Interim Results

RNS Number : 3354Q

B.P. Marsh & Partners PLC

18 October 2011

 



Date:                     18^th October 2011

On behalf of:        B. P. Marsh & Partners Plc ("B. P. Marsh", "the Company" or

                             "the Group")

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 2011.

Chairman's Statement

Financial Highlights

·     Net Asset Value ("NAV") during six month period up 4.3% to £48.5m from £46.5m at 31 January 2011

·     NAV year on year increase of 8.1% from £44.9m at 31 July 2010

·     NAV per share of 166p, an increase of 13p from 153p at 31 July 2010

·     Profit before tax of £2.3m (unaudited), an increase of 69.4% from £1.4m for the six months to 31 July 2010

·     Average compound NAV growth of 12.1% p.a. since 1990 (excl. £10.1m raised on flotation)

·     £0.45m cash at year-end plus a further £3.075m loan facility available (£2.36m committed to current investments, £1.17m available)

Overview

We are pleased to announce the interim results for B.P. Marsh & Partners Plc and its consolidated statements for the six-month period ended 31 July 2011 (the "Period").

During the Period we have successfully increased NAV by 4%, which the Board considers to be a solid achievement in light of the continued climate of economic fragility, whilst our share price has performed consistently against the benchmark indices over the Period. This NAV uplift is predominantly due to the continued strong growth in revenues and EBITDA at Hyperion, together with a solid performance from our other investments.

The Board remains committed to its previously stated aim of reducing the discount to NAV. We are maintaining our corporate visibility in the market with increased newsflow and the release of our Trading Update in August demonstrates that this approach has a positive effect on share price. The Group also reconsidered its advisory appointments over the period and appointed Panmure Gordon as Corporate Broker and Nominated Adviser with effect from 12 September 2011.

The Board recognises the challenges faced by small and mid-cap companies retaining a listing on AIM and our Group is no exception to this. Whilst the junior market has shown some signs of resurgence in recent months, the Directors are of the view that economic conditions will continue to be difficult. Nevertheless, we are confident in the strength of our underlying portfolio. 

Portfolio Update

Besso Insurance Group Ltd ("Besso")

In April 2011, the Group acquired a further 11% shareholding and additional loan stock in Besso for £1.5m, taking its total equity holding in the group to 34%; £1.25m of this further investment was financed from the £4.325m Directors' loan that was put in place in June 2010.

The Group first invested in Besso in 1995 and when the opportunity arose to restructure the company the Group demonstrated its commitment to its investee company. It is this commitment to Management within the investee companies that makes the Group unique.

The transaction saw Michael Wade joining Besso as its new Chairman, taking a 15% stake in place of Union Hamilton Reinsurance Limited (part of the Wells Fargo corporation). Besso has maintained its listing in the Insurance Times Top 50 Brokers, ranked 36^th in the 2011 edition, and with the support of its shareholders, is now in the process of repositioning; building on its existing business and manoeuvring itself to take advantage of opportunities to grow through acquisition and attracting new teams. Besso has also appointed Tony Hulse as a non-executive director, who was a partner at KPMG, and spent the last two years as their Head of General Insurance Markets in the UK.

Hyperion Insurance Group Ltd ("Hyperion")

In 2010 Hyperion increased revenue by 26% to £72.2m and EBITDA by 41% to £12.0m. 2011 is on track to deliver further strong revenue and EBITDA growth, and the group has expanded further with the acquisition of Accette Insurance Group, Asia's largest independent insurance broker, and the acquisition of Davidoff Insurance Brokers in Israel.

Howden Broking Group (the broking subsidiary of Hyperion) reached agreement to acquire the broking business of professional indemnity specialist PYV Ltd on 3 May 2011. As a result of this acquisition a significant team and book of business has moved to Howden Broking Group.

Hyperion has moved up to 19^th place in the Insurance Times Top 50 Brokers listings, from 22^nd  place in 2010,  following their 2010 results. The group was named as one of the top 10 insurance brokers to deliver outstanding results and the Insurance Times stated "This is a tremendous story of what can be achieved through focus, hard work and an underwriting agency that delivers excellent profits". Earlier this year Howden Insurance Brokers (the UK Broking subsidiary of Howden Broking Group Ltd) won the Insurance Broker of the Year award at the 2011 British Insurance Awards.

Oxford Insurance Brokers Ltd ("Oxford"), trading subsidiary of US Risk (UK) Ltd

David Doe and his North American special lines division are the latest recruits to join Oxford, moving from Alwen Hough Johnson. This team specialises in professional liability, financial institutions and directors and officers business.

This follows the arrival of another North American specialty lines team earlier this year from AJ Gallagher International.

In recent months Oxford has also brought in new teams to strengthen its UK professional indemnity division and to develop an international fine art and specie portfolio.

Group Strategy, Market Overview and Investment Opportunities

The Group focuses on minority investment opportunities in financial services business, typically taking an equity stake of between 15% and 45%. The geographic focus is predominantly within the UK but the Group continues to investigate opportunities to strengthen relationships with potential US-based investment partners, recognising that in the insurance market in particular there are increasing investment opportunities in the North American region. These are in part being generated by fall-out from continuing consolidation in the "big three" insurance brokers and the emergence of new participants in the market on aggressive acquisition trails, such as Ryan-Turner Specialty LLC , leading to potential opportunities for new investment as well as for the Group's existing portfolio companies.

Despite these positive developments, conditions remain difficult in the insurance market, with Lloyd's of London posting an interim loss of £697m for the six-month period ending 30 June 2011. Recent natural disasters do not appear to have soaked up excess capacity in the market and rates remain soft across many lines of business.

Shareholders

The Board remains committed to its stated aim of narrowing the discount to NAV and delivering shareholder returns that reflect performance. The Directors believe that the Group's investment portfolio is demonstrating steady growth and that the portfolio will continue to increase in value.

Dividends

As previously stated in the Annual Results for the year ended 31 January 2011, the Group is not minded to recommend dividends while part of its loan facility remains drawn upon. Therefore no dividends will be paid from the period to 31 July 2011. However, as successful realisations are made and loan funds repaid, the Board will reassess this position.

Outlook

The general economic outlook remains uncertain and this calls for a steady approach from the Board and the Group over the coming months. Whilst it is difficult to predict how events in the global economy will unfold, the Board believes that the Group continues to be well-positioned to face ongoing challenges in the global markets, and to exploit the potential investment opportunities this presents. The Board continues to consider and rigorously review all exit opportunities for its portfolio of investments.

Brian Marsh OBE

Chairman

18 October 2011

Investments

As at 31st July 2011 the Group's equity interests were as follows:

Amberglobe Limited

(www.amberglobe.co.uk)

In March 2008 the Group assisted in establishing Amberglobe Limited, a business sales platform that provides valuation and negotiation services for the sale of SME businesses in the sub £3m sector.

Date of investment: March 2008

Equity stake: 49.0%

31st July 2011 valuation: £98,000

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: 34.02%

31st July 2011 valuation: £4,182,000

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 2011 valuation: £0

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: 19.5%

31st July 2011 valuation: £31,748,000

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: 21.95%

31st July 2011 valuation: £3,069,000

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 July 2011 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 July 2011 valuation: £1,893,000

Randall & Quilter Investment Holdings plc

(www.rqih.com)

Randall & Quilter Investment Holdings plc 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: 1.23%

31st July 2011 valuation: £844,992

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 July 2011 valuation: £5,210,000

US Risk (UK) Limited

(www.oxfordinsurancebrokers.co.uk)

In July of this year the Group completed its investment in US Risk (UK) Limited, the parent company of Oxford Insurance Brokers Limited, a London-based Lloyd's insurance and reinsurance broker.

Date of investment: July 2010

Equity stake: 30.0%

31st July 2011 valuation: £1,647,000

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 PERIOD ENDED 31ST JULY 2011

Notes Unaudited Unaudited Audited 6 months to 6 months to Year to 31st July 2011 31st July 2010 31st January 2011 £'000 £'000 £'000 £'000 £'000 £'000 GAINS/ (LOSSES) ON INVESTMENT Realised (losses) / gains on disposal of investments 5 (20) 347 350 Impairment of investments and loans (239) (223) (446) Unrealised gains on investment revaluation 4 2,639 1,396 2,971 2,380 1,520 2,875 INCOME Dividends 130 198 599 Income from loans and receivables 415 280 599 Fees receivable 219 394 820 764 872 2,018 INCOME NET OF GAINS ON INVESTMENT 3,144 2,392 4,893 Operating expenses (761) (967) (1,837) OPERATING INCOME 2,383 1,425 3,056 Financial income - 3 2 Financial expenses (47) (6) (28) Carried interest provision 9 3 (11) (7) Exchange movements 30 (30) (10) (14) (44) (43) PROFIT ON ORDINARY ACTIVITIES BEFORE EXCEPTIONAL ITEMS 2,369 1,381 3,013 Exceptional items 10 (30) - - PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,339 1,381 3,013 Income tax 8 (331) (388) (415) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS £2,008 £993 £2,598 Earnings per share  - basic and diluted (pence) 3 6.9p 3.4p 8.9p The result for the period is wholly attributable to continuing activities.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31ST JULY 2011

		Unaudited			Unaudited			Audited
	Notes	31st July 2011			31st July 2010			31st January 2011
		£'000	£'000		£'000	£'000		£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		24			36			33
Investments	4	48,692			45,578			47,143
Loans and receivables		6,329			4,475			4,403
			55,045			50,089			51,579
CURRENT ASSETS
Trade and other receivables		1,757			1,412			1,672
Cash and cash equivalents		448			562			515
			2,205			1,974			2,187
LIABILITIES
NON-CURRENT LIABILITIES
Loans and other payables	11	(1,250)			-			-
Carried interest provision	9	(328)			(335)			(331)
Deferred tax liabilities	8	(7,014)			(6,656)			(6,683)
			(8,592)			(6,991)			(7,014)
CURRENT LIABILITIES
Trade and other payables		(174)			(201)			(276)
			(174)			(201)			(276)
NET ASSETS			£48,484			£44,871			£46,476
CAPITAL AND RESERVES -
EQUITY
Called up share capital			2,929			2,929			2,929
Share premium account			9,370			9,370			9,370
Fair value reserve			22,909			19,202			20,883
Reverse acquisition reserve			393			393			393
Retained earnings			12,883			12,977			12,901
SHAREHOLDERS' FUNDS - EQUITY	6		£48,484			£44,871			£46,476

The Interim Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 17th October 2011

and signed on its behalf by B.P. Marsh & J.S. Newman.

 CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31ST JULY 2011

Unaudited Unaudited Audited 31st July 2011 31st July 2010 31st January  2011 £'000 £'000 £'000 Cash (used by) / from operating activities Income from loans to investees 415 280 599 Dividends 130 198 599 Fees received from investment activity 219 394 820 Operating expenses (761) (967) (1,837) Exceptional item - termination payment (30) - - Decrease / (increase) in receivables 66 (162) 4 Decrease in payables (102) (168) (93) Depreciation 12 14 22 Net cash (used by) / from operating activities  (51)  (411) 114 Net cash (used by) investing activities Purchase of property, plant and equipment (3) - (6) Purchase of investments (735) (1,437) (1,437) Proceeds from investments 30 15 18 Net cash (used by) investing activities  (708)  (1,422)  (1,425) Net cash from / (used by) financing activities Advances of borrowings 1,250 - - Net payments of loans to investee companies (510) (284) (827) Financial income - 3 2 Financial expenses (47) (6) (28) Dividends paid - (293) (293) Net cash from / (used by) financing activities 693  (580)  (1,146) Change in cash and cash equivalents (66) (2,413) (2,457) Cash and cash equivalents at beginning of the period 515 2,972 2,972 Exchange movement * (1) 3 - Cash and cash equivalents at end of period £448 £562 £515

*The exchange movement as noted in the Consolidated Statement of Comprehensive Income is £30k (6 months to 31st July 2010: £(30)k & 12 months to 31st January 2011: £(10)k).  The movement in the Consolidated Statement of Cash Flows excludes an exchange gain of £31k (6 months to 31st July 2010: loss £33k & 12 months to 31st January 2011: loss £10k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement. 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31ST JULY 2011

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		31st July 2011	31st July 2010	31st January 2011
		£'000	£'000	£'000
Opening total equity		46,476	44,171	44,171
Total recognised income for period		2,008	993	2,598
Dividends paid		-	(293)	(293)
Total equity		£48,484	£44,871	£46,476

Refer to Note 6 for detailed analysis of the changes in the components of equity.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31ST JULY 2011

1.       ACCOUNTING POLICIES

Basis of preparation of financial statements

These 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 the profit or 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.

These interim consolidated financial statements were approved by the Board on 17th October 2011.  They have not been audited nor reviewed by the Group's Auditors, as is the case with the comparatives to 31st July 2010, and do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial statements have been prepared using the accounting policies and presentation that were applied in the audited financial statements for the year ended 31st January 2011.  Those accounts, upon which the Group's Auditors issued an unqualified opinion, have been filed with the Registrar of Companies and do not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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. 

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 operating policies. Investments that are held as part of the Group's investment portfolio are carried in the 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.

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 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 Statement of Comprehensive Income for the period.  In the 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 Statement of Comprehensive Income.

Income from investments

Income from investments comprises:

a)   gross interest from loans, which is taken to the Statement of Comprehensive Income on an accruals basis;

b)   dividends from equity investments are recognised in the 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 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 substantially 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.

Bonus provision

There is no contractual obligation on the Group to pay bonuses to employees and as such no provision has been made in the operating expenses within the Consolidated Statement of Comprehensive Income for the period to 31st July 2011 (as was also the case with the interims to 31st July 2010). However, the consolidated Statement of Comprehensive Income to 31st January 2011 does include such a provision where discretionary awards were made for the year-end.

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 beginning on or after
IAS 12 – Limited scope amendment (recovery of underlying assets)	1st January 2012
IFRS 9 – Financial Instruments: classification and measurement	1st January 2013

The directors do not anticipate that adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application and have decided not to adopt them early.

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 and Channel Islands and Non-UK and 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
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July
	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000
Income net of losses on investment	2,962	2,405	182	(13)	3,144	2,392
Operating expenses	(691)	(735)	(70)	(232)	(761)	(967)
Segment operating profit	2,271	1,670	112	(245)	2,383	1,425
Financial income	-	2	-	1	-	3
Financial expenses	(43)	(6)	(4)	-	(47)	(6)
Carried interest provision	3	(11)	-	-	3	(11)
Exchange movements	(1)	3	31	(33)	30	(30)
Exceptional items	(30)	-	-	-	(30)	-
Profit / (loss) before tax	2,200	1,658	139	(277)	2,339	1,381
Income tax	(295)	(310)	(36)	(78)	(331)	(388)
Profit/ (loss) for the period	£1,905	£1,348	£103	£(355)	£2,008	£993

Non-current assets
Property, plant and equipment	21	32	3	4	24	36
Investments	43,482	39,642	5,210	5,936	48,692	45,578
Loans and receivables	5,272	3,187	1,057	1,288	6,329	4,475
	48,775	42,861	6,270	7,228	55,045	50,089
Current assets
Trade and other receivables	1,275	1,107	482	305	1,757	1,412
Cash and cash equivalents	448	562	-	-	448	562
	1,723	1,669	482	305	2,205	1,974
Total assets	50,498	44,530	6,752	7,533	57,250	52,063
Non-current liabilities
Loans and other payables	(1,250)	-	-	-	(1,250)	-
Carried interest provision	(328)	(335)	-	-	(328)	(335)
Deferred tax liabilities	(6,985)	(6,594)	(29)	(62)	(7,014)	(6,656)
	(8,563)	(6,929)	(29)	(62)	(8,592)	(6,991)
Current liabilities
Trade and other payables	(174)	(201)	-	-	(174)	(201)
Total liabilities	(8,737)	(7,130)	(29)	(62)	(8,766)	(7,192)
Net assets	£41,761	£37,400	£6,723	£7,471	£48,484	£44,871

	Geographic segment 1: UK & Channel Islands		Geographic segment 2: Non-UK & Channel Islands		Group
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	31st July	31st July	31st July	31st July	31st July	31st July
	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000
Additions to property, plant and equipment	3	-	-	-	3	-
Depreciation of property, plant and equipment	11	13	1	1	12	14
Impairment of investments and loans	239	223	-	-	239	223

	Geographic segment 1: UK & Channel Islands	Geographic segment 2: Non-UK & Channel Islands	Group
	Audited	Audited	Audited
	31st January	31st January	31st January
	2011	2011	2011
	£'000	£'000	£'000
Income net of losses on investment	5,524	(631)	4,893
Operating expenses	(1,353)	(484)	(1,837)
Segment operating profit / (loss)	4,171	(1,115)	3,056
Financial income	2	-	2
Financial expenses	(21)	(7)	(28)
Carried interest provision	(7)	-	(7)
Exchange movements	-	(10)	(10)
Exceptional items	-	-	-
(Loss) / profit before tax	4,145	(1,132)	(3,013)
Income tax	(732)	317	(415)
Profit for the year	£3,413	£(815)	£2,598

Non-current assets
Property, plant and equipment	29	4	33
Investments	41,207	5,936	47,143
Loans and receivables	2,952	1,451	4,403
	44,188	7,391	51,579
Current assets
Trade and other receivables	1,361	311	1,672
Cash and cash equivalents	515	-	515
	1,876	311	2,187
Total assets	46,064	7,702	53,766
Non-current liabilities
Carried interest provision	(331)	-	(331)
Deferred tax liabilities	(7,009)	326	(6,683)
	(7,340)	326	(7,014)
Current liabilities
Trade and other payables	(276)	-	(276)
Total liabilities	(7,616)	326	(7,290)
Net assets	£38,448	£8,028	£46,476

Additions to property, plant and equipment	6	-	6
Depreciation of property, plant and equipment	19	3	22
Impairment of investments and loans	446	-	446

3.       EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

		Unaudited		Unaudited		Audited
		31st July 2011		31st July 2010		31st January 2011
		£'000		£'000		£'000
Earnings
Earnings for the period		2,008		993		2,598
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity shareholders		2,008		993		2,598
Earnings per share - basic and diluted		6.9p		3.4p		8.9p
Number of shares		Number		Number		Number
Weighted average number of ordinary shares for the purposes of basic earnings per share		29,286,143		29,286,143		29,286,143
Number of dilutive shares under option		Nil		Nil		Nil
Weighted average number of ordinary shares for the purposes of dilutive earnings per share		29,286,143		29,286,143		29,286,143

4.       NON-CURRENT INVESTMENTS

Group Investments		Unaudited		Unaudited		Audited
		31st July 2011		31st July 2010		31st January 2011
		£'000		£'000		£'000
At valuation
At 1st February		47,143		42,745		42,745
Additions		735		1,437		1,437
Disposals		(1,825)		-		(10)
Movement in valuation / provisions		2,639		1,396		2,971
At period end		£48,692		£45,578		£47,143
At cost
At 1st February		19,375		17,948		17,948
Additions		735		1,437		1,437
Disposals		(1,825)		-		(10)
At period end		£18,285		£19,385		£19,375

The principal addition relates to the acquisition on 31st March 2011 of a further 11.3% shareholding in Besso Insurance Group Limited (formerly known as Besso Holdings Limited) for £735,000, with a further consideration of £300,000 payable under certain events.

The principal disposal relates to the redemption on 31st March 2011 of the Group's £1,775,000 preferred shares (at par) in Besso Insurance Group Limited.  The subsequent subscription for £2,540,000 of 14% loan stock on the same date from Besso Insurance Group Limited is included within loans and receivables under non-current assets.

The unquoted investee companies, which are registered in England except Summa Insurance Brokerage S.L. (Spain), Preferred Asset Management Ltd (Jersey), New Horizons Ltd (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	30.04.10	(650,932)	(288,358)	Business sales platform
	Besso Insurance Group Limited	34.03	31.12.10	8,812,323	(780,368)	Holding company for insurance intermediaries
	HQB Partners Limited	27.72	31.12.10	(42,855)	(164,777)	Investor relations consultants
	Hyperion Insurance    Group Limited	19.50	30.09.10	41,444,000	4,390,000	Insurance holding company
	LEBC Holdings Limited	21.95	30.09.10	707,092	50,777	Independent financial advisor company
	Portfolio Design Group   International Limited	20.00	31.12.10	7,338,806	(502,892)	Fund managers of traded endowment policies
	Morex Commercial Limited	20.00	31.12.10	492,308	125,054	Trading in secondary life policies
	Preferred Asset    Management Limited	20.00	30.09.10	610,117	(76,129)	Fund management company
	New Horizons Limited    (formerly Surrenda-Link    Nominees Limited)	20.00	31.12.08	1,595,863	66,732	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	31.12.09	9,144,749	92,618	Consolidator of regional insurance brokers
	US Risk (UK) Limited	30.00	31.12.10	1,807,220	152,736	Holding company for insurance intermediaries

In addition, as a result of the disposal of the Company's interest in JMD Specialist Insurance Services Group Limited in the year to 31st January 2010, the Company acquired an investment of £698,750 in respect of 650,000 ordinary shares in Randall & Quilter Investment Holdings Plc ("R&Q"). In June 2010 the Group acquired 40,000 additional ordinary shares in R&Q and in September 2010, as a result of a 91 for 94 share capital consolidation, the number of ordinary shares held by the Group reduced by 22,022 to 667,978.  As at 31st July 2011 the Group held 1.34% of the share capital of R&Q.  R&Q is listed on the AIM Market.

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 with effect from its year ended 30th September 2010. 

HQB Partners Limited's UK GAAP accounts have included the Group's 27.72% 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.

5.       REALISED (LOSSES) / GAINS ON DISPOSAL OF INVESTMENTS

The realised losses on disposal of investments comprises a loss of £20,740 in respect of a capital distribution made by R&Q in the period.  The amount included in realised gains on disposal of investments for the 6 months to 31st July 2010 and 12 months to 31st January 2011 includes the dividend (in specie) from Whitmar Holdings Ltd ("Whitmar") of £332,314 which was effected in 1998 and confirmed during the year to 31st January 2011 following the finalisation of the liquidation of Whitmar.

6.       RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

		Share		Reverse
	Share	premium	Fair value	acquisition	Retained
	capital	account	reserve	reserve	earnings	Total
	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)
At 31st January 2011	2,929	9,370	20,883	393	12,901	46,476
Profit for the period	-	-	2,026	-	(18)	2,008
At 31st July 2011	£2,929	£9,370	£22,909	£393	£12,883	£48,484

7.       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, 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 July 2011 £685,000 of this facility had been drawn down.

On 1st April 2009 the Group entered into an agreement to provide a loan facility of £400,000 to LEBC Group Limited, an investee company.  As at 31st July 2011 no amounts 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 July 2011 none of this facility had been drawn down.

8.       DEFERRED TAX AND CONTINGENT LIABILITIES

The Directors estimate that, if the Group were to dispose of all its investments at the amount stated in the Statement of Financial Position, £7.0m (interim 6 months to 31st July 2010: £6.7m  & full year to 31st January 2011: £6.7m) of tax on capital gains would become payable by the Group at the current corporation tax rate of 26%.  This amount is fully provided for in the financial statements.

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 £425,000 together with the Employers' National Insurance due thereon.  £100,000, £250,000 and £75,000 are due to be paid on 1st October 2011, 1st October 2012 and 1st October 2013 respectively. 

No amount has been included in these financial statements as the performance conditions relating to these incentives had not been met at the time of the reporting period.

9.       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, 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 period end was £328,000.

No amounts were paid under this arrangement during the period (2010: £nil).

10.     EXCEPTIONAL ITEMS

A one-off compensation payment amounting to £30,000 was made to a director who left the Group during the period.

11.     LOANS AND OTHER PAYABLES

During the period, the Group utilised £1,250,000 of a loan facility totalling £4,325,000, which certain directors agreed to provide to the Group during the year to 31st January 2011.  This draw down was used to finance the Besso Insurance Group Limited related transaction as noted in Note 4 above.  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.

Analyst Briefing

An analyst briefing given by Brian Marsh OBE, Executive Chairman, Jonathan Newman, Finance Director, Daniel Topping, Investment Director and Camilla Kenyon, Investment Director, will be held at 10:00 a.m. on Tuesday 18 October 2011 at B.P. Marsh's office at 2^nd Floor, 36 Broadway, London SW1H 0BH.

- Ends -

For further information:

B.P. Marsh & Partners Plc                                                    www.bpmarsh.co.uk

Brian Marsh OBE / Millie Kenyon                                            [phone]

Nominated Adviser & Broker

Panmure Gordon & Co

Paul Lumbis / Fred Walsh                                                          [phone]

Redleaf Polhill (PR to BP Marsh)                              

Emma Kane / Samantha Robbins / David Ison                          [phone]

Notes to Editors:

About B.P. Marsh & Partners Plc

B.P. Marsh's current portfolio contains ten companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk.

Over the past 20 years, 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 14 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 Member of the Institute of Chartered Secretaries and Administrators (ACIS). Dan currently holds four non-executive board appointments through which he advises investee companies and he also 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. She holds three non-executive appointments and is Chair of the New Business Committee. She is a Member of the Investor Relations Society.

 

END

 

 

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