Interim Results
B.P. Marsh & Partners PLC
24 October 2007
Date: 24th October 2007
On behalf of: B.P. Marsh & Partners Plc
Embargoed until: 0700hrs
B.P. Marsh & Partners Plc
('B. P. Marsh', 'the Company' or 'the Group')
Interim Results
_______________
B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early
stage financial services businesses, announces its unaudited Group results for
the six months ended 31 July 2007.
Chairman's Statement
____________________
I am pleased to present the unaudited interim results for B P Marsh & Partners
Plc (the 'Group') and its consolidated statements for the six months ended 31st
July 2007. This is the first occasion that the results have been presented in
accordance with International Financial Reporting Standards and the comparative
data for the six months to 31st July 2006 and the year to 31st January 2007 have
been restated. A reconciliation of the Balance Sheet and Income Statement has
been included in the notes to the accounts.
Investments
In the six months to 31st July 2007 the Group made the following investments:
• The Group acquired a 25% shareholding in JMD Specialist Insurance
Services Group Limited ('JMD') for £0.6 million and has agreed to provide a
further £0.25 million in loans to further develop the business. JMD is an
accelerated premium collection service based in the City of London and
provides a unique approach to the acceleration of insurance cash flow as
well as attractive balance sheet management;
• The Group acquired a 22.5% shareholding in LEBC Holdings Limited
('LEBC') for an initial consideration of £1.8 million and a further payment
of £0.2 million based on its subsidiary company's audited results to 31st
May 2007. LEBC is an Independent Financial Adviser established in 2000 with
11 branches and 56 advisers around the UK and which provides services to
individuals, corporates and partnerships, principally in employee benefits,
investment and life product areas;
• The Group participated in a further rights issue for Hyperion Insurance
Group Limited to further develop the business, taking up its pro-rata share
at £1.5 million and thereby retaining its 27.89% shareholding;
• The Group lent Summa Insurance Brokerage S. L. an additional €1.6
million, part of an agreed €2 million loan facility, to fund further
acquisitions of regional brokers in Spain.
In addition, the Group has currently committed to provide a further £0.6 million
of funding either through debt or deferred equity for its existing investments.
After taking this into consideration, the Group currently has circa £1.2 million
of cash available for further investments together with a £3 million loan
facility.
Business Strategy
The Group typically invests amounts of up to £2.5 million and only takes
minority equity positions, normally acquiring between 15% and 45% of a target
company's total equity. The Group insists on its investee companies adopting
certain minority shareholder protections and appointing one of its directors to
the relevant 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.
Financial Performance
At 31st July 2007, the net asset value of the Group excluding deferred tax was
up 12.8% to £50.6 million, compared with £44.9 million at 31st July 2006.
Including deferred tax this was up 11.7% to £42.9 million (2006: £38.4 million).
Compared to 31st January 2007, the net asset value of the Group rose by 6.1%
excluding deferred tax and 5.7% including deferred tax. The Directors are
pleased with this result considering the recent market turmoil.
This represented a total increase in net asset value before deferred tax of £38
million (£30.3m after deferred tax) since the Group was originally formed in
1990, having adjusted for the £10.1 million net proceeds raised on AIM and the
original capital investment of £2.5 million. The Directors are pleased that,
since 1990, the Group has over 17.5 years achieved an annual compound growth
rate of 16.8% after running costs, realisations, losses and distributions but
excluding deferred tax (15.3% including deferred tax).
Based upon the above figures the Group's undiluted net asset value per share as
at 31st July 2007 was 172.9 pence excluding deferred tax (146.6 pence including
deferred tax).
The Group's investment portfolio movement during the year was as below:
July 2006 Acquisitions Disposals at Valuations Adjusted July 2007
valuation at cost cost released to July 2006 valuation
P&L at cost valuation
____________________________________________________________________________
£35.8 £4.0 million £nil £nil £39.8 £45.3
million million million
____________________________________________________________________________
This equates to an uplift of 13.8% before deferred tax. However, this assumes
all acquisitions were made on the first day of the year and therefore the actual
rate of increase is greater.
The consolidated profit on ordinary activities before share based provisions for
the six months to 31st July 2007 was £2.9 million (2006: £3.5 million).
Adjusting for unrealised gains on investment revaluations and carried interest
provisions the consolidated profit on ordinary activities before share based
provisions for the six months to 31st July 2007 was £268,000 (2006: £187,000).
The Directors note that at the current corporation tax rate of 30% the estimate
of deferred tax is £7.7 million. However, under government proposals to reduce
the corporation tax rate to 28% from April 2008 this would, based upon figures
to 31st July 2007, reduce this contingent liability to £7.2 million.
People
In March 2007 we said farewell to Stephen Crowther, who had served as a Director
since 1998 and with whom we maintain a mutually helpful relationship in his
subsequent capacity as a Director of one of our main investee companies.
I thank the Directors and staff for their unstinting contributions to the
progress of the Group.
Outlook
The Group remains unique in its investment sector and we continue to see a large
number of relatively small enterprises with excellent management and spirited
business plans. These represent a challenge, which the BP Marsh team relishes.
BP Marsh OBE
Chairman
Analyst Briefing
An analyst briefing given by Brian Marsh OBE, Executive Chairman, Francis de
Zulueta, Director of New Business Development and Jonathan Newman, Finance
Director, will be held at 09:00 am on Wednesday 24 October 2007 at Redleaf
Communications Ltd, 9-13 St Andrew Street, London EC4A 3AF.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
_________________
Brian Marsh OBE +44 (0)20 7730 2626
Nominated Adviser
Nabarro Wells & Co. Limited
David Nabarro/Marc Cramsie +44(0) 20 7710 7400
Redleaf Communications (PR to BP Marsh)
Emma Kane/Tom Newman +44 (0)20 7822 0200
Investments
As at 31st July 2007 the Group's equity interests were as follows:
Berkeley (Insurance) Holdings Limited
(www.berkeleyinsurance.com)
In July 2002 the Group invested in Berkeley (Insurance) Holdings, a company that
provides its clients with independent advice on the most suitable choice of
insurance broker in specialist as well as mainstream insurance areas.
Date of investment: July 2002
Equity stake: 19.9%
31st July 2007 valuation: £40,000
Besso Holdings 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. The company
specialises in insurance broking for the North American wholesale market.
Date of investment: February 1995
Equity stake: 23.55%
31st July 2007 valuation: £10,174,000
HQB Partners Limited
(www.hqbpartners.com )
In January 2005 the Group made an investment in HQB Partners, a company which
provides strategic transaction advice, proxy solicitation services, voting
analysis and investor relations services.
Date of investment: January 2005
Equity stake: 27.72%
31st July 2007 valuation: £350,000
Hyperion Insurance Group Limited
(www.hyperiongrp.com)
The Group first invested in Hyperion Insurance Group in 1994. The Hyperion
Insurance Group 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: 27.89%
31st July 2007 valuation: £16,549,000
JMD Specialist Insurance Services Group Limited
(www.jmd-sis.com)
In March 2007 the Group invested in JMD, a provider of leading-edge services to
the insurance industry. Their unique approach to measurable cash flow and profit
enhancements adds value to Lloyd's syndicates, UK and international insurers and
re-insurers.
Date of investment: March 2007
Equity stake: 25.0%
31 July 2007 valuation: £600,000
LEBC Holdings Limited
(www.lebc-group.com)
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: 22.5%
31 July 2007 valuation: £2,140,000
Paterson Martin Limited
(www.patersonmartin.com)
Paterson Martin 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 modeling techniques to assess risk, with a view
to providing counter-party risk transaction advice.
Date of investment: April 2004
Equity stake: 22.5%
31st July 2007 valuation: £427,000
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 July 2007 valuation: £6,306,000
Principal Investment Holdings Limited
(www.principalinvestment.co.uk)
In December 1999 the Group invested in Principal, a predominantly discretionary
fund manager with both retail and institutional clients.
Date of investment: December 1999
Equity stake: 18.57%
31st July 2007 valuation: £7,371,000
Public Risk Management Limited
(www.publicriskmanagement.co.uk)
In September 2003 the Group assisted in establishing Public Risk Management, a
company which specialises in the development and provision of risk management
services, including processes and procedures, to the public sector.
Date of investment: September 2003
Equity stake: 44.0%
31st July 2007 valuation: £110,000
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: 35.0%
31st July 2007 valuation: £1,238,000
Financial Statements
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED 31ST JULY 2007
Notes Unaudited Unaudited * Audited *
6 months to 6 months to Year to 31st
31st July 2007 31st July 2006 January 2007
______________ ______________ ____________
£'000 £'000 £'000 £'000 £'000 £'000
Gains on Investments
Realised Gains on
disposal of Investments 91 115 115
Unrealised Gains on
investment revaluation 3 2,591 3,451 6,369
______ ______ ______
2,682 3,566 6,484
Income
Dividends 491 419 825
Income from Loans and
receivables 355 215 453
Fees receivable 406 374 749
______ ______ ______
OPERATING INCOME 1,252 1,008 2,027
Operating expenses (1,139) (1,106) (2,260)
_______ ______ _______
OPERATING PROFIT 2,795 3,468 6,251
Bank Interest receivable
and similar income 91 167 347
Interest payable and
similar charges (15) (17) (33)
Carried Interest Provision 6 50 (120) (253)
Exchange Movements (11) 20 45
______ ______ ______
115 50 106
_______ ______ _______
PROFIT ON ORDINARY ACTIVITIES
BEFORE SHARE BASED PROVISIONS 2,910 3,518 6,357
Share Based Provisions 7 (131) (94) (222)
_______ ______ _______
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAX 2,779 3,424 6,135
Income Tax 5 (588) (957) (1,619)
_______ ______ _______
PROFIT ON ORDINARY
ACTIVITIES FOR THE PERIOD 2,191 2,467 4,516
_______ ______ _______
Earnings Per Share
Basic (pence) 0.07 0.08 0.15
Diluted (pence) 0.07 0.07 0.13
* Restated for International Financial Reporting Standards, see note 2.
CONSOLIDATED BALANCE SHEET
AS AT 31ST JULY 2007
Unaudited Unaudited* Audited*
Notes 31st July 2007 31st July 2006 31st January 2007
______________ ______________ _______________
£'000 £'000 £'000 £'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Office equipment, 4 6 5
fixtures and fittings
Investments 3 45,305 35,764 38,834
Loans and Receivables 4,134 - 3,091
_______ ______ _______
49,443 35,770 41,930
CURRENT ASSETS
Trade and Other receivables 1,271 3,692 1,056
Cash and Cash equivalents 1,880 7,424 6,989
_______ ______ _______
3,151 11,116 8,045
LIABILITIES
NON-CURRENT
LIABILITIES
Loans and Other payables - - -
Carried Interest Provision 6 (1,000) (917) (1,050)
Deferred Tax Liabilities 5 (7,698) (6,448) (7,110)
_______ ______ _______
(8,698) (7,365) (8,160)
CURRENT LIABILITIES
Trade and Other payables (969) (1,102) (1,209)
_______ ______ _______
(969) (1,102) (1,209)
_______ ______ _______
NET ASSETS 42,927 38,419 40,606
_______ ______ _______
EQUITY
Called up share capital 2,929 2,928 2,929
Share premium 9,370 9,361 9,370
Shares to be issued 353 94 222
Fair Value Reserve 20,216 16,093 18,215
Reverse acquisition reserve 393 393 393
Distributable Reserve 9,666 9,550 9,477
_______ ______ _______
TOTAL EQUITY 42,927 38,419 40,606
_______ ______ _______
* Restated for International Financial Reporting Standards, see note 2.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31ST JULY 2007
Unaudited Unaudited
31st July 2007 31st July 2006
______________ ______________
£'000 £'000
Cash inflow/(outflow) from operating activities
Interest received on loans to Investees 355 215
Dividends Received 491 419
Fees Received from investment activity 406 374
Operating Expenses (1,138) (1,084)
(Increase) / Decrease in Debtors (214) 270
Increase / (Decrease) in Creditors (240) (631)
______ ______
Net Cash outflow from operating activities (340) (437)
______ ______
Net cash generated from / (used in) investing activity
Purchase of Property, plant and equipment. - -
Purchase of Investments (3,929) (3,815)
Proceeds from Investments 91 387
______ ______
Net cash out flow from investing activities (3,838) (3,428)
______ ______
Net cash generated from / (used in) financing activities
Repayment of Long - term borrowings - (2,500)
Proceeds from issue of shares - 11,019
Placement costs - (874)
(Payments) / Repayments of Loans to / (from) Investee
Companies (995) 2,390
Interest received 91 167
Interest paid (15) (17)
______ ______
Net cash outflow of financing activities (919) 10,185
______ ______
Change in Cash and cash equivalents (5,097) 6,320
Cash and cash equivalent at beginning of the period 6,989 1,084
FX Loss on Escrow accounts (12) 20
______ ______
Cash and cash equivalents at end of period. 1,880 7,424
RECONCILIATION IN MOVEMENT IN EQUITY
FOR THE PERIOD ENDED 31ST JULY 2007
6 months to 6 months to 12 months to
31st July 2007 31st July 2006 31st January 2007
______________ ______________ _________________
£'000 £'000 £'000
Opening total Equity 40,605 25,712 25,712
Total Recognised income and
expense for period 2,191 2,467 4,516
Dividends - - -
Issue of Shares - 13,134 13,143
Shares to be Issued 131 94 222
Placement Costs - (845) (845)
Acquisition of subsidiary undertaking - (2,143) (2,143)
______ ______ ______
Total Equity 42,927 38,419 40,605
______ ______ ______
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 31ST JULY 2007
1. ACCOUNTING POLICIES
Basis of preparation of financial statements
The next annual financial statements of B.P. Marsh and Partners Plc ('the
Group') will be prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the EC applied in accordance with the
provisions of the Companies Act 1985.
Accordingly, the interim financial information in this report has been prepared
using accounting policies consistent with IFRS. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretation Committee (IFRIC) and there is
an ongoing process for review and endorsement by the European Commission. The
financial information has been prepared on the basis of IFRS that the directors
expect to be applicable as at 31st January 2008.
The financial information has been prepared under the historic cost convention
as modified by the revaluation of fair value through the profit and loss
investments. The principal accounting policies set out below have been
consistently applied to all periods presented.
The financial information contained in this interim statement has not been
audited or reviewed by the Group's Auditors and does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. They have
been prepared using accounting policies applicable to the year ended 31 January
2007 apart from IFRS. Those accounts, upon which the Group's Auditors issued an
unqualified opinion, have been filed with the Registrar of Companies.
IFRS Transition
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. The
interim financial information has been prepared on the basis of the following
exemptions:
Business combinations prior to 1st January 2006 have not been restated to comply
with IFRS 3 'Business Combinations'.
IFRS 2 'Share based payments' has been applied retrospectively to those options
that were issued after 7 November 2002 and had not vested by 1st January 2006.
The disclosures required by IFRS 1 concerning the transition from UK GAAP to
IFRS are given in note 2.
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 British Venture Capital Association
(BVCA). The following valuation methodologies have been used in reaching 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 cashflow 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 income statement for the year, with transaction costs on
acquisition or disposal of investment expensed.
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 income statement
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 substantially enacted by the balance sheet date.
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 balance sheet 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 utilized. 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 balance sheet
date 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 profit or loss, 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.
Bonus provision
There is no contractual obligation on the company to pay bonuses to employees
and as such no provision has been made in the operating expenses within the
income statement for the period to 31st July 2007 (as per the interims to 31st
July 2006). However, the income statement to 31st January 2007 does include such
provision where discretionary awards were made for the year-end.
2. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
B.P. Marsh & Partners Plc reported under UK GAAP in its previously published
financial statements for the year ended 31st January 2007. The analysis below
shows a reconciliation of net assets and profit as reported under UK GAAP as at
31 January 2007 to the revised net assets and profits under IFRS as reported in
these financial statements. In addition, there is a reconciliation of net assets
under UK GAAP to IFRS at the transition date for this company, being 1 February
2006. There is also a reconciliation of net assets under UK GAAP to IFRS at the
comparative interim date, being 31 July 2006.
Reconciliation of Equity Previous Effect of IFRS
at 31st January 2007 GAAP Transition to IFRS
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and fittings 5 - 5
Investments 37,784 1,049 38,833
Loans and Receivables 3,091 - 3,091
______ _____ ______
40,880 1,049 41,929
______ _____ ______
CURRENT ASSETS
Trade and Other receivables 1,056 - 1,056
Cash and Cash equivalents 6,989 - 6,989
______ _____ ______
8,045 - 8,045
______ _____ ______
LIABILITIES
NON-CURRENT LIABILITIES
Loans and Other payables - - -
Carried Interest Provision - (1,050) (1,050)
Deferred Tax Liabilities - (7,110) (7,110)
______ _____ ______
- (8,160) (8,160)
______ _____ ______
CURRENT LIABILITIES
Trade and Other payables (1,209) - (1,209)
______ _____ ______
NET ASSETS 47,716 (7,111) 40,605
====== ===== ======
EQUITY
Called up share capital 2,929 - 2,929
Share premium 9,370 - 9,370
Shares to be issued 222 - 222
Fair Value Reserve 25,324 (7,110) 18,214
Reverse acquisition Reserve 393 - 393
Distributable Reserve 9,478 (1) 9,477
_______ _______ ______
TOTAL EQUITY 47,716 (7,111) 40,605
======= ======= ======
Reconciliation of Equity Previous Effect of IFRS
at 31st July 2006 GAAP Transition to IFRS
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and fittings 6 - 6
Investments 34,847 917 35,764
Loans and Receivables - - -
______ ______ ______
34,853 917 35,770
______ ______ ______
CURRENT ASSETS
Trade and Other receivables 3,692 - 3,692
Cash and Cash equivalents 7,424 - 7,424
______ ______ ______
11,116 - 11,116
______ ______ ______
LIABILITIES
NON-CURRENT LIABILITIES
Loans and Other payables - - -
Carried Interest Provision - (917) (917)
Deferred Tax Liabilities - (6,448) (6,448)
______ ______ ______
- (7,365) (7,365)
______ ______ ______
CURRENT LIABILITIES
Trade and Other payables (1,102) - (1,102)
______ ______ ______
NET ASSETS 44,867 (6,448) 38,419
====== ====== ======
EQUITY
Called up share capital 2,928 - 2,928
Share premium 9,361 - 9,361
Shares to be issued 94 - 94
Fair Value Reserve 22,541 (6,448) 16,093
Reverse acquisition Reserve 393 - 393
Distributable Reserve 9,550 - 9,550
______ ______ ______
TOTAL EQUITY 44,867 (6,448) 38,419
====== ====== ======
Reconciliation of Equity Previous Effect of IFRS
at 31st January 2006 GAAP Transition to IFRS
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and fittings 8 - 8
Investments 27,700 797 28,497
Loans and Receivables 3,231 - 3,231
______ ______ ______
30,939 797 31,736
______ ______ ______
CURRENT ASSETS
Trade and other receivables 3,413 - 3,413
Cash and Cash equivalents 1,084 - 1,084
______ ______ ______
4,497 - 4,497
______ ______ ______
LIABILITIES
NON-CURRENT LIABILITIES
Loans and Other payables (2,500) - (2,500)
Carried Interest Provision - (797) (797)
Deferred Tax Liabilities - (5,491) (5,491)
______ ______ ______
(2,500) (6,288) (8,788)
______ ______ ______
CURRENT LIABILITIES
Trade and Other payables (1,733) - (1,733)
NET ASSETS 31,203 (5,491) 25,712
EQUITY
Called up share capital 2,520 - 2,520
Share premium 17 - 17
Shares to be issued - - -
Fair Value Reserve 19,209 (5,491) 13,718
Reverse acquisition Reserve - - -
Distributable Reserve 9,457 - 9,457
______ ______ ______
TOTAL EQUITY 31,203 (5,491) 25,712
====== ====== ======
Reconciliation of net Profits
As at 31st January 2007
£'000
Profit under UK GAAP 20
Unrealised Gains on Investments 6,369
Stamp Duty expenses (1)
Carried Interest Provision (253)
Deferred Taxation (1,619)
______
Profit Under IFRS 4,516
======
Reconciliation of net Profits
As at 31st July 2006
£'000
Profit under UK GAAP 92
Unrealised Gains on Investments 3,452
Carried Interest Provision (120)
Deferred Taxation (957)
______
Profit Under IFRS 2,467
======
3. NON-CURRENT ASSET INVESTMENTS
Group Investments 31st July 2007 31st July 2006 31st January 2007
______________ ______________ _________________
£'000 £'000 £'000
At valuation
At 1st February 38,834 28,497 28,497
Additions 3,930 3,815 3,968
Disposal (50) - -
Movement in valuation 2,591 3,452 6,369
______ ______ ______
At 31st January 45,305 35,764 38,834
====== ====== ======
At cost
At 1st February 12,460 8,491 8,491
Additions 3,930 3,815 3,969
Disposal (50) - -
______ ______ ______
At 31st January 16,340 12,306 12,460
====== ====== ======
The investee companies, which are registered in England except Summa Insurance
Brokerage S.L. (Spain), Preferred Asset Management Ltd (Jersey) and New Horizons
Ltd (Isle of Man), are as follows :
% Holding Date Aggregate Post Tax
Of share audited capital Profit/(loss)
capital information and for the Principal
Name of company Available to Reserves year activity
_________ ___________ ________ _________ _________
£ £
Berkeley Insurance 19.90 31.10.06 80,000 24,000 Insurance
(Holdings) Limited holding
company
Besso Holdings Limited 23.55 31.12.06 8,580,455 125,635 Investment
holding
company
HQB Partners Limited 28.00 31.12.06 304,570 302,484 Investor
relations
consultants
Hyperion Insurance 27.89 30.09.06 11,318,000 2,946,000 Insurance
Group Limited holding
company
JMD Specialist Insurance 25.00 31.10.06 150,787 35,260 Insurance
Services Ltd sector
consultants
LEBC Holdings Ltd 22.50 31.05.06 701,201 402,834 Independent
Financial
Advisory
Company
Paterson Martin Limited 22.50 31.12.06 504,113 110,016 Actuarial
insurance/
reinsurance
consultants
Portfolio Design Group 20.00 31.12.06 5,228,504 1,672,080 Fund
International Limited managers
of traded
endowment
policies
Morex Commercial Ltd 20.00 31.07.06 (493,864) 788,943 Trading in
secondary
life
policies
Preferred Asset 20.00 30.09.06 267,753 72,672 Fund
Management Ltd management
company
New Horizons Ltd 20.00 31.12.04 654 Nil Investment
(formerly Surrenda-Link holding
Nominees Ltd) company
Principal Investment 18.57 31.12.06 5,394,000 1,435,000 Fund
Holdings Limited management
company
Public Risk Management 44.00 31.12.06 (277,057) 3,943 Public
Limited sector risk
consultants
Summa Insurance 35.00 31.12.05 385,361 (126,648) Consolidator
Brokerage, S.L. of regional
insurance
brokers
Under FRS 25 the Paterson Martin Limited accounts have included the company's
22.5% interest as a long-term creditor. As this is in reality an equity
investment the aggregate capital and reserves shown have therefore been adjusted
to include this as equity and therefore part of the total shareholders' funds.
Under FRS 25 the HQB Consulting Limited accounts have included the company's 28%
interest as a long-term creditor. As this is in reality an equity investment the
aggregate capital and reserves shown have therefore been adjusted to include
this as equity and the profit has been adjusted by the dividend paid out.
Under FRS 25 the Hyperion Insurance Group Limited accounts have included their
Preferred Ordinary Shares as a long-term creditor. As this is in reality equity
the aggregate capital and reserves shown have therefore been increased by
£4,125,000 to include this as equity and the profit has been increased by
£200,000, which relates to the dividend paid out.
4. LOAN COMMITMENTS
On 31st January 2005 the Group entered into an agreement to provide a loan
facility of €1,500,000 to Summa Insurance Brokerage S.L, an associated company
and a company incorporated in Spain. On 29th January 2007 this was increased to
€2,000,000. As at 31st January 2007 €400,000 of this facility had been drawn
down with the remainder being drawn down on 19th February 2007.
On 5th March 2007 the company entered into a loan agreement to provide a loan
facility of £250,000 to JMD Specialist Insurance Services Ltd an associated
company. At 31st July 2007 the loan facility had not been drawn down.
On 15th April 2004 the Group entered into an agreement to provide a loan
facility of £300,000 to Paterson Martin Limited, an associated company. On 31st
July 2007 £200,000 of this facility had been drawn down. This loan is repayable
on 31st March 2008.
On 7th February 2005 the Group entered into an agreement to provide a loan
facility of £140,000 to HQB Partners Limited, an associated company. As at 31st
July 2007 £80,000 of this facility had been drawn down.
5. CONTINGENT LIABILITIES
The Directors estimate that, if the Group were to dispose of all its investments
at the amount stated in the Balance Sheet, £7.7m (2006: £6.4m) of tax on capital
gains would become payable by the Group at the current corporation tax rate of
30%. No account has been made of the proposal to reduce this rate to 28% from
April 2008.
The Group has entered into long-term incentive arrangements with certain
employees. Provided the employees remain in employment with the Group as at 1st
November 2010 the Group has agreed to pay bonuses totaling £250,000 plus
Employers' National Insurance. £50,000 of this is currently funded through an
Employee Benefit Trust.
On 10th April 2007 the Group acquired a 22.5% shareholding in LEBC Holdings
Limited for an initial consideration of £1,783,250 with a potential further
payment of up to £182,250 based upon their subsidiary company's audited 31st May
2007 accounts.
6. DIRECTOR'S INTEREST IN CONTRACTS
S.S. Clarke is entitled to a maximum of 20% of any gain, after deducting
expenses and following the repayment of all loans, the redemption of all
preference shares, loan stock and equivalent finance provided by the Group, on
the sale of certain agreed investments of the Group and its subsidiaries.
No amounts were paid under this contract during the year (2006: £nil).
In the accounts to 31st January 2007 the valuations of these certain agreed
investments of the Group and its subsidiaries were reduced by the respective
entitlements to S.S. Clarke. However, under IFRS a provision has now been
included within the balance sheet with any period movements expensed through the
income statement and thus the investments are now shown gross.
7. SHARE BASED PAYMENT ARRANGEMENTS
During the year ended 31 January 2007, B.P. Marsh & Partners Plc entered into a
share-based payment arrangement with certain employees and advisors. The details
of the arrangements are described in the following table:
Nature of the Share options Share options Share
arrangement granted to granted to appreciation
advisors advisors rights
_____________ _____________ _____________ ________________
Date of grant 2 February 2006 9 February 2006 19 April 2006
Number or instruments
granted 17,857 17,857 4,392,921
Exercise price (pence) 140.00 140.00 140.00
Share price at grant (pence) 150.50 150.50 150.50
Vesting period (years) 5 5 Units vest 10 days after
results to 31/01/09
reported, i.e. approx 3
years
Vesting conditions None None 50% vest if IRR over
exercise price exceeds 5%
and 100% vest if IRR
exceeds 8% after 3 years.
Between 5% and 8% it is
pro-rata.
Option Life (years) 5 5 3.34
Expected volatility 15% 15% 15%
Risk free rate 4.2% 4.15% 4.52%
Expected dividends
expressed as a
dividend yield 0% 0% 0%
Settlement Shares Shares Shares
% expected to vest (based
upon leavers) 100% 100% 80%
Number expected to vest 17,857 17,857 3,514,337
Fair value per granted
instrument (pence) 41.90 41.20 23.50
Charge for period ending
31 July 2007 (£) - - £130,667
Valuation model Black-Scholes Black-Scholes Trinomial
The Company admitted its shares for trading on AIM on 2nd February 2006 and
consequently, at the date of valuation of the options, little historical price
data existed. As a consequence the volatilities of quoted companies that the
directors considered to be the most comparable to the Group were used to
determine the Group's expected volatility over the life of the options.
The risk free rates are based on the yield on UK Government Gilts of a term
consistent with the assumed option life.
No options were exercised during the period. 878,583 share appreciation rights
representing 20% of the available units originally granted were forfeited before
31st January 2007. The expected number of units to vest has therefore been
adjusted accordingly with no further expectation of forfeiture over the
remaining life of the option.
This information is provided by RNS
The company news service from the London Stock Exchange
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