Final Results
Date: 4th June 2013
On behalf of: B. P. Marsh & Partners Plc ("the Company" or "the Group")
Embargoed until: 0700hrs
B. P. Marsh & Partners Plc
Final Results
B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early stage financial services businesses, announces its audited Group final results for the year to 31st January 2013.
The highlights of the results are:
¡ Net asset value up 10.6% to £55.5m (2012: £50.1m)
¡ Net asset value per share of 190p (2012: 171p)
¡ Share price trading at 32.1% discount to Net Asset Value (as at 3rd June 2013) (2012: 48.2%)
¡ Consolidated profit after tax up 55.7% to £5.7m (2012: £3.6m)
¡ Annual compound growth rate of 11.9% achieved since formation
¡ £3.7m of realised gains delivered on sale of investments
¡ £1.8m of cash available at year-end, plus a further £4.3m Directors' loan facility available; a total of £6.1m. £4m available for new investments excluding commitments to existing investments
¡ Sale agreed for 80% of the Company's shareholding in Hyperion Insurance Group Limited, subject to regulatory consent. Sale price reflected in Hyperion valuation at year-end, which drove 55.7% uplift in profit over 2012
¡ Net Cash to be received of £20.0m (post-tax and loans) post-completion of the Hyperion sale. Directors' loan facility to be repaid and cancelled upon receipt
Chairman's Statement
I am pleased to present the audited Consolidated Financial Statements of B. P. Marsh & Partners Plc for the year ended 31st January 2013.
In this, our 23rd year of operations, I am pleased to be able to report that we have again been able to increase our NAV by 10.6%, as more particularly set out below.
Our eight investee companies, large and small, are all in good heart and facing the opportunities and challenges of 2013 with confidence and enthusiasm.
Whilst we expect major developments and changes to take place in our portfolio over the coming months, we have every confidence in the future of our business, which continues to enjoy much diversity and a truly global reach.
Agreement has been reached for a sale of 80% of our shareholding in Hyperion Insurance Group Ltd, however this is still subject to regulatory consent. We are not in the habit of setting out plans until we know with a degree of certainty what will prevail.
Business Update
Financial Performance
At 31st January 2013, the net asset value of the Group was £55.5m (2012: £50.1m), after making allowance for deferred corporation tax, an increase of 10.6%. This equates to a net asset value of 190p per ordinary share as at 31st January 2013 (2012: 171p).
The Group has therefore achieved an annual compound growth rate of 11.9% after running costs, realisations, losses and distributions and having made an appropriate allowance for deferred corporation tax since the Group's establishment in 1990 (excluding £10.1m raised on flotation).
Reflecting investment portfolio movement, including the unrealised increase on revaluation of the portfolio, the consolidated profit on ordinary activities after tax for the year was £5.7m (2012: profit of £3.6m), an increase of 55.7%. However, excluding portfolio movement the Group made a pre-tax profit of £0.06m (2012: profit of £0.11m). The Group aims each year to at least break even on an underlying basis, before taking into account any portfolio movement.
£3.7m of gains were realised on the sale of investments during the year, as set out below. Due to the value of these investments being included at sale price within the 31st January 2012 portfolio valuation, no profit was shown directly within the Consolidated Statement of Comprehensive Income as the uplift in valuation had been previously reflected as unrealised gains in previous years. On sale the £3.7m realised gains were therefore transferred from the fair value reserve to retained earnings within the Consolidated Statement of Financial Position.
The Board believes that the Group's prospects remain good, despite the continued difficult outlook for the global economy. The Directors continue to explore all opportunities for realisations and development within the portfolio.
Summary of Developments in the Portfolio
During the financial year ended 31st January 2013, the following developments took place within the Group and its portfolio:
· Hyperion Insurance Group Limited ("Hyperion")
Partial disposal of shares to Murofo Investments SL ("Murofo")
In May 2012 the Group sold 2.75% of its 18.94% shareholding in Hyperion to a fellow investor, Murofo, for a total consideration of £4.54m, or the equivalent of £3.80 per share.
This sale resulted in the Group realising what was its overall equity investment in Hyperion, (£4.35m over 17 years) whilst allowing it to continue with a significant shareholding and the prospect of further growth. This sale delivered £3.7m in profit for the Group.
In July 2012 Hyperion completed the acquisition of Windsor Limited, an international insurance and reinsurance Lloyd's broking group. As a result of this acquisition, the Group's shareholding was diluted from 16.19% to 13.97%.
· Besso Insurance Group Limited ("Besso")
Acquisition of further 6.71% shareholding
On 1st November 2012 the Group increased its shareholding by 6.71% for a cash consideration of £0.78m. The Group's equity interest in Besso increased from 30% to 36.71% as a result (with economic rights over 36.48%).
This further investment was made alongside a consortium of American investors, who are well-known to Besso's business, who acquired 5.85% of Besso for a cash consideration of £0.70m.
Subsequent to the above, Besso had a positive 2012 financial year and is in the final stages of negotiations to complete several value accretive acquisitions. The Group, having worked alongside Besso's management team in reviewing these investments, is of the opinion that these would be positive additions to Besso.
· LEBC Holdings Limited ("LEBC")
LEBC Group Limited ("LEBC Group"), the trading subsidiary of LEBC, has announced a significant turnaround in its financial performance, which sees the national IFA and employee benefits consultancy secure a year-on-year turnaround in profit before tax of £1.1m (FY2012 profit of £0.5m versus FY2011 loss of £0.6m), on a turnover of £10.2m, for the year ended 30th September 2012.
The Edinburgh-headquartered firm, which has 13 branches throughout the United Kingdom, has also reported a positive start to the new year, with strong revenue and profit growth.
· Summa Insurance Brokerage SL ("Summa")
Despite the economic environment in Spain, Summa grew revenue in 2012 and maintained a satisfactory profit margin, which is in stark comparison to many other insurance operations in the Spanish market.
The Group has been working alongside Summa's Management team to develop their interaction with the Lloyd's and London Market, and has made various introductions to augment Summa's service offering to their clients.
The Group has also assisted Summa in the sourcing and recruitment of a new Chief Financial Officer so as to further improve the infrastructure for growth within this investment.
Notwithstanding the above, 2013 is likely to be a challenging year for Summa and the Board have reflected continued uncertainty surrounding the Spanish economy within its valuation of the business.
· The Broucour Group Limited ("Broucour")
By 31st January 2013 Turner Butler Limited, a specialist SME business sales agency and a subsidiary of Broucour reached £0.5m revenue in just six months trading since its acquisition for £0.4m on 27th July 2012, over double its budgeted target. This acquisition was funded by loan financing provided by the Group. As a result of this performance the first loan repayment of £0.05m was made in March 2013, over two months ahead of schedule.
Post Balance Sheet Events
· Hyperion - Partial disposal of shares to General Atlantic
On 27th March 2013, the Group reached agreement with General Atlantic to sell 80% of its shareholding in Hyperion (11.04% of Hyperion's issued share capital) alongside 3i, at £5.20 per share. Due to its size in relation to the remainder of the portfolio, this transaction was put before the Company's shareholders at a General Meeting on 16th April 2013 where it was duly approved, and completion is now conditional upon regulatory approvals being granted in Spain, Singapore and Texas, USA. Completion of this transaction will see the Company in receipt of £29.2m pre-tax, and represents an effective uplift of £4.3m upon the Company's 31st July 2012 valuation.
The Group will continue to hold a 2.76% shareholding in Hyperion, which will be held under a Call Option with General Atlantic, who will be able to purchase the shares at £5.20 for a period of three years, or when Hyperion undertakes an Initial Public Offering, whichever is the sooner. In addition, the Company will no longer benefit from its previous minority protections or a nominee director on the Hyperion Board due to its reduced shareholding.
One of the terms of the transaction was that the Company provide an ongoing £6m loan to enable Hyperion to refinance a majority of the existing shareholder debt, and this has been agreed at an interest rate of 7.5% (increasing if the Bank of England Base rate increases beyond 2.5%) for a minimum term of 12 months.
Due to the sale price being agreed and significant due diligence having been carried out prior to the year-end, the valuation of Hyperion as at 31st January 2013 is reflective of this offer.
· LEBC
The Group can confirm that LEBC (the holding company for LEBC Group) has completed the acquisition of Sesame Bankhall Group's remaining 10% stake in LEBC Group, which Sesame has held since its initial investment in LEBC Group in 2000. LEBC Group is now a 100% subsidiary of LEBC.
The Group is also happy to announce that LEBC Group won the award for Best Retirement Advisor at the Money Marketing Financial Services Awards 2013. This is a fine vindication of the service offering provided by LEBC.
Directors' Loan
The Group repaid the £1.25m drawn down on the £4.325m Directors' Loan facility upon receipt of funds from the sale of Hyperion shares to Murofo, such that at the year-end no amounts were due. Since 31st January 2013 £2.08m of Directors' loans were used to fund a draw down by US Risk (UK) of its loan facility and a new acquisition for Besso, and a further £2.25m has been drawn down to fund a new investment opportunity due to complete shortly. The facility will be repaid in full following completion of the Hyperion disposal to General Atlantic and the facility will thereafter be cancelled.
Business Strategy
The Group typically invests amounts of up to £2.5m and only takes minority equity positions, normally acquiring between 15% and 45% of an investee company's total equity. Based on our current portfolio, the average investment has been held for approximately 9 years. The Group requires its investee companies to adopt certain minority shareholder protections and appoints a director to its board. The Group's successful track record is based upon a number of factors that include, amongst other things, a robust investment process, the management's considerable experience of the Financial Services sector and a flexible approach towards exit-strategies.
At the year end, the Group had £1.79m in cash, plus a further £4.325m Directors' loan facility available. Of the £6.1m, £4.0m is available for new investment opportunities after providing for commitments to loan funding for existing investments.
Board Composition
The Board appointed Natasha Dunbar as an executive director in February 2013, in order to reflect her increased involvement in the company and the executive duties that she had taken on. Natasha served as Managing Director of the Company between 2002 and 2008, following which she was appointed as a non-executive director.
Pursuant to the above transfer of duties the Board felt that an additional non-executive director would assist to rebalance the Board, and duly invited Campbell Scoones to join the Board as a non-executive director and member of the Remuneration Committee with effect from 19th April 2013.
Investment Opportunities
The Group continued to receive a strong inflow of opportunities in the year ended 31st January 2013 and believes that this trend will continue. The New Business Department gave its detailed consideration to a number of these; including propositions from within the insurance intermediary and wealth management sectors. The Group is currently in the final stages of completing a new investment and hopes to make an announcement regarding this within the next week. The Board will continue to pursue opportunities in the best interests of the Group's shareholders.
The Group's investment strategy remains unchanged; to take minority positions in profitable businesses with strong management teams and good growth potential. The Directors consider that the Group remains unique in its investment sector and we continue to see a sufficient number of investment opportunities with good management and business plans that would fit with our tried and tested business strategy.
Brian Marsh OBE
4th June 2013
Investments
As at 31st January 2013 the Group's equity interests were as follows:
Besso Insurance Group Limited
(www.besso.co.uk)
In February 1995 the Group assisted a specialist team departing from insurance broker Jardine Lloyd Thompson Group in establishing Besso Holdings Limited. The company specialises in insurance broking for the North American wholesale market and changed its name to Besso Insurance Group Limited in June 2011.
Date of investment: February 1995
Equity stake: 36.5%
31st January 2013 valuation: £5,223,000
The Broucour Group Limited
(www.amberglobe.co.uk)
In March 2008 the Group assisted in establishing Amberglobe, a business sales platform that provides valuation and negotiation services for the sale of SME businesses in the sub £3m sector. In July 2012 Broucour was formed as a new holding company for Amberglobe, and the Group financed the acquisition of Turner Butler.
Date of investment: March 2008
Equity stake: 49.0%
31st January 2013 valuation: £173,000
Hyperion Insurance Group Limited
(www.hyperiongrp.com)
The Group first invested in Hyperion in 1994. Hyperion owns, amongst other things, an insurance broker specialising in directors' and officers' ("D&O") and professional indemnity ("PI") insurance. A subsidiary of Hyperion became a registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing general agency specialising in developing D&O and PI business in Europe.
Date of investment: November 1994
Equity: 13.8%
31st January 2013 valuation: £35,456,000
LEBC Holdings Limited
In April 2007 the Group invested in LEBC, an Independent Financial Advisory company providing services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas.
Date of investment: April 2007
Equity stake: 21.9%
31st January 2013 valuation: £3,460,000
Paterson Squared, LLC
(www.paterson2.com)
Paterson Squared was founded by a group of professionals from the actuarial, capital markets and reinsurance advisory sectors in conjunction with the Group. The company uses sophisticated modelling techniques to assess risk, with a view to providing counter-party risk transaction advice.
Date of investment: April 2004
Equity stake: 22.5%
31st January 2013 valuation: £0
Portfolio Design Group International Limited
(www.surrendalink.co.uk)
In March 1994 the Group invested in the Portfolio Design Group, a company which sells with-profits life endowment policies to large financial institutions. In 2002 the company diversified into investment management.
Date of investment: March 1994
Equity stake: 20.0%
31st January 2013 valuation: £1,721,000
Randall & Quilter Investment Holdings plc
(www.rqih.com)
Randall & Quilter Investment Holdings is an AIM listed run-off management service provider and acquirer of solvent insurance companies in run-off. The Group invested in Randall & Quilter in January 2010, the result of a share exchange with the Group's shareholding in JMD Specialist Insurance Services Group Limited, which Randall & Quilter have now wholly acquired.
Date of investment: January 2010
Equity stake: 1.35%
31st January 2013 valuation: £785,000
Summa Insurance Brokerage, S. L.
(www.grupo-summa.com)
In January 2005 the Group provided finance to a Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Spain.
Date of investment: January 2005
Equity stake: 48.63%
31st January 2013 valuation: £3,486,000
US Risk (UK) Limited
(www.oxfordinsurancebrokers.co.uk)
(jhinternational.co.uk)
In July 2010 the Group completed its investment in US Risk (UK), the parent company of Oxford Insurance Brokers Limited, a London-based Lloyd's insurance and reinsurance broker and James Hampden International Brokers Ltd, a specialist international reinsurance and insurance broking company.
Date of investment: July 2010
Equity stake: 29.3%
31st January 2013 valuation: £2,407,000
These investments have been valued in accordance with the accounting policies on Investments set out in note 1 of the Consolidated Financial Statements.
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31ST JANUARY 2013
|
|
Notes |
2013 |
2012 |
||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
GAINS ON INVESTMENTS |
1 |
|
|
|
|
|
Realised gains / (losses) on disposal of investments |
1,13 |
5 |
|
(20) |
|
|
Impairment of investments and loans |
15 |
- |
|
(339) |
|
|
Unrealised gains on investment revaluation |
12 |
6,130 |
|
4,592 |
|
|
Carried interest provision |
2,17 |
5 |
|
32 |
|
|
|
|
|
6,140 |
|
4,265 |
|
INCOME |
|
|
|
|
|
|
Dividends |
1,26 |
301 |
|
661 |
|
|
Income from loans and receivables |
1,26 |
929 |
|
859 |
|
|
Fees receivable |
1,26 |
855 |
|
594 |
|
|
|
|
|
2,085 |
|
2,114 |
|
OPERATING INCOME |
2 |
|
8,225 |
|
6,379 |
|
|
|
|
|
|
|
|
Operating expenses |
2 |
|
(2,007) |
|
(1,817) |
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
|
6,218 |
|
4,562 |
|
|
|
|
|
|
|
|
Financial income |
2,4 |
5 |
|
- |
|
|
Financial expenses |
2,3 |
(65) |
|
(104) |
|
|
Exchange movements |
2,8 |
37 |
|
(51) |
|
|
|
|
|
(23) |
|
(155) |
|
|
|
|
|
|
|
|
PROFIT ON ORDINARY ACTIVITIES BEFORE EXCEPTIONAL ITEMS |
|
|
6,195 |
|
4,407 |
|
|
|
|
|
|
|
|
Exceptional item |
5,6 |
|
- |
|
(30) |
|
|
|
|
|
|
|
|
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION |
8 |
|
6,195 |
|
4,377 |
|
|
|
|
|
|
|
|
Taxation |
9 |
|
(518) |
|
(732) |
|
|
|
|
|
|
|
|
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS |
21 |
|
£5,677 |
|
£3,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted (pence) |
10 |
|
19.4p |
|
12.4p |
|
|
|
|
|
|
|
The result for the year is wholly attributable to continuing activities.
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
31ST JANUARY 2013
|
|
|
Group |
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Notes |
2013 |
2012 |
|
2013 |
2012 |
|
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
11 |
7 |
14 |
|
- |
- |
|
Investments |
12 |
52,711 |
50,624 |
|
45,299 |
39,965 |
|
Loans and receivables |
14 |
8,587 |
5,983 |
|
10,155 |
10,155 |
|
|
|
61,305 |
56,621 |
|
55,454 |
50,120 |
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
15 |
1,174 |
2,093 |
|
- |
- |
|
Cash and cash equivalents |
|
1,787 |
666 |
|
1 |
1 |
|
TOTAL CURRENT ASSETS |
|
2,961 |
2,759 |
|
1 |
1 |
|
TOTAL ASSETS |
|
64,266 |
59,380 |
|
55,455 |
50,121 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
Loans and other payables |
16 |
(100) |
(1,250) |
|
- |
- |
|
Carried interest provision |
17 |
(294) |
(299) |
|
- |
- |
|
Deferred tax liabilities |
18 |
(7,933) |
(7,415) |
|
- |
- |
|
TOTAL NON-CURRENT LIABILITIES |
|
(8,327) |
(8,964) |
|
- |
- |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Trade and other payables |
19 |
(484) |
(295) |
|
- |
- |
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
(484) |
(295) |
|
- |
- |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
(8,811) |
(9,259) |
|
- |
- |
|
NET ASSETS |
|
£55,455 |
£50,121 |
|
£55,455 |
£50,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL AND RESERVES - EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital |
20 |
2,923 |
2,929 |
|
2,923 |
2,929 |
|
Share premium account |
21 |
9,370 |
9,370 |
|
9,370 |
9,370 |
|
Fair value reserve |
21 |
26,348 |
24,656 |
|
43,155 |
37,821 |
|
Reverse acquisition reserve |
21 |
393 |
393 |
|
- |
- |
|
Capital redemption reserve |
21 |
6 |
- |
|
6 |
- |
|
Retained earnings |
21 |
16,415 |
12,773 |
|
1 |
1 |
|
SHAREHOLDERS' FUNDS - EQUITY |
21 |
£55,455 |
£50,121 |
|
£55,455 |
£50,121 |
The Financial Statements were approved by the Board of Directors and authorised for issue on 3rd June 2013
and signed on its behalf by:
B.P. Marsh & J.S. Newman
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31ST JANUARY 2013
|
|
Notes |
|
2013 |
|
2012 |
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
Cash from operating activities |
|
|
|
|
|
|
Income from loans to investees |
|
|
929 |
|
859 |
|
Dividends |
|
|
301 |
|
661 |
|
Fees received from investment activity |
|
|
855 |
|
594 |
|
Operating expenses |
|
|
(2,007) |
|
(1,817) |
|
Exceptional item - termination payment |
|
|
- |
|
(30) |
|
Increase in receivables |
|
|
(361) |
|
(95) |
|
Increase in payables |
|
|
287 |
|
20 |
|
Depreciation |
11 |
|
8 |
|
23 |
|
Net cash from operating activities |
|
|
12 |
|
215 |
|
|
|
|
|
|
|
|
Net cash from / (used by) investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
11 |
|
(1) |
|
(4) |
|
Purchase of investments |
12 |
|
(822) |
|
(735) |
|
Proceeds from investments |
12 |
|
4,870 |
|
51 |
|
Net cash from / (used by) investing activities |
|
|
4,047 |
|
(688) |
|
|
|
|
|
|
|
|
Net cash (used by) / from financing activities |
|
|
|
|
|
|
(Repayment) / advances of borrowings |
16 |
|
(1,250) |
|
1,250 |
|
Net payments of loans to investee companies |
|
|
(1,276) |
|
(515) |
|
Financial income |
4 |
|
5 |
|
- |
|
Financial expenses |
3 |
|
(65) |
|
(104) |
|
Dividends paid |
7 |
|
(293) |
|
- |
|
Payments made to repurchase Company shares |
21 |
|
(50) |
|
- |
|
Net cash (used by) / from financing activities |
|
|
(2,929) |
|
631 |
|
|
|
|
|
|
|
|
Change in cash and cash equivalents |
|
|
1,130 |
|
158 |
|
Cash and cash equivalents at beginning of the period |
|
|
666 |
|
515 |
|
Exchange movement |
|
|
(9)* |
|
(7)* |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
|
£ 1,787 |
|
£ 666 |
|
|
|
|
|
|
|
*The exchange movement as noted in the Consolidated Statement of Comprehensive Income is a gain of £37k (2012: loss of £51k). The exchange movement in the Consolidated Statement of Cash Flows excludes an exchange gain of £46k (2012: loss of £44k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement.
COMPANY STATEMENT OF CASH FLOWS
No Company Statement of Cash Flows has been prepared as there has been no cash flow movement in the Company during the current and previous period, other than dividends received from B. P. Marsh & Company Limited ("BPMCL"), a subsidiary company, which were settled via an intercompany adjustment. The ordinary dividend payment to the Company's members and the share repurchase during the year was physically made by BPMCL and reflected in the Company through an intercompany adjustment. Accordingly the Company's "cash and cash equivalents" balance as at 31st January 2013 is £1k (2012: £1k).
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST JANUARY 2013
|
|
Group |
Company |
||
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Opening total equity |
50,121 |
46,476 |
50,121 |
46,476 |
|
Total recognised income and expense for period |
5,677 |
3,645 |
5,677 |
3,645 |
|
Dividends paid |
(293) |
- |
(293) |
- |
|
Repurchase of Company shares |
(50) |
- |
(50) |
- |
|
TOTAL EQUITY |
£55,455 |
£50,121 |
£55,455 |
£50,121 |
Refer to Note 21 for detailed analysis of the changes in the components of equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST JANUARY 2013
1. ACCOUNTING POLICIES
Basis of preparation of financial statements
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use by the European Union ("IFRS"), and in accordance with the Companies Act 2006.
The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and financial liabilities through profit and loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates particularly in relation to investment valuation. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
New standards effective during the year
None of the new standards, interpretations or amendments, which are effective for the first time in these consolidated financial statements, has had a material impact on these consolidated financial statements.
Basis of consolidation
The Group financial statements consolidate the results and net assets of the Company and all of its subsidiary undertakings.
Business combinations
The results of subsidiary undertakings are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
All business combinations are accounted for by using the acquisition accounting method. This involves recognising identifiable assets and liabilities of the acquired business at fair value. Goodwill represents the excess of the fair value of the purchase consideration for the interests in subsidiary undertakings over the fair value to the Group of the net assets and any contingent liabilities acquired. The one exception to the use of the acquisition accounting method was in 2006 when B.P. Marsh & Partners Plc became the legal parent company of B.P. Marsh & Company Limited in a share for share exchange transaction. This was accounted for as a reverse acquisition, such that no goodwill arose, and a merger reserve was created reflecting the difference between the book value of the shares issued by B.P. Marsh & Partners Plc as consideration for the acquisition of the share capital of B.P. Marsh & Company Limited. This compliance with IFRS 3 also represented a departure from the Companies Act.
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.
Associates are those entities in which the Group has significant influence, but not control, over the financial and operatingpolicies. Investments that are held as part of the Group's investment portfolio are carried in the Consolidated Statement of Financial Position at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28 Investment in Associates ("IAS 28"), which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the profit or loss in the period of the change. The Group has no interests in associates through which it carries on its business.
No Statement of Comprehensive Income is prepared for the Company, as permitted by Section 408 of the Companies Act 2006. The Company made a profit for the year of £5,676,742, prior to a dividend distribution of £292,861 (2012: profit of £3,644,959).
Investments
All investments are designated as "fair value through profit or loss" assets and are initially recognised at the fair value of the consideration. They are measured at subsequent reporting dates at fair value.
The Board conducts the valuations of investments. In valuing investments, the Board applies guidelines issued by the International Private Equity and Venture Capital Valuation ("IPEVCV") Committee. The following valuation methodologies have been used in reaching the fair value of investments, some of which are in early stage companies:
a) at cost, unless there has been a significant round of new equity finance in which case the investment is valued at the price paid by an independent third party. Where subsequent events or changes to circumstances indicate that an impairment may have occurred, the carrying value is reduced to reflect the estimated extent of impairment;
b) by reference to underlying funds under management;
c) by applying appropriate multiples to the earnings and revenues of the investee company; or
d) by reference to expected future cash flow from the investment where a realisation or flotation is imminent.
Both realised and unrealised gains and losses arising from changes in fair value are taken to the Consolidated Statement of Comprehensive Income for the year. In the Consolidated Statement of Financial Position the unrealised gains and losses arising from changes in fair value are shown within a "fair value reserve" separate from retained earnings. Transaction costs on acquisition or disposal of investments are expensed in the Consolidated Statement of Comprehensive Income.
Income from investments
Income from investments comprises:
a) gross interest from loans, which is taken to the Consolidated Statement of Comprehensive Income on an accruals basis;
b) dividends from equity investments are recognised in the Consolidated Statement of Comprehensive Income when the shareholders rights to receive payment have been established; and
c) advisory fees from management services provided to investee companies, which are recognised on an accruals basis in accordance with the substance of the relevant investment advisory agreement.
Carried interest provision
This represents the amount payable to a director in the event of a particular investment being sold and is calculated on the fair value of that investment at the end of each reporting period.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the property, plant and equipment cost less their estimated residual value, over their expected useful lives on the following bases:
Furniture & equipment - 5 years
Leasehold fixtures and fittings - over the life of the lease
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies at the reporting period are translated at the exchange rate ruling at the reporting period.
Transactions in foreign currencies are translated into sterling at the foreign exchange rate ruling at the date of the transaction.
Exchange gains and losses are recognised in the Consolidated Statement of Comprehensive Income.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable is based on the estimated taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the date of the Consolidated Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and of liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and it is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each date of the Consolidated Statement of Financial Position and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current assets and liabilities on a net basis.
Pension costs
The Group operates a defined contribution scheme for some of its employees. The contributions payable to the scheme during the period are charged to the Consolidated Statement of Comprehensive Income.
Operating leases
Rentals under operating leases are charged on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight- line basis over the period until the date the rent is expected to be adjusted to the prevailing market rate.
Financial assets and liabilities
Financial instruments are recognised in the Consolidated Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument. De-recognition occurs when rights to cash flows from a financial asset expire, or when a liability is extinguished.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the reporting period which are classified as non-current assets.
Loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowings. After initial recognition, these are subsequently measured at amortised cost using the effective interest method, which is the rate that exactly discounts the estimated future cash flows through the expected life of the liabilities. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.
Trade and other receivables
Trade and other receivables in the Consolidated Statement of Financial Position are initially measured at original invoice amount and subsequently measured after deducting any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise cash and short-term deposits as defined above and other short-term highly liquid investments that are readily convertible into cash and are subject to insignificant risk of changes in value, net of bank overdrafts.
Trade and other payables
Trade and other payables are stated based on the amounts which are considered to be payable in respect of goods or services received up to the date of the Consolidated Statement of Financial Position.
International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of these consolidated financial statements, the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") have issued the following standards, which are effective for annual accounting periods beginning on or after the stated effective date.
|
|
Effective for periods |
|
IAS 1 - Presentation of items of Other Comprehensive Income (Amendment) |
1st July 2012 |
|
|
|
|
IFRS 7 - Financial Instruments: Disclosures (Amendments) |
1st January 2013 |
|
|
|
|
IFRS 13 - Fair Value Measurement |
1st January 2013 |
|
|
|
|
IFRS 10, 11 & 12 and IAS 27 & 28 - Investment Entities (Amendments) |
1st January 2014 |
|
|
|
|
IFRS 9 - Financial Instruments |
1st January 2015 |
|
|
|
The Group is currently assessing the impact of IFRS 10 "Investment Entities (Amendments)". All other standards and interpretations are not expected to have a material impact on the consolidated financial statements.
As the Group prepares its financial statements in accordance with IFRS as adopted by the European Union, the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU Endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the Group's discretion to early adopt standards.
2. SEGMENTAL REPORTING
The Group operates in one business segment, provision of consultancy services to, as well as making and trading investments in, financial services businesses.
The Group identifies its reportable operating segments based on the geographical location in which each of its investments is incorporated and primarily operates. For management purposes, the Group is organised and reports its performance by two geographic segments: UK & Channel Islands and Non-UK & Channel Islands.
If material to the Group overall (where the segment revenues, reported profit or loss or combined assets exceed the quantitative thresholds prescribed by IFRS 8 Operating Segments ("IFRS 8")), the segment information is reported separately.
The Group allocates revenues, expenses, assets and liabilities to the operating segment where directly attributable to that segment. All indirect items are apportioned based on the percentage proportion of revenue that the operating segment contributes to the total Group revenue (excluding any unrealised gains and losses on the Group's non-current investments).
Each reportable segment derives its revenues from three main sources. These are described in further detail in Note 1 under 'Income from investments'.
All reportable segments derive their revenues entirely from external clients and there are no inter-segment sales.
|
|
Geographic segment 1: UK & Channel Islands |
Geographic segment 2: Non-UK & Channel Islands |
Group |
|||
|
|
|
|
|
|
|
|
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Operating income / (loss) |
9,180 |
6,076 |
(955) |
303 |
8,225 |
6,379 |
|
Operating expenses |
(1,558) |
(1,307) |
(449) |
(510) |
(2,007) |
(1,817) |
|
Segment operating profit / (loss) |
7,622 |
4,769 |
(1,404) |
(207) |
6,218 |
4,562 |
|
|
|
|
|
|
|
|
|
Financial income |
4 |
- |
1 |
- |
5 |
- |
|
Financial expenses |
(51) |
(75) |
(14) |
(29) |
(65) |
(104) |
|
Exchange movements |
(9) |
(8) |
46 |
(43) |
37 |
(51) |
|
Exceptional items |
- |
(30) |
- |
- |
- |
(30) |
|
|
|
|
|
|
|
|
|
Profit / (loss) before tax |
7,566 |
4,656 |
(1,371) |
(279) |
6,195 |
4,377 |
|
Income tax |
(834) |
(805) |
316 |
73 |
(518) |
(732) |
|
Profit / (loss) for the year |
£ 6,732 |
£ 3,851 |
£ (1,055) |
£ (206) |
£ 5,677 |
£ 3,645 |
Included within the operating income reported above are the following amounts requiring separate disclosure owing to the fact that they are derived from a single investee company and the total revenues attributable to that investee company are 10% or more of the total realised income generated by the Group during the period:
|
Investee Company |
Total income attributable to the investee company £'000 |
% of total realised operating income |
Reportable geographic segment |
|||
|
|
|
|
|
|
|
|
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
Besso Insurance Group Limited |
724 |
550 |
35 |
26 |
1 |
1 |
|
Hyperion Insurance Group Limited |
590 |
599 |
28 |
28 |
1 |
1 |
|
Summa Insurance Brokerage, S.L. |
312 |
425 |
15 |
20 |
2 |
2 |
|
U.S. Risk (UK) Limited |
210 |
209 |
10 |
10 |
1&2 |
1&2 |
|
|
Geographic segment 1: UK & Channel Islands |
Geographic segment 2: Non-UK & Channel Islands |
Group |
|||
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
7 |
13 |
- |
1 |
7 |
14 |
|
Investments |
49,225 |
45,717 |
3,486 |
4,907 |
52,711 |
50,624 |
|
Loans and receivables |
6,899 |
4,833 |
1,688 |
1,150 |
8,587 |
5,983 |
|
|
56,131 |
50,563 |
5,174 |
6,058 |
61,305 |
56,621 |
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
970 |
1,404 |
204 |
689 |
1,174 |
2,093 |
|
Cash and cash equivalents |
1,787 |
666 |
- |
- |
1,787 |
666 |
|
Deferred tax assets |
- |
- |
327 |
50 |
327 |
50 |
|
|
2,757 |
2,070 |
531 |
739 |
3,288 |
2,809 |
|
|
|
|
|
|
|
|
|
Total assets |
58,888 |
52,633 |
5,705 |
6,797 |
64,593 |
59,430 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Loans and other payables |
(100) |
(1,250) |
- |
- |
(100) |
(1,250) |
|
Carried interest provision |
(294) |
(299) |
- |
- |
(294) |
(299) |
|
Deferred tax liabilities |
(8,260) |
(7,465) |
- |
- |
(8,260) |
(7,465) |
|
|
(8,654) |
(9,014) |
- |
- |
(8,654) |
(9,014) |
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
(484) |
(295) |
- |
- |
(484) |
(295) |
|
Total liabilities |
(9,138) |
(9,309) |
- |
- |
(9,138) |
(9,309) |
|
|
|
|
|
|
|
|
|
Net assets |
£49,750 |
£43,324 |
£5,705 |
£6,797 |
£55,455 |
£50,121 |
|
Additions to property, plant and equipment |
1 |
4 |
- |
- |
1 |
4 |
|
Depreciation of property, plant and equipment |
7 |
21 |
1 |
2 |
8 |
23 |
|
Impairment of investments and loans |
- |
239 |
- |
100 |
- |
339 |
|
|
|
|
|
|
|
|
|
Cash flow arising from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
(29) |
304 |
41 |
(89) |
12 |
215 |
|
Investing activities |
4,047 |
(688) |
- |
- |
4,047 |
(688) |
|
Financing activities |
(2,899) |
936 |
(30) |
(305) |
(2,929) |
631 |
|
Change in cash and cash equivalents |
1,119 |
552 |
11 |
(394) |
1,130 |
158 |
|
3. FINANCIAL EXPENSES |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Other interest (Note 16) |
£ 65 |
£ 104 |
|
4. FINANCIAL INCOME |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Bank interest |
£ 5 |
£ - |
5. STAFF COSTS
The average number of employees, including all directors (executive and non-executive), employed by the Group during the year was 16 (2012: 16). All remuneration was paid by B. P. Marsh & Company Limited.
|
The related staff costs were: |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Wages and salaries |
1,219 |
1,055 |
|
Social security costs |
153 |
125 |
|
Pension costs |
43 |
37 |
|
|
£1,415 |
£1,217 |
Included within the prior year wages and salaries total above was a one-off compensation payment of £30,000 made to a director who left the Group during the year (see Note 6 below). This was included in the Consolidated Statement of Comprehensive Income as an exceptional item. No such payment was made to any of the employees in the current year.
|
6. DIRECTORS' EMOLUMENTS |
|
|
|
|
2013 |
2012 |
|
The aggregate emoluments of the directors were: |
£'000 |
£'000 |
|
|
|
|
|
Management services - remuneration |
883 |
794 |
|
Fees |
43 |
36 |
|
Pension contributions - remuneration |
26 |
24 |
|
|
£ 952 |
£ 854 |
In addition to the above, Mr S. S. Clarke has an entitlement to a gain based on a carried interest, as outlined in Note 17.
Included within the prior year management services total above was a one-off compensation payment of £30,000 made to a director who left the Group during that year. This was included in the Consolidated Statement of Comprehensive Income as an exceptional item. No such payment was made to any of the directors in the current year.
|
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
Highest paid director |
|
|
|
Emoluments |
175 |
191 |
|
Long term incentive payments |
250 |
- |
|
Pension contribution |
13 |
- |
|
|
£ 438 |
£ 191 |
The Company contributes into its defined contribution pension scheme on behalf of certain employees and directors. Contributions payable are charged to the Consolidated Statement of Comprehensive Income in the period to which they relate.
During the period, 3 directors (2012: 4) accrued benefits under the defined contribution pension scheme.
|
7. DIVIDENDS |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
Ordinary dividends |
|
|
|
|
|
|
|
Final dividend paid: |
|
|
|
|
|
|
|
1 pence each on 29,286,143 Ordinary shares |
293 |
- |
|
|
|
|
|
|
£ 293 |
£ - |
|
|
|
|
|
8. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
The profit for the period is arrived at after charging / (crediting): |
|
|
|
|
|
|
|
Depreciation of owned tangible fixed assets |
8 |
23 |
|
Auditors remuneration :- |
|
|
|
Audit fees for the Company |
23 |
21 |
|
Other services: |
|
|
|
-Audit of subsidiaries' accounts |
9 |
7 |
|
-Taxation |
8 |
10 |
|
-Other advisory |
22 |
30 |
|
Exchange (gain) / loss |
(37) |
51 |
|
Operating lease rentals of land and buildings |
84 |
112 |
|
9. TAXATION |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
The charge for tax comprises: |
|
|
|
|
|
|
|
UK corporation tax charge for the year |
- |
- |
|
Deferred tax charge for the year (Note 18) |
518 |
732 |
|
|
|
|
|
|
£ 518 |
£ 732 |
|
|
|
|
Factors affecting the charge for the year
|
Profit on ordinary activities before tax |
6,195 |
4,377 |
|
|
|
|
|
Tax at 24.33% on profit on ordinary activities (2012: 26.32%) |
1,507 |
1,152 |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
25 |
20 |
|
Non taxable net unrealised gains |
(1,493) |
(1,217) |
|
Capital gains on disposal of investments |
953 |
5 |
|
Other effects: |
|
|
|
Management expenses (utilised)/carried forward |
(919) |
214 |
|
Non-taxable income (dividends received) |
(73) |
(174) |
|
|
|
|
|
Corporate tax charge for the year |
£ - |
£ - |
There are no factors which may affect future tax charges except as set out in Note 18.
10. EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
|
|
2013
£'000 |
2012
£'000 |
|
Earnings |
|
|
|
Earnings for the purpose of basic and diluted earnings per share being net profit attributable to equity shareholders |
5,677 |
3,645 |
|
|
|
|
|
Earnings per share - basic and diluted |
19.4p |
12.4p |
|
|
|
|
|
Number of shares |
Number |
Number |
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
29,258,072 |
29,286,143 |
|
|
|
|
|
Number of dilutive shares under option |
Nil |
Nil |
|
|
|
|
|
Weighted average number of ordinary shares for the purposes of dilutive earnings per share |
29,258,072 |
29,286,143 |
In August 2012 the Company repurchased 56,143 ordinary shares at a price of 89 pence per ordinary share. These shares were immediately cancelled upon purchase, resulting in a reduction in the number of ordinary shares in issue from 29,286,143 to 29,230,000.
|
11. PROPERTY, PLANT AND EQUIPMENT |
Furniture & Equipment £'000 |
Leasehold Fixtures & Fittings £'000 |
Total £'000 |
|
Group |
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
At 1st February 2011 |
63 |
51 |
114 |
|
Additions |
4 |
- |
4 |
|
Disposals |
- |
- |
- |
|
At 31st January 2012 |
67 |
51 |
118 |
|
|
|
|
|
|
At 1st February 2012 |
67 |
51 |
118 |
|
Additions |
1 |
- |
1 |
|
Disposals |
(10) |
- |
(10) |
|
At 31st January 2013 |
58 |
51 |
109 |
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 1st February 2011 |
44 |
37 |
81 |
|
Eliminated on disposal |
- |
- |
- |
|
Charge for the year |
9 |
14 |
23 |
|
At 31st January 2012 |
53 |
51 |
104 |
|
|
|
|
|
|
At 1st February 2012 |
53 |
51 |
104 |
|
Eliminated on disposal |
(10) |
- |
(10) |
|
Charge for the year |
8 |
- |
8 |
|
At 31st January 2013 |
51 |
51 |
102 |
|
|
|
|
|
|
Net book value |
|
|
|
|
At 31st January 2013 |
£ 7 |
£ - |
£ 7 |
|
At 31st January 2012 |
£ 14 |
£ - |
£ 14 |
|
At 31st January 2011 |
£ 19 |
£ 14 |
£ 33 |
|
12. NON-CURRENT INVESTMENTS |
|
|
|
|
|
|
|
Group |
|
Shares in investee companies |
|
|
|
Total |
|
|
|
£'000 |
|
At valuation |
|
|
|
|
|
|
|
At 1st February 2011 |
|
47,143 |
|
Additions |
|
735 |
|
Disposals |
|
(1,846) |
|
Provisions |
|
- |
|
Unrealised gains in this period |
|
4,592 |
|
At 31st January 2012 |
|
£50,624 |
|
|
|
|
|
At 1st February 2012 |
|
50,624 |
|
Additions |
|
822 |
|
Disposals |
|
(4,865) |
|
Provisions |
|
- |
|
Unrealised gains in this period |
|
6,130 |
|
At 31st January 2013 |
|
£52,711 |
|
|
|
|
|
At cost |
|
|
|
|
|
|
|
At 1st February 2011 |
|
19,375 |
|
Additions |
|
735 |
|
Disposals |
|
(1,846) |
|
Provisions |
|
- |
|
At 31st January 2012 |
|
£18,264 |
|
|
|
|
|
At 1st February 2012 |
|
18,264 |
|
Additions |
|
822 |
|
Disposals |
|
(1,117) |
|
Provisions |
|
- |
|
At 31st January 2013 |
|
£17,969 |
The principal addition in the year relates to the acquisition on 1st November 2012 of a further 6.71% shareholding in Besso Insurance Group Limited for £775,000.
The principal disposals relate to the following transactions in the year:
On 16th March 2012 the Group made a partial disposal of 4.02% of its then total 34.02% equity interest in Besso Insurance Group Limited ("Besso") with a carrying value of £279,000 for consideration of £278,698. The partial disposal was made from an 11.29% equity interest in Besso originally acquired on 31st March 2011 by B. P. Marsh & Company Limited, a wholly owned subsidiary of the Company, which at the time increased the Group's overall holding from 22.73% to 34.02%. The 4.02% disposal represented the proportion of shares which were available for buy-back by Besso following the exercise of a Call Option agreement (entered into on 26th May 2011) for subsequent issue to management under a share incentive scheme. As a result of the Call Option being exercised, and the further 6.71% acquired on 1st November 2012 (noted above), the Group's overall holding in Besso as at 31st January 2013 was 36.71%.
On 17th May 2012 the Group made a disposal of 2.75% of its then total 18.94% equity interest in Hyperion Insurance Group Limited ("Hyperion"). 1,193,500 shares (from a total holding of 8,222,900 shares) were sold to an existing Hyperion shareholder and co-investor, Murofo Investments S.L., for a cash consideration of £4,535,330. Following a major acquisition by Hyperion on 3rd July 2012 which was part funded by the issue of new shares, as at 31st January 2013 the Group's overall holding in Hyperion stood at 13.84%.
Group (continued)
The unquoted investee companies, which are registered in England except Summa Insurance Brokerage S. L. (Spain), Preferred Asset Management Limited (Jersey), Close Horizons Limited (Isle of Man) and Paterson Squared, LLC (USA), are as follows:
|
|
% holding |
Date |
Aggregate |
Post tax |
|
||||||
|
|
of share |
information |
capital and |
profit/(loss) |
|
||||||
|
Name of company |
capital |
available to |
reserves |
for the year |
Principal activity |
||||||
|
|
|
|
£ |
£ |
|
||||||
|
|
|
|
|
|
|
||||||
|
Amberglobe Limited |
49.00 |
30.04.12 |
(789,729) |
(50,789) |
Business sales platform |
||||||
|
|
|
|
|
|
|
||||||
|
Besso Insurance Group Limited |
36.71 |
31.12.12 |
6,383,049 |
14,163 |
Investment holding company |
||||||
|
|
|
|
|
|
|
||||||
|
Hyperion Insurance Group Limited |
13.84 |
30.09.12 |
37,940,000 |
20,572,000 |
Insurance holding company |
||||||
|
|
|
|
|
|
|
||||||
|
|
LEBC Holdings Limited |
21.95 |
30.09.12 |
619,910 |
360,006 |
Independent financial advisor company |
|||||
|
|
|
|
|
|
|
||||||
|
Portfolio Design Group International Limited |
20.00 |
31.12.12 |
6,442,713 |
(398,801) |
Fund managers of traded endowment policies |
||||||
|
|
|
|
|
|
|
||||||
|
Morex Commercial Limited |
20.00 |
31.12.12 |
446,923 |
44,255 |
Trading in secondary life policies |
||||||
|
|
|
|
|
|
|
||||||
|
Preferred Asset Management Limited |
20.00 |
30.09.12 |
368,720 |
139,813 |
Fund management company |
||||||
|
|
|
|
|
|
|
||||||
|
Close Horizons Limited
|
20.00 |
31.12.12 |
1,442,900 |
153,939 |
Investment holding company |
||||||
|
|
|
|
|
|
|
||||||
|
|
Paterson Squared, LLC |
22.50 |
31.12.10 |
364,411 |
279,575 |
Independent reinsurance transaction consultants |
|||||
|
|
|
|
|
|
|
|
|||||
|
|
Summa Insurance Brokerage, S. L. |
48.625 |
31.12.11 |
9,968,299 |
1,097,805 |
Consolidator of regional insurance brokers |
|||||
|
|
|
|
|
|
|
|
|||||
|
|
U.S. Risk (UK) Limited |
29.28 |
31.12.12 |
1,879,733 |
(965,017) |
Holding company for insurance intermediaries |
|||||
In addition, as at 31st January 2013 the Group held 1.35% of the share capital of Randall & Quilter Investment Holdings Plc ("R&Q"). R&Q is an AIM listed company. During the current year R&Q made two 'return of value' distributions totalling £55,442 to shareholders through the issue and subsequent cancellation of new shares. The Group elected to receive these distributions (£32,731 in June 2012 and £22,711 in November 2012) as 'capital' receipts rather than the dividend (income) alternative. The Group has treated these distributions as disposal proceeds and reduced the cost base of this investment accordingly, resulting in a £4,501 realised gain on disposal of investment (see Note 13) which is reflected in the Consolidated Statement of Comprehensive Income for the year.
On 27th July 2012 the Company's wholly owned subsidiary B. P. Marsh & Company Limited entered into a Share Exchange Agreement with The Broucour Group Limited ("the Broucour Group") in respect of its 49% equity investment in Amberglobe Limited ("Amberglobe"). On this date the Broucour Group acquired the entire issued share capital of Amberglobe (£200,000 divided into £130,000 ordinary shares and £70,000 preference shares of £1 each, of which the Group, through its subsidiary undertaking, owned £98,000 divided into £28,000 ordinary shares and £70,000 preference shares). The Broucour Group was incorporated in July 2012 as a holding company to facilitate the acquisition of the assets of Turner Butler Limited ("Turner Butler"). The Group assisted in this acquisition by providing the Broucour Group with a £600,000 loan facility to fund the acquisition cost and associated working capital requirements which was drawn down in full on 27th July 2012. As a result of this transaction, the Group's original investment in Amberglobe is now held in the Broucour Group, with Amberglobe now a wholly owned subsidiary of the Broucour Group.
The aggregate capital and reserves and profit / (loss) for the year shown above are extracted from the relevant local GAAP accounts of the investee companies except for those of Hyperion Insurance Group Limited which are prepared under IFRS.
|
|
Shares in |
|
Company |
group |
|
|
undertakings |
|
|
£'000 |
|
At valuation |
|
|
|
|
|
At 1st February 2011 |
36,320 |
|
Additions |
- |
|
Unrealised gains in this period |
3,645 |
|
At 31st January 2012 |
£ 39,965 |
|
|
|
|
At 1st February 2012 |
39,965 |
|
Additions |
- |
|
Unrealised gains in this period |
5,334 |
|
At 31st January 2013 |
£ 45,299 |
|
|
|
|
At cost |
|
|
|
|
|
At 1st February 2011 |
2,143 |
|
Additions |
- |
|
At 31st January 2012 |
£ 2,143 |
|
|
|
|
At 1st February 2012 |
2,143 |
|
Additions |
- |
|
At 31st January 2013 |
£ 2,143 |
|
|
|
Shares in group undertakings
All group undertakings are registered in England and Wales. The details and results of group undertakings, which are extracted from the UK GAAP accounts of these companies, are as follows:
|
|
|
Aggregate |
Profit/(loss) |
|
|
|
|
% |
capital and |
for the |
|
|
|
|
Holding |
reserves at |
year to |
|
|
|
|
of share |
31st January |
31st January |
|
|
|
Name of company |
Capital |
2013 |
2013 |
Principal activity |
|
|
|
|
£ |
£ |
|
|
|
|
|
|
|
|
|
|
B.P. Marsh & Company Limited |
100 |
53,232,062 |
4,519 |
Consulting services and investment holding company |
|
|
|
|
|
|
|
|
|
Marsh Insurance Holdings Limited |
100 |
11,082,299 |
54,836 |
Investment holding company |
|
|
|
|
|
|
|
|
|
B.P. Marsh Asset Management Limited |
100 |
1,000 |
- |
Dormant |
|
|
|
|
|
|
|
|
|
B.P. Marsh & Co. Trustee Company Limited |
100 |
1,000 |
- |
Dormant |
|
|
|
|
|
|
|
|
|
Marsh Development Capital Limited |
100 |
1 |
- |
Dormant |
|
13. REALISED GAINS / (LOSSES) ON DISPOSAL OF INVESTMENTS
The realised gains on disposal of investments comprises of a gain of £4,501 in respect of capital distributions made by R&Q in the year (see Note 12). The amount included in realised losses on disposal of investments for the year ended 31st January 2012 was £20,740 which was also in respect of capital distributions made by R&Q.
In addition, during the year the Group also disposed of part of its investment in Hyperion Insurance Group Limited ("Hyperion") at its carrying value of £4,535,000. The Group also disposed of shares held under an option agreement in Besso Insurance Group Limited ("Besso") with a carrying value of £279,000 for consideration of £278,698 (see Note 12 for further details). As a result of these disposals being made at carrying value, no material gain or loss was included in the Consolidated Statement of Comprehensive Income in the current year.
The above Hyperion and Besso disposals did, however, result in a release to Retained Earnings from the Fair Value Reserve of £3,748,321 (see Note 21).
|
14. LOANS AND RECEIVABLES - NON-CURRENT |
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Trade receivables |
127 |
- |
|
- |
- |
|
Loans to investee companies (Note 26) |
8,460 |
5,983 |
|
- |
- |
|
Amounts due from subsidiary undertakings |
- |
- |
|
10,155 |
10,155 |
|
|
£ 8,587 |
£ 5,983 |
|
£ 10,155 |
£ 10,155 |
Included within trade receivables is £127,214 (2012: £Nil) owed by the Group's participating interests.
See Note 26 for terms of the loans.
15. TRADE AND OTHER RECEIVABLES - CURRENT
|
|
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Trade receivables |
363 |
388 |
|
- |
- |
|
Less provision for impairment of receivables |
- |
(123) |
|
- |
- |
|
|
363 |
265 |
|
- |
- |
|
Loans to investee companies (Note 26) |
261 |
1,415 |
|
- |
- |
|
Other receivables |
11 |
7 |
|
- |
- |
|
Prepayments and accrued income |
539 |
406 |
|
- |
- |
|
|
|
|
|
|
|
|
|
£ 1,174 |
£ 2,093 |
|
£ - |
£ - |
|
|
|
|
|
|
|
Included within trade receivables is £332,394 (2012: £244,952) owed by the Group's participating interests.
Trade receivables are provided for based on estimated irrecoverable amounts from the fees and interest charged to investee companies, determined by the Group's management based on prior experience and their assessment of the current economic environment.
Movement in the allowance for doubtful debts:
|
|
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Balance at 1st February |
123 |
68 |
|
- |
- |
|
(Utilisation of) / increase in provision in the period |
(123) |
55 |
|
- |
- |
|
|
|
|
|
|
|
|
Balance at 31st January |
£ - |
£ 123 |
|
£ - |
£ - |
|
|
|
|
|
|
|
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.
The Group's net trade receivable balance (current and non-current) includes debtors with a carrying amount of £490,046 (2012: £263,552) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances.
Ageing of past due but not impaired:
|
|
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
0 - 30 days |
238 |
63 |
|
- |
- |
|
31 - 60 days |
83 |
65 |
|
- |
- |
|
61 - 90 days |
45 |
12 |
|
- |
- |
|
More than 90 days |
124 |
123 |
|
- |
- |
|
|
|
|
|
|
|
|
|
£ 490 |
£ 263 |
|
£ - |
£ - |
|
|
|
|
|
|
|
In the current year there were no provisions made against loans to investee companies (2012: £339,000). The total provision against loans relating to Fixed Asset Investments as at 31st January 2013 stands at £785,000 (2012: £785,000).
See Note 26 for terms of the loans and Note 25 for further credit risk information.
16. LOANS AND OTHER PAYABLES
During the year, the Group repaid £1,250,000 of a loan facility totalling £4,325,000, which certain directors and companies controlled by the directors, or other related parties, agreed to provide to the Group during the year to 31st January 2011. The loan facility is secured on the assets of the Company, accrues interest at a rate of UK Base Rate + 4% (subject to a minimum of 6.5%), and is repayable in full by 9th June 2013. As at 31st January 2013 none of this facility remained drawn down (as at 31st January 2012: £1,250,000 drawn down).
Interest on this loan facility of £64,760 (2012: £103,524) was charged to the Consolidated Statement of Comprehensive Income for the current year (Note 3).
In addition, during the year the Group received an upfront payment of £300,000 in respect of a three year loan arrangement fee from Besso Insurance Group Limited ("Besso"). As at 31st January 2013 £100,000 of this fee was included in the Consolidated Statement of Financial Position under 'Non-current liabilities' as long-term deferred income. The remaining portion of the fee is included within the Consolidated Statement of Financial Position under 'Current liabilities' or has already been credited to the Consolidated Statement of Comprehensive Income as fees receivable. The receipt of this upfront fee had no cash impact for the Group as it was funded through an increase to a loan facility provided to Besso in March 2012.
|
17. CARRIED INTEREST PROVISION |
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013
|
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Carried interest provision |
294 |
299 |
|
- |
- |
|
|
|
|
|
|
|
|
|
£ 294 |
£ 299 |
|
£ - |
£ - |
|
|
|
|
|
|
|
This carried interest provision represents S. S. Clarke's entitlement to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries.
No amounts were paid under this contract during the year (2012: £Nil).
|
18. DEFERRED TAX LIABILITIES - NON- CURRENT |
|
|
Group |
|
|
Company |
|
|
|
£'000 |
|
|
£'000 |
|
|
|
|
|
|
|
|
|
|
At 1st February 2011 |
|
6,683 |
|
|
- |
|
|
Charged to Statement of Comprehensive Income |
|
732 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
At 31st January 2012 |
|
£ 7,415 |
|
|
£ - |
|
|
|
|
|
|
|
|
|
|
At 1st February 2012 |
|
7,415 |
|
|
- |
|
|
Charged to Statement of Comprehensive Income |
|
518 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
At 31st January 2013 |
|
£ 7,933 |
|
|
£ - |
|
|
|
|
|
|
|
|
|
The directors estimate that, if the Group were to dispose of all its investments at the amount stated in the Consolidated Statement of Financial Position, £7,933,000 (2012: £7,415,000) of tax on capital gains would become payable by the Group at a corporation tax rate of 23% (2012: 26%).
The Government recently announced a further 2% reduction in the corporation tax rate from 23% to 21% with effect from 1 April 2014, which is expected to be legislated in the Finance Bill 2013.
As the 21% rate was not substantively enacted at the year end and is not effective until 1st April 2014 at the earliest, this rate has not been used in calculating the deferred tax liabilities arising from the unrealised gains on the revaluation of the Group's investments.
|
19. TRADE AND OTHER PAYABLES - CURRENT |
Group |
|
Company |
||
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Trade payables |
30 |
37 |
|
- |
- |
|
Other taxation & social security costs |
31 |
45 |
|
- |
- |
|
Accruals and deferred income |
423 |
213 |
|
- |
- |
|
|
|
|
|
|
|
|
|
£ 484 |
£ 295 |
|
£ - |
£ - |
|
20. CALLED UP SHARE CAPITAL |
2013 |
2012 |
|
|
£'000 |
£'000 |
|
Allotted, called up and fully paid |
|
|
|
29,230,000 Ordinary shares of 10p each (2012: 29,286,143) |
2,923 |
2,929 |
|
|
|
|
|
|
£ 2,923 |
£ 2,929 |
In August 2012 the Company repurchased 56,143 ordinary shares at a price of 89 pence per ordinary share. These shares were immediately cancelled upon purchase, resulting in a reduction in the number of ordinary shares in issue from 29,286,143 to 29,230,000.
21. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
|
Group |
|
Share |
|
Reverse |
Capital |
|
|
|||||
|
|
Share |
premium |
Fair value |
acquisition |
redemption |
Retained |
|
|||||
|
|
capital |
account |
reserve |
reserve |
reserve |
earnings |
Total |
|||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||
|
|
|
|
|
|
|
|
|
|||||
|
At 1st February 2011 |
2,929 |
9,370 |
20,883 |
393 |
- |
12,901 |
46,476 |
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Profit for the year |
- |
- |
3,773 |
- |
- |
(128) |
3,645 |
|||||
|
|
|
|
|
|
|
|
|
|||||
|
At 31st January 2012 |
£2,929 |
£9,370 |
£24,656 |
£ 393 |
£ - |
£12,773 |
£50,121
|
|||||
|
At 1st February 2012 |
2,929 |
9,370 |
24,656
|
393 |
- |
12,773 |
50,121 |
|
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
5,440 |
- |
- |
237 |
5,677 |
|
|
|
|
|
|
|
|
|
|
Transfers on sale of investments (Note 13) |
- |
- |
(3,748) |
- |
- |
3,748 |
- |
|
|
|
|
|
|
|
|
|
|
Dividends Paid (Note 7) |
- |
- |
- |
- |
- |
(293) |
(293) |
|
|
|
|
|
|
|
|
|
|
Share repurchase (Note 20) |
(6) |
- |
- |
- |
6 |
(50) |
(50) |
|
|
|
|
|
|
|
|
|
|
At 31st January 2013 |
£2,923 |
£9,370 |
£26,348 |
£ 393 |
£ 6 |
£16,415 |
£55,455
|
|
Company |
|
Share |
|
Capital |
|
|
|
|
Share |
premium |
Fair value |
redemption |
Retained |
|
|
|
capital |
account |
reserve |
reserve |
earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
At 1st February 2011 |
2,929 |
9,370 |
34,176 |
- |
1 |
46,476 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
3,645 |
- |
- |
3,645 |
|
|
|
|
|
|
|
|
|
At 31st January 2012 |
£2,929 |
£9,370 |
£37,821 |
£ - |
£ 1 |
£50,121 |
|
At 1st February 2012 |
2,929 |
9,370 |
37,821 |
- |
1 |
50,121 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
5,334 |
|
343 |
5,677 |
|
|
|
|
|
|
|
|
|
Dividends paid (Note 7) |
- |
- |
- |
|
(293) |
(293) |
|
|
|
|
|
|
|
|
|
Share repurchase (Note 20) |
(6) |
- |
- |
6 |
(50) |
(50) |
|
|
|
|
|
|
|
|
|
At 31st January 2013 |
£2,923 |
£9,370 |
£43,155 |
£ 6 |
£ 1 |
£55,455 |
22. OPERATING LEASE COMMITMENTS
The Group and Company was committed to making the following future aggregate minimum lease payments under non‑cancellable operating leases:
|
|
2013 |
2012 |
|
|
Land and |
Land and |
|
|
buildings |
buildings |
|
|
£'000 |
£'000 |
|
|
|
|
|
Earlier than one year |
£ 84 |
£ 84 |
|
Between two and five years |
£ 244 |
£ 329 |
23. LOAN AND EQUITY COMMITMENTS
On 10th March 2008 the Group entered into an agreement to provide a loan facility of £630,000 to Amberglobe Limited, a subsidiary undertaking of The Broucour Group Limited, an investee company. An additional loan facility of £65,000 was agreed on 30th November 2009 increasing the total facility to £695,000. As at 31st January 2013 £685,000 of this facility had been drawn down.
On 22nd July 2010 the Group entered into an agreement to provide a loan facility of £1,950,000 to US Risk (UK) Limited, an investee company. As at 31st January 2013 none of this facility had been drawn down.
Refer to Note 27 for details of a loan funding commitment entered into in respect of Hyperion Insurance Group Limited after the balance sheet date.
24. CONTINGENT LIABILITIES
The Group has entered into long-term incentive arrangements with certain employees and directors. Provided they remain in employment with the Group as at specified dates in the future, the Group has agreed to pay bonuses totalling £135,000 together with the Employers' National Insurance due thereon. £75,000, £30,000 and £30,000 are due to be paid on 1st October 2013, 15th May 2015 and 15th May 2016 respectively. No amount has been included in these financial statements as the performance conditions relating to these incentives had not been met at the year end.
25. FINANCIAL INSTRUMENTS
The Group's financial instruments comprise loans to participating interests, cash and liquid resources and various other items, such as trade debtors, trade creditors, other debtors and creditors and loans. These arise directly from the Group's operations.
The Group has not entered into any derivatives transactions.
It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments are price risk, credit risk, liquidity risk, interest rate cash flow risk and currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised in the Group Report of the Directors under "Financial Risk Management".
Interest rate profile
The Group has cash balances of £1,787,000 (2012: £666,000), which are part of the financing arrangements of the Group. The cash balances comprise bank current accounts and deposits placed at investment rates of interest, which ranged up to 0.3% p.a. in the period (2012: deposit rates of interest ranged up to 0.1% p.a.). During the period maturity periods ranged between immediate access and 1 month (2012: all cash balances were held in immediate access accounts).
Currency hedging
During the period, the Group did not engage in any form of currency hedging transaction (2012: None).
Financial liabilities
The Company had no borrowings as at 31st January 2013 (2012: £1,250,000). Please refer to Note 16 for further details.
Fair values
The Group has adopted the amendment to IFRS 7 for financial instruments which are measured at fair value at the reporting date. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
· Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
· Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, observed either directly as prices or indirectly from prices; and
· Level 3: Inputs for the asset or liability that are not based on observable market data.
The following table presents the Group's assets and liabilities that are measured at fair value at 31st January 2013:
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments designated as "fair value through profit or loss" assets |
|
785 |
- |
51,926 |
52,711 |
|
|
|
|
|
|
|
|
|
|
£785 |
- |
£51,926 |
£52,711 |
The Group's assets and liabilities that are measured at fair value at 31st January 2012 are presented in the following table:
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments designated as "fair value through profit or loss" assets |
|
658 |
- |
49,966 |
50,624 |
|
|
|
|
|
|
|
|
|
|
£658 |
- |
£49,966 |
£50,624 |
26. RELATED PARTY DISCLOSURES
The following loans owed by the associated companies of the Company and its subsidiaries were outstanding at the year end:
|
|
2013 |
2012 |
|
|
£ |
£ |
|
|
|
|
|
The Broucour Group Ltd |
1,285,000 |
685,000 |
|
Besso Insurance Group Ltd |
3,678,698 |
2,940,000 |
|
Hyperion Insurance Group Ltd |
2,754,392 |
2,846,642 |
|
Paterson Squared, LLC |
100,000 |
100,000 |
|
|
|
|
|
|
€ |
€ |
|
|
|
|
|
Summa Insurance Brokerage, S. L. |
1,971,879 |
1,942,678 |
The loans are typically secured on the assets of the investee companies and an appropriate interest rate is charged based upon the risk profile of that company.
During the year, the Group repaid part of an agreed £4,325,000 loan facility with certain directors, companies controlled by the directors, or other related parties (the "Lenders"), including Brian Marsh Enterprises Limited (£425,000 of a total £3,500,000 facility drawn down as at 31st January 2012 repaid in full during the year), Ms J. K. N. Dunbar (total facility of £500,000 drawn down as at 31st January 2012 repaid in full during the year), Mr P. J. Mortlock (total facility of £250,000 drawn down as at 31st January 2012 repaid in full during the year) and Mrs M. Newman (total facility of £75,000 drawn down as at 31st January 2012 repaid in full during the year) which was secured on the assets of the Company.
The loan accrued interest at a rate of UK Base Rate + 4%, subject to a minimum of 6.5%, and was repayable in full by 9th June 2013. Interest was payable on a quarterly basis. This rolling facility bears a charge of 1% p.a. on any undrawn amount. As at 31st January 2013 none of this facility remained drawn down (as at 31st January 2012: £1,250,000).
Mr B. P. Marsh, the Chairman and majority shareholder of the Company is also the Chairman and majority shareholder of Brian Marsh Enterprises Limited. Ms J. K. N. Dunbar (a director and shareholder of the Company) and Ms C. S. Kenyon (a director of the Company) are also directors and minority shareholders of Brian Marsh Enterprises Limited.
Income receivable, consisting of consultancy fees, interest on loans and dividends recognised in the Consolidated Statement of Comprehensive Income in respect of the associated companies of the Company and its subsidiaries for the year were as follows:
|
|
2013 |
2012 |
|
|
£ |
£ |
|
|
|
|
|
The Broucour Group Limited |
30,855 |
46,668 |
|
Besso Insurance Group Limited |
723,581 |
549,666 |
|
HQB Partners Limited |
- |
7,575 |
|
Hyperion Insurance Group Limited |
589,843 |
599,364 |
|
LEBC Group Limited |
102,249 |
129,892 |
|
Paterson Squared, LLC |
959 |
15,575 |
|
Portfolio Design Group International Limited |
66,000 |
82,000 |
|
Summa Insurance Brokerage, S. L. |
311,733 |
424,519 |
|
U.S. Risk (UK) Limited and related entities |
209,531 |
208,508 |
|
|
|
|
In addition, the Group made management charges of £35,000 (2012: £35,000) to Marsh Christian Trust. Mr B. P. Marsh, the Chairman and majority shareholder of the Company, is also the Trustee and Settlor of Marsh Christian Trust.
The Group also made management charges of £15,000 (2012: £15,000) to Brian Marsh Enterprises Limited.
S. S. Clarke is entitled to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries. The carried interest provided for at the year end was £294,000 (2012: £299,000).
All the above transactions were conducted on an arms length basis.
Of the total dividend payments made during the year of £292,861, £187,334 was paid to the directors and/or parties related to them (2012: £Nil).
27. POST BALANCE SHEET EVENTS
On 1st March 2013 the Group subscribed for a further £50,000 of 14% loan stock in Besso Insurance Group Limited ("Besso"). The loan stock is in addition to the £2,700,000 already held by the Group as at 31st January 2013, bringing the total 14% loan stock held to £2,750,000 as at the date of this report.
On 21st March 2013 the Group utilised £875,000 of the Directors' Loan Facility (see Note 16) in order to ensure that sufficient funds are available to pursue the various new business opportunities that it is currently investigating. On 25th March 2013 the Group utilised a further £1,200,000 of this facility in order to fund a reciprocal loan draw down request from U.S. Risk (UK) Limited (noted below). On 31st May 2013 the Group utilised the remaining £2,250,000 of the facility to finance a new investment which is expected to complete within a week of signing these consolidated financial statements, therefore as at the date of this report the £4,325,000 facility had been drawn down in full.
On 27th March 2013 the Group announced that, subject to FCA and other overseas regulatory approval, it had agreed to sell 5,623,520 shares (from a total holding of 7,029,400 shares) in Hyperion Insurance Group Limited ("Hyperion") to the global growth equity firm General Atlantic for a cash consideration of £29,242,304 (£5.20 per A Ordinary share). On completion the Group will retain a 2.76% stake in Hyperion subject to a Call Option arrangement which will allow General Atlantic to purchase the Group's remaining stake of 1,405,880 A Ordinary shares of Hyperion at £5.20 per share. The Call Option will expire and fall away upon the third anniversary of completion or upon Hyperion undertaking an Initial Public Offering ("IPO"), whichever is the earlier. The Share Purchase Agreement includes an anti-embarrassment provision which provides that if Hyperion undertakes an IPO within twelve months of completion, at a price at or in excess of £6.25 per A Ordinary share, there will be an additional amount payable to the Group, up to a maximum of £0.30 per A Ordinary share.
As part of the above agreement, and subject to banking consent, the Group has also agreed to provide circa £6,100,000 in loan funding to Hyperion at an interest rate of Bank of England Base rate plus 5% (minimum 7.5%) for a minimum term of 12 months to refinance existing shareholder loans (including £2,754,392 that the Group has already provided to Hyperion). The loan will be repayable on an IPO or a change of control of Hyperion or 3rd October 2017, whichever is the earlier, but following the first anniversary of this facility Hyperion will be able to pre-pay prior to these events on the giving of one months' notice.
On 2nd April 2013 the Group provided £1,200,000 of an agreed £1,950,000 loan facility to U.S. Risk (UK) Limited to fund the continued expansion of the business.
On 13th May 2013, following the £25,000,000 placing of new shares by Randall & Quilter Investment Holdings plc ("R&Q") being approved by its shareholders and the shares being admitted to the market, the Group subscribed to its pro-rata proportion at 120p per share (total consideration of £337,022), maintaining its 1.35% shareholding.
On 29th May 2013, the Group provided Besso with a loan facility of £747,000, of which it drew down on £265,000, to enable it to finance a new acquisition. Together with £2,750,000 of 14% loan stock and other loans of £978,698, total loans amounted to £3,993,698 at the reporting date.
28. ULTIMATE CONTROLLING PARTY
The directors consider Mr B. P. Marsh to be the ultimate controlling party.
Notice
The financial information set out above does not constitute B.P. Marsh & Partners Plc's statutory accounts for the year to 31st January 2013 but is derived from those accounts. The statutory accounts for the year to 31st January 2013 have not yet been delivered to the Registrar of Companies. The auditors have reported on those accounts and have given the following opinion:-
· the financial statements give a true and fair view of the state of the Group's and of the Company's affairs as at 31st January 2013 and of the Group's profit for the year then ended;
· the Group's financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
· the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Approval
The financial statements were approved by the Board of Directors on 3rd June 2013 for their release on 4th June 2013.
Analyst Briefing
An analyst briefing, hosted by Brian Marsh OBE, Chairman, Jonathan Newman, Finance Director, and Daniel Topping, Director will be held at 10:00 a.m., on 4th June 2013 at B. P. Marsh & Partners Plc, 2nd Floor, 36 Broadway, London SW1H 0BH.
Please contact Redleaf Polhill on 020 7382 4747 or bpmarsh@redleafpr.com if you wish to attend.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
Brian Marsh OBE +44 (0)20 7233 3112
Nominated Adviser & Broker
Panmure Gordon
Hugh Morgan / Fred Walsh +44 (0)20 7886 2500
PR Adviser
Redleaf Polhill bpmarsh@redleafpr.com
Emma Kane +44 (0)20 7382 4747
Notes to Editors:
About B.P. Marsh & Partners Plc
B.P. Marsh's current portfolio contains nine companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk.
Since formation over 20 years ago, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Many of the directors have worked with each other in previous roles, and all have worked with each other for at least four years.
Prior to Brian Marsh's involvement in the Company, he spent many years in insurance broking and underwriting in Lloyd's as well as the London and overseas market. He has over 30 years' experience in building, buying and selling financial services businesses, particularly in the insurance sector.
Jonathan Newman is a Chartered Management Accountant and is the Group Director of Finance and has over 15 years' experience in the financial services industry. Jonathan advises investee companies through three non-executive board appointments and evaluates new investment opportunities.
Daniel Topping is a Member of the Chartered Institute of Securities and Investment (MCSI) and an Associate of the Institute of Chartered Secretaries and Administrators (ACIS), having graduated from the University of Durham in 2005. Dan joined B.P. Marsh in February 2007 having started his career at an accountancy firm. In 2011 he was appointed as a director of B.P. Marsh and currently has a number of non-executive appointments over four investee companies and evaluates new investment opportunities.
Camilla Kenyon was appointed as Head of Investor Relations at B.P. Marsh in February 2009, having four years' prior experience with the Company. Camilla holds two non-executive appointments, is Chair of the New Business Committee and is a Member of the Investor Relations Society.
Natasha Dunbar has over 18 years' experience in the financial services industry. Having joined the Company in 1994 she was made managing director in March 2002, subsequently becoming a non-executive director of the Company in 2008, a position she held for five years. Natasha was reappointed as a Director in February 2013 and holds non-executive appointments at three of the Group's investee companies.
- ends -
This information is provided by RNS
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