continued) Pensions The company operates a defined contribution pension scheme. Contributions are charged in the profit and loss account as they become payable in accordance with the rules of the scheme. 2. Operating profit/(loss) Operating profit/(loss) is stated after charging: 2013 2012 Auditors remuneration 6,500 6,500 Foreign currency gains (106,046) (7,829) Profit on sale of tangible fixed assets Depreciation of tangible fixed assets 35,687 14,238 3. Directors remuneration The directors remuneration for the year are as follows: 2013 2012 Directors remuneration (including benefits in kind and money purchase pension scheme contributions) 324,557 307,622 During the year the number of directors who were receiving benefits and share incentives was as follows: 2013 2012 Accruing benefits under money purchase pension scheme 3 3

Directors Report 2013 14 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 4. Taxation Analysis of current period tax charge Current tax 2010 2009 Corporation tax charge 115,169 4,410 Deferred tax Origination and reversal of timing differences (2,550) (1,965) Total tax on profit on ordinary activities 112,619 6,375 5. Tangible fixed assets Investment properties Fixtures and fittings Motor vehicles Office Equipment Total Cost or valuation At 1 October 2012 Additions At 30 September 2013 335,000 13,750 348,750 98,039 14,156 112,195 107,496-107,496 19,637-19,637 560,172 27,906 588,078 Depreciation At 1 October 2012 Charge for the year At 30 September 2013 - - - 81,967 11,433 93,400 16,263 22,808 39,071 9,996 1,446 11,442 108,226 35,687 143,913 Net Book Value At 30 September 2013 At 30 September 2012 348,750 335,000 18,795 16,072 68,425 91,233 8,195 9,641 444,165 451,946 Leased Assets Included within the net book value of tangible fixed assets is 60,953 (2012 81,271) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was 20, 318 (2012-1,729).

Directors Report 2013 15 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 5. Tangible fixed assets (continued) Revaluations The investment properties class of fixed assets was valued on 30 September 2013 by the director who is internal to the company. The basis of this valuation was open market value. This class of assets has a current value of 348,750 (2012-335,000) and a carrying amount at historical cost of 237,500 (2012-237,500). The depreciation on this historical cost is nil (2012 - nil). 6. Investments held as fixed assets Shares in group undertakings and participating interests Other investments 2013 1 75,504 75,505 2012 1 502 503 Shares in group undertakings and participating interests Cost At 1 October 2012 At 30 September 2013 Net book value At 30 September 2013 Subsidiary undertakings 1 1 1 Total 1 1 1 Other investments Cost At 1 October 2012 Additions At 30 September 2013 Net book value At 30 September 2013 At 30 September 2012 Listed Investments - 75,000 75,000 75,000 - Unlisted Investments The market value of the listed investments at 30 September 2013 was 72,158 (2012 - nil) 502 2 504 504 502 Total 502 75,002 75,504 75,504 502

Directors Report 2013 16 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) Details of undertakings Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows: Undertaking Subsidiary undertakings Holding Proportion of voting rights and shares held Principal activity Iris Aviation Limited Joint Ventures Ordinary 100% Provision of helicopter lessons Iris Aviation Brokers Limited Ordinary 33.3% that of an insurance agent Iris Facilities Limited Ordinary 33.3% that of an insurance agent Blink Intermediary Solutions Limited Ordinary 50% broker network Iris M & K Limited Ordinary 33.3% that of an insurance agent The loss for the financial period of Iris Aviation Limited was 29,434 and the aggregate amount of capital and reserves at the end of the period was (220,562). The profit for the financial period of Iris Aviation Brokers Limited was 48,460 and the aggregate amount of capital and reserves at the end of the period was 149,618. The profit for the financial period of Iris Facilities Limited was 99,937 and the aggregate amount of capital and reserves at the end of the period was 210,889.

Directors Report 2013 17 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) Details of undertakings (continued) The loss for the financial period of Blink Intermediary Solutions Limited was 300 and the aggregate amount of capital and reserves at the end of the period was 700. The profit for the financial period of Iris M & K Limited was 336,763 and the aggregate amount of capital and reserves at the end of the period was 336,766. 7. Debtors 2013 2012 Trade debtors 6,232,418 4,940,417 Amounts owed by group undertakings & undertakings in which the company has a participating interest 226,853 195,985 Other debtors 534,045 291,566 6,993,316 5,427,968

Directors Report 2013 18 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 8. Creditors: Amounts falling due within one year 2013 2012 Trade creditors 8,604,543 6,704,681 Bank loans and overdrafts - 282,325 Obligations under finance lease and hire purchase contracts 12,884 12,884 Amounts owed to a group undertakings and undertakings in which the company has a participating interest 974 - Corporation tax 115,169 4,410 Other taxes and social security 86,767 56,511 Other creditors 1,016,777 595,255 9,837,114 7,656,066 9. Creditors: Amounts falling due after more than one year 2013 2012 Obligations under finance lease and hire purchase contracts 37,232 50,116 10. Provisions Deferred tax Total At 1 October 2012 8,285 8,285 Credited to the profit and loss account (2,550) (2,550) At 30 September 2013 5,735 5,735

Directors Report 2013 19 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) Analysis of deferred tax 2013 2012 Difference between accumulated depreciation and amortisation and capital allowances 3,148 8,285 11. Share capital Allotted, called up and fully paid shares 2013 2012 No. No. Ordinary shares of 10.00 each 5,000 50,000 5,000 50,000 12. Dividends Dividends paid 2013 2012 Current year interim dividend paid - 50,000 13. Reserves Revaluation Profit and Reserve loss account Total At 1 October 2012 97,500 557,090 654,590 Profit for the year - 311,963 311,963 At 30 September 2013 97,500 869,053 966,553

Directors Report 2013 20 Notes to the Financial Statements for the Year Ended 30 September 2013 (Continued) 14. Pension Schemes Defined contribution pension scheme The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to 121,911 (2012-84,980). Contributions totalling 9,536 (2012-9,208) were payable to the scheme at the end of the year and are included in creditors. 15. Commitments Operating lease commitments As at 30 September 2013 the company had annual commitments under non-cancellable operating leases as follows: Operating leases which expire: 2013 2012 Within one year 35,489 - Within two and five years 6,966 39,158 42,455 39,158 16. Control The company is controlled by M E P Hutley who owns 100% of the share capital.