Interim Results

RNS Number : 8393P

B.P. Marsh & Partners PLC

15 October 2019

Date: 15 October 2019

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, the specialist investor in financial services intermediary businesses, announces its unaudited Group interim results for the six months to 31 July 2019 (the "Period").

The financial highlights for the Period are:

· Net Asset Value ("NAV") at 31 July 2019 of £130.0m (31 July 2018 restated*: £120.0m; 31 January 2019 restated*: £126.2m)

· NAV per share of 361p (31 July 2018: 333p; 31 January 2019: 350p)

· 4.0% increase in the equity value of the portfolio in the Period

· Profit after tax of £5.6m

· Final dividend of 4.76p per share for the year to 31 January 2019 declared and paid in July 2019

· Cash balance of £1.4m as at 31 July 2019

· Loan facility of £3.0m available to use for investment

The key developments for the Period are:

· LEBC Holdings Limited valuation impacted by withdrawal from Defined Benefit transfer market. Management actions are underway

· XPT Group LLC, based in New York City, completed a fourth acquisition in the Period and, post Period-end, successfully raised $40.0m in aggregate in funding and acquired its fifth business

· Nexus Underwriting Management Limited secured an additional £16.0m in new loan facilities and completed the acquisitions of a specialist Trade Credit Broker and a London-based Financial and Professional Lines Managing General Agency

· New investment in Ag Guard PTY Limited of Sydney, Australia

Brian Marsh, B.P. Marsh Chairman, commented,

"B.P. Marsh has continued its long track record of delivering NAV growth from its diverse portfolio of investments, despite specific challenges. As a leading specialist investor in global financial services intermediaries and with 50% of our investment portfolio revenues emanating from outside of the UK, the outlook for the rest of the financial year is positive."

Analyst Briefing

An analyst presentation, hosted by the Company, will be held on Tuesday 15 October 2019 at 10:00 a.m. at the offices of B.P. Marsh & Partners Plc, 4 Matthew Parker Street, SW1H 9NP.

Please contact Adam Lloyd at Newgate Communications on 020 3655 6880 or BPMarsh@newgatecomms.com if you wish to attend.

For further information:

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

Brian Marsh OBE / Sinead O'Haire +44 (0)20 7233 3112

Nominated Adviser & Broker

Panmure Gordon

Atholl Tweedie / Erik Anderson / Charles Leigh-Pemberton / Ailsa MacMaster +44 (0)20 7886 2500

Financial PR

Newgate Communications Limited

Emma Kane / Adam Lloyd +44 (0)20 7382 4732

Note: This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

* Please note that these Interim results reflect the adoption of IFRS 16: Leases, which has had the impact of increasing the Group's assets by £1.4m and increasing the Group's liabilities by £1.5m through the recognition of a right-of-use asset and an associated lease liability in relation to the Group's operating lease on its office premises. There has been negligible overall impact on the Group's Net Asset Value, however the prior period comparatives have had to be restated accordingly.

Chairman's Statement

I am pleased to present the unaudited Consolidated Financial Statements of B.P. Marsh & Partners Plc for the six-month period to 31 July 2019.

On 2 September 2019, LEBC Group Limited voluntarily ceased the provision of Defined Benefit pension transfer advice pursuant to a market-wide review by the FCA. As a consequence of this, the Group has reduced the valuation of its holding in LEBC to £23.9m. However due to strong performance elsewhere within the portfolio, the Group is still aiming to conclude the year in a satisfactory position in terms of Net Asset Value. Our Net Asset Value as at 31 July 2019 was £130.0m or 361p per share, up 3% over the Period, notwithstanding the revaluation of LEBC.

During the Period, our partners in New York City, XPT, acquired Klein & Costa Insurance Services, a Managing General Agency and surplus lines broker located in California. XPT continues to have a promising pipeline of new investment opportunities, and we look forward to supporting its growth.

Nexus has continued with its successful acquisition strategy over the Period. In April 2019, it acquired Credit & Business Finance Limited, a specialist trade credit broker, and Capital Risks MGA Limited, a Warranty and Indemnity Managing General Agency. Nexus is now the leading independent UK trade credit broker. Most recently, in July 2019, Nexus acquired Plus Risk Limited, a London based Financial and Professional Lines Managing General Agency.

We were very pleased to complete a new acquisition over the Period. In July 2019, the Group subscribed for a 36% equity stake in Ag Guard Pty Limited ("Ag Guard"), which provides insurance solutions for the Australian agriculture sector, with insurance capacity provided by Munich Re.

The Group's Australian investments continue to perform well, with ATC being a star performer, achieving significant EBITDA growth.

Walsingham has seen strong growth throughout the Period, with its results exceeding expectations.

The Group has experienced a healthy flow of new investment opportunities, with 42 received over the Period, compared to 32 received over the period to 31 July 2018. We continue to look at a number of domestic and international opportunities.

Currently, 50% of our investee companies' revenue emanates from the UK, and 50% emanates from overseas.

Since incorporation, we have achieved an average annual compound growth in Net Asset Value of 11.7%, excluding any new funds raised.

Cash Balance

At 31 July 2019 the Group's cash balance was £1.4m. During the Period, the Group entered into a £3.0m loan facility, provided by Brian Marsh Enterprises Limited, a company in which the Chairman, Brian Marsh, is a director and sole shareholder.

The loan facility provides the Group with further investment funds at an interest rate of the higher of either 4% or the UK 1-month LIBOR plus 3.25%, which are available to be drawn down until July 2020.

The Board considers that these are commercially advantageous terms, compared to other avenues of funding available.

Business Update

Summary of Developments in the Portfolio

New Investments

Ag Guard PTY Limited ("Ag Guard")

On 12 July 2019 the Group invested in Ag Guard, based in Sydney Australia.

The Group subscribed for a 36% equity stake in Agri Services Company PTY Limited, which in turn acquired 100% of Ag Guard, for an initial cash consideration of AU$1.47m (c.£823,000). Further consideration of up to AU$1.13m (c.£628,000) may become payable, subject to performance.

Founders Alex Cohn (Managing Director), Martin Birch (Technical Director) and Ben Ko (Finance & Operations Director) have considerable experience in the provision of general insurance services in the Australian rural sector.

It is expected that the Group's investment in Ag Guard, with the backing of a strong and experienced management team, will enable Ag Guard to become a serious market player over the next five years.

Portfolio news

LEBC Group Limited ("LEBC")

The Group notes its recent announcement regarding its investee company LEBC Holdings Limited released on 2 September 2019, in which it holds a 59.3% shareholding. LEBC Holdings Limited is the parent company of LEBC Group Limited, the UK IFA business.

Pursuant to the FCA's market-wide review of the defined benefit ("DB") transfer market, LEBC agreed to voluntarily cease the provision of DB pension transfer advice and projects, with effect from 2 September 2019.

Advice in the DB transfer market represents c.20% of LEBC's total revenue in its current year. As such, the cessation of the provision of advice in this area has impacted LEBC as can be seen by the Group's reduction in valuation of its equity of LEBC to £23.9m. However, LEBC, excluding DB transfer business, is still expected to produce annual revenue of c. £19.0m alongside an acceptable underlying profit position.

In line with its successful long-term investment strategy, the Group will continue to support LEBC as it evolves its business, which provides a range of financial solutions, for the benefit of its customers, staff and shareholders. LEBC has implemented a significant restructuring and is working on a number of initiatives, some of which have already been implemented, including its bionic advice offering. The Group will work closely with LEBC's management team to return LEBC to the position it was in before the withdrawal from the DB market, and have recently assisted in the recruitment of a new Chairman to the holding company Board.

Since the Company invested in LEBC in April 2007, the current valuation represents a 1.9x money multiple.

Nexus Underwriting Management Limited ("Nexus")

In April 2019 the Group provided Nexus with a £2m revolving credit facility, as part of Nexus' wider debt fundraising exercise in order to undertake M&A activity, bringing the total loan funding from the Company to £6.0m.

In addition to the facility from the Company, Nexus secured an additional £14.0m loan facility from funds managed by HPS Investment Partners, LLC ("HPS"), a leading global investment firm.

The funding provided by both B.P. Marsh and HPS has resulted in Nexus securing a total of £46.0m of loan funding, including the £30.0m of loan funding secured from both B.P. Marsh and HPS in July 2017.

Nexus is forecasting an adjusted EBITDA of c.£20m over the next 12 months, which would represent a compound annual increase in EBITDA of 45% since B.P. Marsh's investment in August 2014.

During the Period, Nexus completed 3 acquisitions; Credit & Business Finance Limited ("CBF"), a specialist trade credit broker, Capital Risks MGA Limited ("Capital Risks"), a Warranty and Indemnity MGA, and Plus Risk Limited ("PBL"), a Financial and Professional Lines MGA.

Following the acquisition of CBF, Nexus became the leading independent UK trade credit broker, fulfilling one of its strategic goals as well as uniting the two biggest producers of 'new to market' business.

As part of the acquisitions, key management from the new acquisitions became shareholders in Nexus. The new acquisitions have increased Nexus' forecast revenue by £2.83m and EBITDA by £1.39m. The Group recognises the recent growth in Nexus, which has been reflected in the Company's valuation for its holding in Nexus increasing from £30.12m to £40.3m.

Nexus were pleased to announce the appointment of Andrew Moss, as non-executive Chairman. Andrew spent five years as Group CEO of Aviva Plc, and prior to this he held senior positions within Lloyd's of London. He was most recently Chairman of Parker Fitzgerald, a London Based management consultancy firm, where he helped steer their recent acquisition by Accenture to its successful outcome.

The Company welcomed this appointment pursuant to Nexus' avowed goal of achieving £20m of annualized EBITDA by the 2020 financial year, which will well position it as the pre-eminent London Market specialty MGA and strategically manoeuvre Nexus to review its next stage of development.

CBC UK Limited ("CBC")

CBC, the London-based Lloyd's broking business has increased its EBITDA by 40% in 2018, and is on target for increasing at the same rate in 2019.

CBC continues to strengthen its product offering with strategic hires and has recently hired an experienced Financial Products team. During the Period, the Group provided a £0.5m loan to support CBC in these endeavours.

The Fiducia MGA Company Limited ("Fiducia")

In November 2016, the Group invested in Fiducia, a UK Marine Cargo Underwriting Agency, established by CEO Gerry Sheehy, based in Leeds.

Fiducia is a registered Lloyd's Coverholder which specialises in the provision of insurance solutions across a number of Marine risks including Cargo, Transit Liability, Engineering and Terrorism Insurance.

During the Period, the Group invested £0.12m in Fiducia, being its pro-rata share of a £0.35m fundraising, with the remainder being provided by its CEO and founder, Gerry Sheehy.

Since Fiducia commenced trading, it has grown from a start-up position to producing in excess of estimated £10m forecast Net Written Premium in the year ending 31 December 2019, across its specialist lines of business.

EC3 Brokers Limited ("EC3")

In December 2017, the Group invested in EC3, an independent specialist Lloyd's broker and reinsurance broker.

Since investment, EC3 is expected to grow its top line revenue from c. £9m to a budgeted target of approaching £14m in the year to 31 December 2019, whilst also maintaining a good underlying profit margin.

Over the same period, B.P. Marsh has worked with EC3 to augment its management function, and further develop its product offering to deliver both top and bottom-line growth.

Walsingham Motor Insurance Limited ("Walsingham")

Walsingham, the London-based motor fleet MGA, continued its strong progress in 2018 reporting £19.8m in premium and generating EBITDA for the year of £0.6m. 2019 has seen further steady growth, reporting £21.5m in premium in 10 months' trading with EBITDA expected to be c.60% ahead of 2018.

USA

XPT Group LLC ("XPT")

The Group invested into XPT, the U.S. based specialty lines insurance distribution company, in June 2017.

In July 2019, XPT acquired Klein & Costa Insurance Services ("Klein & Costa"), an MGA and surplus lines broker located in Santa Ana, California.

Established in 2001, Klein & Costa provides broking services in the areas of Professional Liability and Speciality Lines, and as an MGA it represents three carriers with broad delegated underwriting authority.

Following the acquisition, Klein & Costa became part of Western Security Surplus Insurance Brokers ("WSSIB"), XPT's wholesaler and MGA based in Texas and California, and began trading under the WSSIB name. This acquisition provided WSSIB with entry into a new location and introductions to Klein & Costa's retail producers.

Since XPT commenced trading, it has grown from start-up to $165.0m in Gross Written Premium and is approaching $3.9m of adjusted EBITDA in its current financial year ending 31 December 2019.

Following the Period-end, XPT successfully secured $40m, in aggregate, of funding from Madison Capital Funding LLC ("Madison Capital"). As part of the transaction, Madison Capital took an equity interest in XPT Group LLC.

XPT has secured loan funding of $18.0m to refinance its current debt facility, and an additional $22.0m to support future growth. The financing with Madison Capital provides XPT with an opportunity to enter the next phase of its development and continue to seek strategic acquisitions in the North American insurance market.

As part of the fund raising, Madison Capital invested $2.0m and took an equity holding in XPT which values XPT at an enterprise value of $54.0m. This is approximately 10% greater than the Group's 31 July 2019 valuation.

In tandem with the fundraising, XPT completed the acquisition of Sierra Specialty Insurance Services, Inc ("Sierra"). Sierra is an MGA and wholesale broker based in Fresno, California, and specialises in the provision of insurance to independent retail agents. Sierra represents XPT's fifth acquisition of an established business.

Australia

ATC Insurance Solutions (PTY) Limited

Sterling Insurance (PTY) Limited

MB Prestige Holdings (PTY) Limited

Ag Guard (PTY) Limited

B.P. Marsh's existing investments in Australia continue to perform well in a challenging insurance market, with premium income and profitability increasing across the board.

This is in response to a more positive insurance market internationally, and it also underlines the intrinsic quality of these companies and their management teams.

Additionally, the Group was pleased to note that all of the Company's Australian MGAs successfully renewed their underwriting capacity support with Lloyd's and the international insurance markets.

ATC Insurance Solutions (PTY) Limited ("ATC") saw strong growth throughout the Period, reporting a significant increase of Gross Written Premium from AUD 61.0m in 2018 to AUD 84.0m in 2019.

The Company's newest investment, Ag Guard, is a start-up which will no doubt face initial challenges, however we believe that the management team we have backed, with our investment support and underwriting support from Munich Re, has a strong growth horizon looking to the future.

Canada

Stewart Specialty Risk Underwriting Ltd ("SSRU")

SSRU, the Toronto-based provider of specialty insurance products to a wide array of clients in the Construction, Manufacturing, Onshore Energy, Public Entity and Transportation sectors, commenced operations in February 2017.

Since the Group's investment, SSRU has grown its Gross Written Premium from nil to a forecast position of over CA$9.0m in the year ending 31 December 2019, and achieving a profit and dividend yield.

Europe

Summa Insurance Brokerage, S.L. ("Summa")

Summa is a regional consolidator of insurance brokers with 16 branches across Spain.

Whilst the Spanish insurance market continues to be a challenging place in which to operate, Summa continues to deliver c. €45.0m of annual premium and an annual adjusted EBITDA of over €1.2m.

The Group is also pleased to note that Summa has recently achieved Lloyd's Coverholder status, which will bolster its product offering going forward.

Dividend

In July 2019 the Group paid a dividend of £1.7m to shareholders, equating to a dividend per share of 4.76p. The Board continues to strike a balance between investing cash into new opportunities for long-term capital growth and providing shareholders with a yield. This was the final dividend from an agreed three-year distribution following the successful realisation of Besso in February 2017. The Board is committed to paying further dividends funded by the proceeds of future portfolio realisations.

Share Buy-Backs

The Group has a share buy-back policy, as announced on 17 July 2019, that enables it to buy back shares when the Company's share price is more than 15% below the Company's most recently published Net Asset Value, within the permitted constraints of the Market Abuse Regulation.

The Board remains of the view that the authority to undertake low volume buy-backs of shares, when regulatory restrictions allow, is an important stabilising mechanism in times of market or share price volatility. During the Period, the buy-backs were conducted with the backdrop of market turbulence and the Board believes that these transactions had a stabilising effect on the Company's share price.

During the six-month period to 31 July 2019 a number of buy-backs were undertaken, amounting to 51,416 shares, at an average price of £2.81 per share, which are being held in Treasury.

Directorate Changes

On 23 August 2019, the Group announced that Camilla Kenyon would be resigning her position as Executive Director, with effect from 31 August 2019.

Millie had worked with the Company since 2006. The Board is grateful for her contribution as an Executive Director since 2011.

As part of Millie's departure from the Group, an internal restructuring process was undertaken with her role being divided amongst the existing Management Team. The Investor Relations function will sit with the Chairman, Managing Director and Company Secretary, and New Business responsibilities will be assumed by the Investment Department.

On 2^nd October 2019, the Group announced that Campbell Scoones, aged 72, resigned as a Non-Executive Director of the Company. Campbell also resigned from his role on the Remuneration Committee. The Nominations Committee will be considering candidates for Campbell's replacement.

Business Strategy

The Group invests amounts of up to £5m in the first round of funding and takes minority equity positions in financial services intermediaries, normally acquiring between 20% and 40% of an investee company's total equity. During the holding period, additional investment can lead to the Group having a majority holding, as is the case currently in LEBC and Summa. In these circumstances, day to day business operation remains with management, with the Group providing input, advice and assistance, as with all of its portfolio businesses.

The Group makes long-term investments with an average holding period post-float of 6.4 years, with our current portfolio being held on average for approximately 4.3 years. As ever, we do not invest in companies that accept Insurance Underwriting risk.

The Group requires its investee companies to adopt minority shareholder protections and to appoint a nominee director to its board.

Since 1990 the Group has generated an average NAV annual compound growth rate of 11.7% (excluding the £10.1m proceeds raised on flotation and £16.6m proceeds raised as part of the Placing & Open Offer completed in July 2018). Its successful track record can be attributed to a number of factors that include a robust investment process, management's considerable sector experience and a flexible approach to exit.

Outlook and New Business Opportunities

In addition to making the investment in Ag Guard during the Period to 31 July 2019, the Group continues to look at a number of MGAs and Insurance Brokers both domestically and internationally, alongside several interesting opportunities outside the insurance space.

36% of enquiries received by the Company emanated internationally, and 64% of enquires received by the Company were domestic.

The Group has produced a satisfactory overall performance in the Period. The Group's strategy is to generate long-term value and the Board is confident in the Group's ability to do so, notwithstanding short-term market uncertainties.

Brian Marsh OBE, Chairman

14 October 2019

Investments

As at 31 July 2019 the Group's equity interests were as follows:

AG Guard PTY Limited

(www.agguard.com.au)

In July 2019 the Group subscribed for a 36% stake in Agri Services Company PTY Limited, which in turn acquired 100% of the equity in Ag Guard PTY Limited ("Ag Guard"). Ag Guard is a Managing General Agency, which provides insurance to the Agricultural Sector, based in Sydney, Australia.

Date of investment: July 2019

Equity stake: 36%

31 July 2019 valuation: £827,000

Asia Reinsurance Brokers Pte Limited

(www.arbrokers.asia)

In April 2016 the Group invested in Asia Reinsurance Brokers Pte Limited ("ARB"), the Singapore headquartered independent specialist reinsurance and insurance risk solutions provider. ARB was established in 2008, following a management buy-out of the business from AJ Gallagher, led by the CEO, Richard Austen.

Date of investment: April 2016

Equity stake: 25%

31 July 2019 valuation: £692,000

ATC Insurance Solutions PTY Limited

(www.atcis.com.au)

In July 2018, the Group invested in ATC, an Australian-based MGA and Lloyd's Coverholder, specialising in Accident & Health, Construction & Engineering, Trade Pack and Sports insurance.

Date of investment: July 2018

Equity stake: 20%

31 July 2019 valuation: £7,157,000

CBC UK Limited

(www.cbcinsurance.co.uk)

Established in 1985, CBC is a Retail and Wholesale Lloyd's Insurance Broker, offering a wide range of services to commercial and personal clients as well as broking solutions to intermediaries. The Group assisted in an MBO of CBC allowing Management to buy out a major shareholder via parent company Paladin Holdings Limited.

Date of investment: February 2017

Equity stake: 44.3%

31 July 2019 valuation: £4,907,000

Criterion Underwriting Pte Limited

The Group helped establish Criterion alongside its Partners in Asiare Holdings (PTE) Limited and Asia Reinsurance Brokers (PTE) Limited in July 2018. Criterion is a start-up Singapore-based Managing General Agency providing specialist insurance products to a variety of clients in the Cyber, Financial Lines and Marine sectors in Far East Asia.

Date of investment: July 2018

Equity stake: 29.4%

31 July 2019 valuation: £0

EC3 Brokers Limited

(www.ec3brokers.com)

In December 2017, the Group invested in EC3 Brokers Limited, an independent specialist Lloyd's broker and reinsurance broker, via a newly established NewCo, EC3 Brokers Group Limited. Founded by its current Chief Executive Officer Danny Driscoll, who led a management buyout to acquire EC3's then book of business from AJ Gallagher in 2014, EC3 provides services to a wide array of clients across a number of sectors, including construction, casualty, entertainment and cyber & technology.

Date of investment: December 2017

Equity Stake: 20%

31 July 2019 valuation: £5,911,000

The Fiducia MGA Company Limited

(www.fiduciamga.co.uk)

Fiducia, founded in November 2016, is a UK Marine Cargo Underwriting Agency, established by its CEO Gerry Sheehy. Fiducia is a Lloyd's Coverholder which specialises in the provision of insurance solutions across a number of Marine risks including, Cargo, Transit Liability, Engineering and Terrorism Insurance.

Date of investment: November 2016

Equity stake: 35.2%

31 July 2019 valuation: £926,000

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: 59.3%

31 July 2019 valuation: £23,859,000

Mark Edward Partners LLC

(www.markedwardpartners.com)

Founded in 2010 by Mark Freitas, its President & Chief Executive Officer, Mark Edward Partners LLC ("MEP") provides core insurance products in Financial & Liability, Property & Casualty, Personal Lines, Life Insurance, Cyber and Affinity Groups. MEP is a national U.S. firm with licenses to operate in all 50 states and has offices in New York, Palm Beach and Los Angeles.

Date of investment: October 2017

Equity stake: 30%

31 July 2019 valuation: £0

MB Prestige Holdings PTY Limited

(www.mbinsurance.com.au)

In December 2013 the Group invested in MB Prestige Holdings PTY Ltd ("MB Group"), the parent Company of MB Insurance Group PTY a Managing General Agent, headquartered in Sydney, Australia. MB Group is recognised as a market leader in respect of prestige motor vehicle insurance in all mainland states of Australia.

Date of investment: December 2013

Equity stake: 40%

31 July 2019 valuation: £2,568,000

Nexus Underwriting Management Limited

(www.nexusunderwriting.com)

In 2014 the Group invested in Nexus Underwriting Management Limited ("Nexus"), an independent specialty Managing General Agency, founded in 2008. Through its operating subsidiaries Nexus specialises in the provision of Directors & Officers, Professional Indemnity, Financial Institutions, Accident & Health, Trade Credit, Political Risks Insurance, Surety, Bond and Latent Defect Insurance, both in the UK and globally.

Date of investment: August 2014

Equity stake: 17.8%

31 July 2019 valuation: £40,295,000

Stewart Specialty Risk Underwriting Ltd

(www.ssru.ca)

A Canadian based Managing General Agent, providing insurance solutions to a wide array of clients in the Construction, Manufacturing, Onshore Energy, Public Entity and Transportation sectors. SSRU was established by its CEO Stephen Stewart, who has over 25 years' experience in the insurance industry having had senior management roles at both Ironshore and Lombard in Canada.

Date of investment: January 2017

Equity stake: 30%

31 July 2019 valuation: £1,103,000

Sterling Insurance PTY Limited

(www.sterlinginsurance.com.au)

In June 2013, in a joint venture enterprise alongside Besso, (Neutral Bay Investments Limited) the Group invested in Sterling Insurance PTY Limited, an Australian specialist underwriting agency offering a range of insurance solutions within the Liability sector, specialising in niche markets including mining, construction and demolition.

Date of investment: June 2013

Equity stake: 19.7%

31 July 2019 valuation: £2,493,000

Summa Insurance Brokerage, S. L.

(www.grupo-summa.com)

In January 2005 the Group provided finance to a Madrid-based Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Spain. Through acquisition Summa is able to achieve synergistic savings, economies of scale and greater collective bargaining thereby increasing overall value.

Date of investment: January 2005

Equity stake: 77.3%

31 July 2019 valuation: £4,443,000

Walsingham Motor Insurance Limited

(www.walsinghamunderwriting.com)

In December 2013 the Group invested in Walsingham Motor Insurance Limited, a niche UK fleet motor Managing General Agency, which commenced trading in July 2013. In 2015 the Group acquired a further 10.5% equity, taking the current shareholding to 40.5%.

Date of investment: December 2013

Equity stake: 40.5%

31 July 2019 valuation: £1,839,000

XPT Group LLC

(www.xptspecialty.com)

In June 2017 the Group backed the ex-Swett & Crawford CEO Tom Ruggieri and a strong management team to develop a New York-based wholesale insurance broking and underwriting agency platform across the U.S. Specialty Insurance Sector.

Date of investment: June 2017

Equity stake: 35%

31 July 2019 valuation: £9,949,000

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 2019

	Notes	Unaudited		Unaudited		Audited
		6 months to		6 months to		Year to
		31^st July 2019		31^st July 2018		31^st January 2019
				Restated*		Restated*
		£'000	£'000	£'000	£'000	£'000	£'000
GAINS ON INVESTMENT
Provision against equity investments and loans		(36)		-		(2,595)
Unrealised gains on equity investment revaluation	4	4,077		5,540		14,106
			4,041		5,540		11,511
INCOME
Dividends		1,879		1,585		2,684
Income from loans and receivables		615		539		1,079
Fees receivable		600		572		868
			3,094		2,696		4,631
OPERATING INCOME			7,135		8,236		16,142

Operating expenses			(1,706)		(1,956)		(3,928)

OPERATING PROFIT			5,429		6,280		12,214

Financial income		14		66		108
Financial expenses		(38)		(46)		(88)
Exchange movements		171		27		(25)
			147		47		(5)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION			5,576		6,327		12,209

Income taxes			18		(79)		232

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS	6		£5,594		£6,248		£12,441


TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	6		£5,594		£6,248		£12,441

Earnings per share - basic and diluted (pence)	3		15.6p		20.8p		37.6p

*Restated for IFRS 16 (Refer to Note 10)

The result for the period is wholly attributable to continuing activities.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31ST JULY 2019

		Unaudited		Unaudited		Audited
	Notes	31^st July 2019		31^st July 2018		31^st January 2019
				Restated*		Restated*
		£'000	£'000	£'000	£'000	£'000	£'000
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment		150		158		158
Right-of-use asset		1,378		1,560		1,468
Investments - equity portfolio	4	106,969		88,291		101,947
Investments - treasury portfolio	5	-		4		14
Loans and receivables		16,339		14,753		14,509
			124,836		104,766		118,096
CURRENT ASSETS
Trade and other receivables		5,626		2,412		2,867
Cash and cash equivalents		1,420		15,350		7,855
			7,046		17,762		10,722
LIABILITIES

NON-CURRENT LIABILITIES
Lease liabilities		(1,289)		(1,453)		(1,372)
Deferred tax liabilities	8	-		-		-
			(1,289)		(1,453)		(1,372)
CURRENT LIABILITIES
Trade and other payables		(401)		(825)		(1,064)
Lease liabilities		(163)		(156)		(160)
Corporation tax provision		(48)		(61)		(48)
			(612)		(1,042)		(1,272)

NET ASSETS			£129,981		£120,033		£126,174

CAPITAL AND RESERVES - EQUITY

Called up share capital			3,748		3,599		3,748
Share premium account			29,363		25,327		29,358
Fair value reserve			50,204		37,562		46,128
Reverse acquisition reserve			393		393		393
Capital redemption reserve			6		6		6
Capital contribution reserve			31		10		21
Retained earnings			46,236		53,136		46,520

SHAREHOLDERS' FUNDS - EQUITY	6		£129,981		£120,033		£126,174

Net Asset Value per share (pence)			361p		333p		350p

*Restated for IFRS 16 (Refer to Note 10)

The Interim Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 14th October 2019

and signed on its behalf by:

B.P. Marsh & J.S. Newman

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31ST JULY 2019

	Unaudited	Unaudited	Audited
	31^st July 2019	31^st July 2018	31^st January 2019
		Restated*	Restated*
	£'000	£'000	£'000
Cash used by operating activities
Income from loans to investees	615	539	1,079
Dividends	1,879	1,585	2,684
Fees received	600	572	868
Operating expenses	(1,706)	(1,956)	(3,928)
Net corporation tax repaid / (paid)	310	(1,168)	(1,170)
Purchase of equity investments (Note 4)	(945)	(3,629)	(8,719)
Net proceeds from sale of equity investments	-	-	-
Net loan (payments to) / repayments from investee companies	(4,711)	234	(1,953)
Adjustment for non-cash share incentive plan	70	69	104
Increase in receivables	(49)	(573)	(954)
Decrease in payables	(664)	(647)	(406)
Depreciation and amortization	105	103	211
Net cash used by operating activities	(4,496)	(4,871)	(12,184)

Net cash from investing activities
Purchase of property, plant and equipment	(8)	(5)	(20)
Purchase of treasury investments (Note 5)	-	(27)	(27)
Net proceeds from sale of treasury investments (Note 5)	14	2,834	2,828
Net cash from investing activities	6	2,802	2,781

Net cash (used by) / from financing activities
Financial income	14	7	45
Financial expenses	(38)	(42)	(84)
Net decrease in lease liabilities	(79)	(75)	(152)
Dividends paid	(1,712)	(1,714)	(1,714)
Net proceeds on issue of company shares	-	16,597	16,589
Payments made to repurchase company shares	(145)	-	(79)
Net cash (used by) / from financing activities	(1,960)	14,773	14,605

Change in cash and cash equivalents	(6,450)	12,704	5,202
Cash and cash equivalents at beginning of the period	7,855	2,648	2,648
Exchange movement	15	(2)	5

Cash and cash equivalents at end of period†	£1,420	£15,350	£7,855

*Restated for IFRS 16 (Refer to Note 10)

All differences between the amounts stated in the Consolidated Statement of Cash Flows and the Consolidated Statement of Comprehensive Income are attributed to non-cash movements.

†The above cash and cash equivalents balance excludes treasury portfolio funds which are referred to in Note 5. Including treasury portfolio balances of £Nil, total available cash and treasury portfolio funds as at 31st July 2019 was £1,420k (as at 31st July 2018: £15,354k, including £4k of treasury portfolio funds and as at 31st January 2019: £7,869k, including £14k of treasury portfolio funds).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31ST JULY 2019

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	31^st July 2019	31^st July 2018	31^st January 2019
		Restated*	Restated*
	£'000	£'000	£'000

Opening total equity	126,174	98,833	98,833
Comprehensive income for the period	5,594	6,248	12,441
Dividends paid	(1,712)	(1,714)	(1,714)
Repurchase of company shares	(145)	-	(79)
Share incentive plan	70	69	104
New shares issued (net funds raised)	-	16,597	16,589
Total equity	£129,981	£120,033	£126,174

*Restated for IFRS 16 (Refer to Note 10)

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 2019

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 are presented in sterling, the functional currency of the Group, rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances, the results of which form the basis of judgements about the carrying amounts of assets and liabilities. Actual results may differ from those amounts.

In the process of applying the Group's accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognised in the financial statements:

Assessment as an investment entity

Entities that meet the definition of an investment entity within IFRS 10: Consolidated Financial Statements ("IFRS 10") are required to account for their investments in controlled entities, as well as investments in associates at fair value through profit or loss. Subsidiaries that provide investment related services or engage in permitted investment related activities with investees that relate to the parent investment entity's investment activities continue to be consolidated in the Group results. The criteria which define an investment entity are currently as follows:

a) an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;

b) an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

c) an entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

The Group's annual and interim consolidated financial statements clearly state its objective of investing directly into portfolio investments and providing investment management services to investors for the purpose of generating returns in the form of investment income and capital appreciation. The Group has always reported its investment in portfolio investments at fair value. It also produces reports for investors of the funds it manages and its internal management report on a fair value basis. The exit strategy for all investments held by the Group is assessed, initially, at the time of the first investment and this is documented in the investment paper submitted to the Board for approval.

The Board has also concluded that the Company meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of equities and similar securities; it has more than one investor and its investors are not related parties. The Board has concluded that B.P. Marsh & Partners Plc and its three trading subsidiaries, B.P. Marsh & Company Limited, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited, which provide investment related services on behalf of B.P. Marsh & Partners Plc, all meet the definition of an investment entity. These conclusions will be reassessed on an annual basis for changes to any of these criteria or characteristics.

Application and significant judgments

When it is established that a parent company is an investment entity, its subsidiaries are measured at fair value through profit or loss. However, if an investment entity has subsidiaries that provide services that relate to the investment entity's investment activities, the exception to the Amendment of IFRS 10 is not applicable as in this case, the parent investment entity still consolidates the results of its subsidiaries. Therefore, the results of B.P. Marsh & Company Limited, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited continue to be consolidated into its Group financial statements for the period.

The most significant estimates relate to the fair valuation of the equity investment portfolio as detailed in Note 4 to the Financial Statements. The valuation methodology for the investment portfolio is detailed below. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

These interim consolidated financial statements were approved by the Board on 14th October 2019. They have not been audited nor reviewed by the Group's Auditors, as is the case with the comparatives to 31st July 2018, 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 2019. Those accounts, upon which the Group's Auditor 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.

First time adoption of IFRS 16: Leases

IFRS 16: Leases ("IFRS 16") was introduced on 13th January 2016 and replaces IAS 17: Leases ("IAS 17"). This standard became effective for all accounting periods beginning on or after 1st January 2019 (with early adoption permitted) and has therefore been adopted within these interim consolidated financial statements for the first time, including restatement of all comparative period information, where applicable.

IFRS 16 requires all operating leases in excess of one year, where the Group is the lessee, to be included in the Group's Statement of Financial Position and recognised as a right-of-use asset and a related lease liability representing the obligation to make lease payments. The right-of-use asset is being amortised on a straight-line basis, with the lease liability being amortised using the effective interest method.

Please refer to Note 10 which sets out the prior period adjustments necessary on transition from IAS 17 to IFRS 16 and its impact upon the Group's consolidated financial statements.

Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

b) exposure, or rights, to variable returns from its involvement with the investee; and

c) the ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

a) rights arising from other contractual arrangements; and

b) the Group's voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of control.

B.P. Marsh & Partners Plc ("the Company"), an investment entity, has three subsidiary investment entities, B.P. Marsh & Company Limited, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited, that provide services that relate to the Company's investment activities. The results of these three subsidiaries, together with other subsidiaries (except for Summa Insurance Brokerage, S.L. ("Summa") and LEBC Holdings Limited ("LEBC")), are consolidated into the Group consolidated financial statements. The Group has taken advantage of the Amendment to IFRS 10 not to consolidate the results of Summa and LEBC. Instead the investments in Summa and LEBC are valued at fair value through profit or loss.

(ii) Associates

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 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: Financial Instruments ("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.

Employee services settled in equity instruments

The Group has entered into a joint share ownership plan ("JSOP") with certain employees and directors. A fair value for the cash settled share awards is measured at the date of grant. The Group measured the fair value using the Expected Return Methodology which was considered to be the most appropriate valuation technique to value the awards.

The fair value of the award is recognised as an expense over the vesting period on a straight-line basis. The level of vesting is assumed to be 100% and will be reviewed annually and the charge is adjusted to reflect actual or estimated levels of vesting with the corresponding entry to capital contribution.

The Group has established an HMRC approved Share Incentive Plan ("SIP"). Ordinary shares in the Company previously repurchased and held in Treasury by the Company have been transferred to The B.P. Marsh SIP Trust ("the SIP Trust"), an employee share trust, in order to be issued to eligible employees. In addition, new shares were issued and allocated to the SIP Trust during the period.

Under the rules of the SIP, eligible employees can each be granted up to £3,600 worth of ordinary shares ("Free Shares") by the SIP Trust in each tax year. The number of shares granted is dependent on the share price at the date of grant. In addition, all eligible employees have been invited to take up the opportunity to acquire up to £1,800 worth of ordinary shares ("Partnership Shares") in each tax year and for every Partnership Share that an employee acquires, the SIP Trust will offer two ordinary shares in the Company ("Matching Shares") up to a total of £3,600 worth of shares. The Free and Matching Shares are subject to a one year forfeiture period, however the awards are not subject to any vesting conditions, hence the related expenses are recognised when the awards are made and are apportioned over the forfeiture period.

The fair value of the services received is measured by reference to the listed share price of the parent company's shares listed on the AIM on the date of award of the free and matching shares to the employee.

Investments - equity portfolio

All equity portfolio 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 equity portfolio investments. In valuing equity portfolio investments the Board applies guidelines issued by the International Private Equity and Venture Capital Valuation Committee ("IPEVCV Guidelines"). The following valuation methodologies have been used in reaching fair value of equity portfolio 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 and/or premiums 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 period. 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 equity portfolio investments are expensed in the Consolidated Statement of Comprehensive Income.

Equity portfolio investments are treated as 'Non-current Assets' within the Consolidated Statement of Financial Position unless the directors have committed to a plan to sell the investment and an active programme to locate a buyer and complete the plan has been initiated. Where such a commitment exists, and if the carrying amount of the equity portfolio investment will be recovered principally through a sale transaction rather than through continuing use, the investment is classified as a 'Non-current asset as held for sale' under 'Current Assets' within the Consolidated Statement of Financial Position.

Income from equity portfolio investments

Income from equity portfolio 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.

Investments - treasury portfolio

All treasury portfolio 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 market value as determined from the valuation reports provided by the fund investment manager.

Both realised and unrealised gains and losses arising from changes in fair market value are taken to the Consolidated Statement of Comprehensive Income for the period. In the Consolidated Statement of Financial Position the unrealised gains and losses arising from changes in fair value are shown within the retained earnings reserve as these investments are deemed as being easily convertible into cash. Costs associated with the management of these investments are expensed in the Consolidated Statement of Comprehensive Income.

Income from treasury portfolio investments

Income from treasury portfolio investments comprises of dividends receivable which are either directly reinvested into the funds or received as cash.

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 and other costs - over the life of the lease

Right-of-use assets

Right-of-use assets are stated at cost which comprises the amount at which the lease liability is measured initially, plus any lease payments made to the lessor before the commencement date, less any lease incentives received, plus any initial indirect costs, less depreciation and any impairment. Depreciation is provided at rates calculated to write off the right-of-use asset's present value over the life of the lease on a straight-line basis.

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.

Income taxes

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 period. 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.

2. SEGMENTAL REPORTING

The Group operates in one business segment; the provision of consultancy services to as well as making and trading investments in financial services businesses.

Under IFRS 8: Operating Segments ("IFRS 8") 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 Non-UK.

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), 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 current and non-current investments).

Each reportable segment derives its revenues from three main sources from equity portfolio investments as described in further detail in Note 1 under 'Income from equity portfolio investments' and also from treasury portfolio investments as described in Note 1 under 'Income from treasury portfolio investments'.

All reportable segments derive their revenues entirely from external clients and there are no inter-segment sales.

	Geographic segment 1: UK		Geographic segment 2: Non-UK		Group

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2019	2018	2019	2018	2019	2018
		Restated*		Restated*		Restated*
	£'000	£'000	£'000	£'000	£'000	£'000
Operating income	1,339	7,238	5,796	998	7,135	8,236
Operating expenses	(1,121)	(1,349)	(585)	(607)	(1,706)	(1,956)
Segment operating profit	218	5,889	5,211	391	5,429	6,280

Financial income	9	46	5	20	14	66
Financial expenses	(25)	(32)	(13)	(14)	(38)	(46)
Exchange movements	7	(1)	164	28	171	27
Profit before tax	209	5,902	5,367	425	5,576	6,327
Income taxes	18	(79)	-	-	18	(79)
Profit for the period	£227	£5,823	£5,367	£425	£5,594	£6,248

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:

	Total income attributable to the investee company (£'000)		% of total realised operating income		Reportable geographic segment

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2019	2018	2019	2018	2019	2018
Investee Company
LEBC Holdings Limited	1,103	930	36	35	1	1
Nexus Underwriting Management Limited	403	313	13	12	1	1
XPT Group LLC¹	380	-	12	-	2	-
Paladin Holdings Limited¹	-	285	-	11	-	1

¹There are no disclosures shown for Paladin Holdings Limited in the current period and for XPT Group LLC in the comparative 6 months to 31st July 2018 and full year to 31st January 2019 as the income derived from these investee companies did not exceed the 10% threshold prescribed by IFRS 8.

*Restated for IFRS 16 (Refer to Note 10)

	Geographic segment 1: UK		Geographic segment 2: Non-UK		Group

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2019	2018	2019	2018	2019	2018
		Restated*		Restated*		Restated*
	£'000	£'000	£'000	£'000	£'000	£'000

Non-current assets
Property, plant and equipment	109	121	41	37	150	158
Right-of-use asset	1,001	1,195	377	365	1,378	1,560
Investments - equity portfolio	77,737	67,658	29,232	20,633	106,969	88,291
Investments - treasury portfolio	-	4	-	-	-	4
Loans and receivables	13,662	11,838	2,677	2,915	16,339	14,753
	92,509	80,816	32,327	23,950	124,836	104,766
Current assets
Trade and other receivables	4,233	976	1,393	1,436	5,626	2,412
Cash and cash equivalents	1,420	15,350	-	-	1,420	15,350
	5,653	16,326	1,393	1,436	7,046	17,762

Total assets	98,162	97,142	33,720	25,386	131,882	122,528

Non-current liabilities
Lease liabilities	(937)	(1,113)	(352)	(340)	(1,289)	(1,453)
	(937)	(1,113)	(352)	(340)	(1,289)	(1,453)
Current liabilities
Trade and other payables	(398)	(825)	(3)	-	(401)	(825)
Lease liabilities	(119)	(120)	(44)	(36)	(163)	(156)
Corporation tax provision	(48)	(61)	-	-	(48)	(61)
	(565)	(1,006)	(47)	(36)	(612)	(1,042)

Total liabilities	(1,502)	(2,119)	(399)	(376)	(1,901)	(2,495)

Net assets	£96,660	£95,023	£33,321	£25,010	£129,981	£120,033


Additions to property, plant and equipment	6	4	2	1	8	5

Depreciation and amortisation of property, plant and equipment	(76)	(79)	(29)	(24)	(105)	(103)

Impairment of investments and loans	-	-	(36)	-	(36)	-

Cash flow arising from:
Operating activities	(2,539)	(1,194)	(1,957)	(3,677)	(4,496)	(4,871)
Investing activities	6	2,802	-	-	6	2,802
Financing activities	(1,960)	14,773	-	-	(1,960)	14,773
Change in cash and cash equivalents	(4,493)	16,381	(1,957)	(3,677)	(6,450)	12,704

	Geographic segment 1: UK	Geographic segment 2: Non-UK	Group

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2019	2019	2019
	Restated*	Restated*	Restated*
	£'000	£'000	£'000

Operating income	16,882	(740)	16,142
Operating expenses	(2,886)	(1,042)	(3,928)
Segment operating profit	13,996	(1,782)	12,214

Financial income	79	29	108
Financial expenses	(65)	(23)	(88)
Exchange movements	8	(33)	(25)
Profit before tax	14,018	(1,809)	12,209
Income taxes	232	-	232
Profit for the year	£14,250	£(1,809)	£12,441

*Restated for IFRS 16 (Refer to Note 10)

	Total income attributable to the investee company (£'000)	% of total realised operating income (excluding gains on investments)	Reportable geographic segment

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2019	2019	2019
Investee Company
LEBC Holdings Limited	1,464	32	1
Nexus Underwriting Management Limited	788	17	1
Paladin Holdings Limited	449	10	1

	Geographic segment 1: UK	Geographic segment 2: Non-UK	Group

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2019	2019	2019
	Restated*	Restated*	Restated*
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	121	37	158
Right-of-use asset	1,128	340	1,468
Investments - equity portfolio	78,309	23,638	101,947
Investments - treasury portfolio	14	-	14
Loans and receivables	11,856	2,653	14,509
	91,428	26,668	118,096
Current assets
Trade and other receivables	1,575	1,292	2,867
Cash and cash equivalents	7,855	-	7,855
	9,430	1,292	10,722

Total assets	100,858	27,960	128,818

Non-current liabilities
Lease liabilities	(1,054)	(318)	(1,372)
	(1,054)	(318)	(1,372)

Current liabilities
Trade and other payables	(1,061)	(3)	(1,064)
Lease liabilities	(123)	(37)	(160)
Corporation tax provision	(48)	-	(48)
	(1,232)	(40)	(1,272)

Total liabilities	(2,286)	(358)	(2,644)

Net assets	£98,572	£27,602	£126,174


Additions to property, plant and equipment	15	5	20

Depreciation and amortisation of property, plant and equipment	(162)	(49)	(211)

Impairment of investments and loans	-	(2,595)	(2,595)

Cash flow arising from:
Operating activities	(3,746)	(8,438)	(12,184)
Investing activities	2,781	-	2,781
Financing activities	14,605	-	14,605
Change in cash and cash equivalents	13,640	(8,438)	5,202

*Restated for IFRS 16 (Refer to Note 10)

As outlined previously, under IFRS 8 the Group reports its operating segments (UK and Non-UK) and associated income, expenses, assets and liabilities based upon the country of domicile of each of its investee companies.

In addition to the segmental analysis disclosure reported above, the Group has undertaken a further assessment of each of its investee companies' underlying revenues, specifically focusing on the geographical origin of this revenue. Geographical analysis of each investee company's 2019 and 2018 revenue budgets was carried out and, based upon this analysis, the directors have determined that on a look-through basis, the Group's portfolio of investee companies can also be analysed as follows:

	Unaudited	Unaudited	Audited
	31^st July 2019	31^st July 2018	31^st January 2019
	%	%	%

UK	50	48	51
Non-UK	50	52	49
Total	100	100	100

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

	Unaudited	Unaudited	Audited
	31^st July 2019	31^st July 2018	31^st January 2019
		Restated*	Restated*
	£'000	£'000	£'000
Earnings
Earnings for the period	5,594	6,248	12,441
Earnings for the purposes of basic and diluted earnings per share being total comprehensive income attributable to equity shareholders	5,594	6,248	12,441
Earnings per share - basic and diluted	15.6p	20.8p	37.6p

Number of shares	Number	Number	Number
Weighted average number of ordinary shares for the purposes of basic earnings per share	35,962,118	30,077,669	33,065,228

Number of dilutive shares under option	Nil	Nil	Nil

Weighted average number of ordinary shares for the purposes of dilutive earnings per share	35,962,118	30,077,669	33,065,228

*Restated for IFRS 16 (Refer to Note 10)

During the 6 months to 31st July 2018 and the 12 months to 31st January 2019 the Company issued a total of 8,252,037 new ordinary shares.

On 12th June 2018 the Company made a Placing Announcement to the market outlining details of a proposed placing of 6,169,194 new ordinary shares (the "Placing") to a new investor, an entity within the PSC Insurance Group ("PSC Group"), at a price of 252 pence per share ("Issue Price"). In addition, in order to provide existing shareholders with an opportunity to participate in the issue of new ordinary shares, the Company launched an open offer (the "Open Offer") to all qualifying shareholders to subscribe for an aggregate of up to 595,238 new ordinary shares at the Issue Price (on the basis of 1 open offer share for every 21 existing ordinary shares held). All new open offer shares were fully subscribed for.

In addition, during those periods, 1,461,302 new ordinary shares of 10 pence each were issued and allotted as part of a new joint share ownership plan ("2018 JSOP"), representing 5.00% of the existing issued share capital at the time the awards were made. This was to provide eligible employees of the Group with a joint beneficial ownership in and opportunity to benefit from any possible appreciation in the value of ordinary shares in the Company subject to a hurdle rate. The new ordinary shares were issued in the name of RBC cees Trustee Limited ("RBC") as trustee of the B.P. Marsh Employees' Share Trust ("Share Trust") at a subscription price of 281 pence, being the mid-market closing price on 12th June 2018. The ordinary shares issued to the Share Trust were partly paid for via a loan from the Company to RBC to cover the subscription cost of the aggregate nominal value of the shares, amounting to £146,130. Refer to Note 10 for further details of the joint share ownership plan.

26,303 new ordinary shares, representing 0.09% of the existing issued share capital at that time, were also issued and allotted to the participants of the Company's Share Incentive Plan ("SIP"). Refer to Note 9 for further details.

Both the 1,461,302 and the 26,303 new ordinary shares issued respectively for the purposes of the 2018 JSOP and the SIP were admitted to trading on AIM on 19th June 2018.

On 5th July 2018, at a General Meeting of the Company, all resolutions set out in a Circular dated 13th June 2018 outlining the conditions of the Placing and Open Offer were duly passed.

Both the Placing and the Open Offer raised total gross proceeds of £17,046,369 (net proceeds of £16,580,674 after costs) and 6,764,432 new ordinary shares were admitted to trading on AIM on 9th July 2018.

Following admission of the aforementioned new ordinary shares, the Company's issued share capital increased from 29,226,040 as at 31st January 2018 to 37,478,077 as at 31st July 2018.

The weighted average number of ordinary shares at 31st July 2018 was calculated by proportioning the Placing and Open Offer shares over the period.

During the period the Company paid £144,553 in order to repurchase 51,416 ordinary shares at an average price of 281 pence per share. During the interim 6 months to 31st July 2018 no share repurchases were made and in the full year to 31st January 2019 the Company paid £79,310 in order to repurchase 28,573 ordinary shares at an average price of 278 pence per share. Distributable reserves were reduced by £144,553 as a result during the period (full year to 31st January 2019: distributable reserves were reduced by £79,310).

Ordinary shares held by the Company in Treasury

Movement of ordinary shares held in Treasury:	Unaudited	Unaudited	Audited
	31^st July 2019	31^st July 2018	31^st January 2019
	Number	Number	Number

Opening total ordinary shares held in Treasury	28,573	21,009	21,009

Ordinary shares repurchased into Treasury during the period	51,416	-	28,573

Ordinary shares transferred to the B.P. Marsh SIP Trust during the period	(19,218)	(21,009)	(21,009)

Total ordinary shares held in Treasury at period end	60,771	-	28,573

The Treasury shares do not have voting or dividend rights and have therefore been excluded for the purposes of calculating earnings per share.

The repurchase of the ordinary shares is borne from the Group's commitment to reduce share price discount to net asset value. Its policy has been throughout the period (and previously) to be able to buy small parcels of shares when the share price is below a fixed percentage of its published Net Asset Value and place them into Treasury. During the interim 6 months to 31st July 2018 this threshold was 20%. During the full year to 31st January 2019 the threshold was 20% until 11th October 2018 when the Group announced an updated Share Buy-Back Policy confirming that the threshold had been reduced from 20% to 15%.

The weighted average number of shares used for the purposes of calculating the earnings per share, net asset value and net asset value per share of the Group excludes the 1,461,302 shares held under joint share ownership arrangements (Note 9) as these were non-dilutive in the period to 31st July 2019, are subject to performance criteria that have not yet been achieved and are held within an Employee Benefit Trust. The Group net asset value has therefore also excluded the economic right the Group has to the first 281 pence per share (£4,106,259) on vesting for the same reasons. On this basis the current net asset value per share is 361 pence for the Group. If the joint share ownership arrangements were included, this would increase the Group's net asset value by £4,106,259 and the net asset value per share would be 358 pence.

The increase to the weighted average number of ordinary shares between the 2018 and 2019 interim periods is mainly attributable to the increased weighting of the new ordinary shares that were issued from the Placing and Open Offer which occurred towards the end of the 6 month interim period to 31st July 2018.

The 19,218 ordinary shares transferred from Treasury to the SIP Trust in June 2019 have been treated as re-issued for the purposes of calculating earnings per share and have therefore also contributed to the increase to the weighted average number of shares in the current period.

33,330 ordinary shares (comprising the 19,218 ordinary shares transferred from Treasury to the SIP Trust during the period together with 14,112 of unallocated ordinary shares acquired by the SIP Trust as part of the new issue of shares by the Company during the interim period to 31st July 2018) were allocated to the participating employees as Free, Matching and Partnership shares under the share incentive plan arrangement in June 2019 (Note 9).

4. NON-CURRENT INVESTMENTS - EQUITY PORTFOLIO

Group Investments
	Unaudited	Unaudited	Audited
	31^st July 2019	31^st July 2018	31^st January 2019
	Continuing investments	Continuing investments	Continuing investments
	£'000	£'000	£'000
At valuation
At 1^st February	101,947	79,122	79,122
Additions	945	3,629	8,719
Disposals	-	-	-
Movement in valuation	4,077	5,540	14,106

At period end	£106,969	£88,291	£101,947

At cost
At 1^st February	55,819	47,100	47,100
Additions	945	3,629	8,719
Disposals	-	-	-

At period end	£56,764	£50,729	£55,819

The principal additions relate to the following transactions in the period:

On 26th April 2019 the Group agreed, as part of a rights issue in conjunction with its fellow shareholder Gerry Sheehy, to provide further funding of £122,909 to The Fiducia MGA Company Limited ("Fiducia") as part of a total fundraising of £350,802. The Group subscribed for a further 48 A ordinary shares in Fiducia which represented its proportional pre-emption rights. As at 31st January 2019 the Group's holding in Fiducia was 35% and following the rights issue this increased to 35.18%.

On 12th July 2019 the Group acquired a 36% stake in Agri Services Company PTY Limited ("Agri Services") for an initial consideration of AUD 1,470,000 (£822,516). Agri Services is the holding company for Ag Guard PTY Limited, which provides insurance solutions for the Australian agricultural sector. Further consideration of up to AUD 1,130,000 (c.£636,000) may become payable subject to agreed conditions.

The unquoted investee companies, which are registered in England except Summa Insurance Brokerage, S.L. (Spain), MB Prestige Holdings PTY Limited (Australia), Bastion Reinsurance Brokerage (PTY) Limited (South Africa), Bulwark Investment Holdings (PTY) Limited (South Africa), Property and Liability Underwriting Managers (PTY) Limited (South Africa), Asia Reinsurance Brokers Pte Limited (Singapore), Stewart Specialty Risk Underwriting Ltd (Canada), XPT Group LLC (USA), Mark Edward Partners LLC (USA), ATC Insurance Solutions PTY Limited (Australia), Criterion Underwriting Pte Limited (Singapore) and Agri Services Company PTY Limited (Australia) 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
			£	£

Agri Services Company PTY Limited¹	36.00	-	-	-	Holding company for specialist Australian agricultural Managing General Agency

Asia Reinsurance Brokers Pte Limited	25.00	31.12.17	2,377,299	(227,666)	Specialist reinsurance broker

ATC Insurance Solutions PTY Limited	20.00	30.06.18	1,690,468	1,065,772	Specialist Australian Managing General Agency

Bastion Reinsurance Brokerage (PTY) Limited	35.00	31.12.17	(618,839)	(292,069)	Reinsurance broker

Bulwark Investment Holdings (PTY) Limited	35.00	31.12.16	(466,434)	(354,827)	Holding company for South African Managing General Agents

Criterion Underwriting Pte Limited¹	29.40	-	-	-	Specialist Singaporean Managing General Agency

EC3 Brokers Group Limited	20.00	31.12.17	893,851	(7,695)	Investment holding company

LEBC Holdings Limited	59.34	30.09.18	7,423,355	3,560,187	Independent financial advisor company

MB Prestige Holdings PTY Limited	40.00	31.12.18	1,884,343	630,641	Specialist Australian Motor Managing General Agency

Mark Edward Partners LLC	30.00	31.12.17	5,046,643	3,470,754	Specialty insurance broker

Neutral Bay Investments Limited	49.90	31.03.18	4,014,882	86,330	Investment holding company

Nexus Underwriting Management Limited	17.77	31.12.18	20,973,929	1,568,016	Specialist Managing General Agency

Paladin Holdings Limited	44.33	31.12.18	105,677	242,277	Investment holding company

Property and Liability Underwriting Managers (PTY) Limited	42.50	31.12.17	(306,965)	(255,986)	Specialist South African Property Managing General Agency

Stewart Specialty Risk Underwriting Ltd	30.00	31.12.18	(58,072)	35,352	Specialist Canadian Casualty Underwriting Agency

Summa Insurance Brokerage, S.L.	77.25	31.12.18	8,382,512	(369,155)	Consolidator of regional insurance brokers

The Fiducia MGA Company Limited	35.18	31.12.18	(2,128,168)	(962,122)	Specialist UK Marine Cargo Underwriting Agency


Walsingham Holdings Limited	20.00	30.09.18	980	(520)	Investment holding company

Walsingham Motor Insurance Limited	40.50	30.09.18	(914,027)	414,950	Specialist UK Motor Managing General Agency

XPT Group LLC	35.00	31.12.17	4,538,143	(1,495,402)	USA Specialty lines insurance distribution company

¹Criterion Underwriting Pte Limited and Agri Services Company PTY Limited are both newly incorporated companies. Statutory accounts are not available as these are not yet due.

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.

5. NON-CURRENT INVESTMENTS - TREASURY PORTFOLIO

Group	Unaudited	Unaudited	Audited
At valuation	31^st July 2019	31^st July 2018	31^st January 2019
	£'000	£'000	£'000

Market value at 1st February	14	2,756	2,756
Additions at cost	-	27	27
Disposals	(14)	(2,834)	(2,828)
Change in value in the year	-	55	59
Market value at period end	£ -	£ 4	£ 14

Investment fund split:

GAM London Limited	-	2	2
Rathbone Investment Management Limited	-	2	12
Total	£ -	£ 4	£ 14

The treasury portfolio comprises of investment funds managed and valued by the Group's investment managers, GAM London Limited and Rathbone Investment Management Limited. All investments in securities are included at year end market value.

The purpose of the funds is to hold (and grow) the Group's surplus cash until such time that suitable investment opportunities arise.

The funds are risk bearing and therefore their value not only can increase, but also has the potential to fall below the amount initially invested by the Group. However, the performance of each fund is monitored on a regular basis and the appropriate action is taken if there is a prolonged period of poor performance.

Investment management costs of £22 (interim 6 months to 31st July 2018: £4,065 and full year to 31st January 2019: £4,125) were charged to the Consolidated Statement of Comprehensive Income during the period.

6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS


		Share		Reverse	Capital	Capital
	Share	premium	Fair value	acquisition	Redemption	contribution	Retained
	capital	account	reserve	reserve	Reserve	reserve	Earnings*	Total
	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)

At 31^st January 2019 (Restated*)	3,748	29,358	46,128	393	6	21	46,520	126,174

Profit for the period	-	-	4,077	-	-	-	1,517	5,594

Dividends paid	-	-	-	-	-	-	(1,712)	(1,712)

Repurchase of Company shares (Note 3)	-	-	-	-	-	-	(145)	(145)

Share Incentive Plan (Note 9)	-	5	-	-	-	10	55	70

At 31^st July 2019	£3,748	£29,363	£50,205	£393	£6	£31	£46,235	£129,981

*Restated for IFRS 16 (Refer to Note 10)

7. LOAN AND EQUITY COMMITMENTS

On 27th January 2017 the Group entered into an agreement to provide a loan facility of CAD 850,000 (subject to certain conditions) to Stewart Specialty Risk Underwriting Ltd ("SSRU"), an investee company. As at 31st July 2019 CAD 450,000 (£279,868) of this facility had been drawn down, leaving a remaining undrawn facility of CAD 400,000.

8. DEFERRED TAX AND CONTINGENT LIABILITIES

The directors estimate that, under the current taxation rules and the current investment profile, if the Group were to dispose of all its investments at the amount stated in the Consolidated Statement of Financial Position, no tax on capital gains (interim 6 months to 31st July 2018: £Nil and full year to 31st January 2019: £Nil) would become payable by the Group.

Finance (No.2) Act 2017 introduced significant changes to the Substantial Shareholding Exemption ("SSE") rules in Taxation of Chargeable Gains Act 1992 Sch. 7AC which applied to share disposals on or after 1 April 2017. In general terms, the rule changes relax the conditions for the Group to qualify for SSE on a share disposal.

Having reviewed the Group's current investment portfolio, the directors consider that the Group should benefit from this reform to the SSE rules on all non-US investments and, as a result, the directors anticipate that on a disposal of shares in the Group's current non-US investments, so long as the shares have been held for 12 months, they should qualify for SSE and no corporation tax charge should arise on their disposal.

New tax legislation was introduced in the US in 2018 which taxes at source gains on disposal of any foreign partnership interests in US LLCs. As such, deferred tax will need to be assessed on any potential net gains from the Group's investment interests in the US.

Having assessed the current portfolio, the directors anticipate that there should currently be no requirement to provide for deferred tax in respect of unrealised gains on investments under the current requirements of the IFRS as the US investments do not currently show a net gain, and the non-US investments are expected to benefit from the SSE rules. As such no deferred tax provision has been made as at 31st July 2019. The requirement for a deferred tax provision is subject to continual assessment of each investment to test whether the SSE conditions continue to be met based upon information that is available to the Group and that there is no change to the accounting treatment in this regard under IFRS. It should also be noted that, until the date of the actual disposal, it will not be possible to ascertain if all the SSE conditions are likely to have been met and, moreover, obtaining agreement of the tax position with HM Revenue & Customs may possibly not be forthcoming until several years after the end of a period of accounts.

9. SHARE BASED PAYMENT ARRANGEMENTS

Joint Share Ownership Plan

During the year to 31st January 2019, B.P. Marsh & Partners Plc entered into joint share ownership agreements ("JSOAs") with certain employees and directors. The details of the arrangements are described in the following table:

Nature of the arrangement	Share appreciation rights (joint beneficial ownership)
Date of grant	12th June 2018
Number of instruments granted	1,461,302
Exercise price (pence)	N/A
Share price (market value) at grant (pence)	281.00
Hurdle rate	3.75% p.a. (simple)
Vesting period (years)	3 years
Vesting conditions	There are no performance conditions other than the recipient remaining an employee throughout the vesting period. The awards vest after 3 years or earlier resulting from either: a) a change of control resulting from a person, or persons acting together, obtaining control of the Company either (i) as a result of a making a Takeover Offer; (ii) pursuant to court sanctioned Scheme of Arrangement; or (iii) in consequence of a Compulsory Acquisition); or b) a person becoming bound or entitled to acquire shares in the Company pursuant to sections 974 to 991 of the Companies Act 2006; or c) a winding up. If the employee is a bad leaver the co-owner of the jointly-owned share can buy out the employee's interest for 0.01p
Expected volatility	N/A
Risk free rate	1%
Expected dividends expressed as a dividend yield	1.9%
Settlement	Cash settled on sale of shares
% expected to vest (based upon leavers)	100%
Number expected to vest	1,461,302
Valuation model	Expected Return Methodology (ERM)
ERM value (pence)	36.00
Deduction for carry charge (pence)	31.60
Fair value per granted instrument (pence)	4.40
Charge for period ended 31st July 2019	£10,618

On 12th June 2018 1,461,302 new 10p Ordinary shares in the Company were issued and transferred into joint beneficial ownership for 12 employees (4 of whom are directors) under the terms of joint share ownership agreements. No consideration was paid by the employees for their interests in the jointly-owned shares.

The new Ordinary shares have been issued into the name of RBC cees Trustee Limited ("the Trustee") as trustee of the B.P. Marsh Employees' Share Trust ("the Trust") at a subscription price of £2.81, being the mid-market closing price on 12th June 2018.

The jointly-owned shares are beneficially owned by (i) each of the 12 participating employees and (ii) the trustee of the Trust upon and subject to the terms of the JSOAs entered into between the participating employee, the Company and the Trustee.

Under the terms of the JSOAs, the employees and directors enjoy the growth in value of the shares above a threshold price of £2.81 per share (market value at the date of grant) plus an annual carrying charge of 3.75% per annum (simple interest) to the market value at the date of grant. The Trust retains the initial market value of the jointly-owned shares plus the carrying cost.

Alternatively, on vesting, the participant and the Trustee may exchange their respective interests in the jointly-owned shares such that each becomes the sole owner of a number of Ordinary shares of equal value to their joint interests.

Participants will therefore receive value from the jointly-owned shares only if and to the extent that the share value grows above the initial market value plus the carrying cost.

The employees and directors received an interest in jointly owned shares and a Joint Share Ownership Plan ("JSOP") is not an option, however the convention for JSOPs is to treat them as if they were options. The value of the employee's interest for accounting purposes is calculated using the Expected Return Methodology.

The risk-free rates are based on the yield on UK Government Gilts of a term consistent with the assumed option life.

No jointly-owned shares were sold or forfeited during the period. The number of jointly-owned shares expected to vest has therefore not been adjusted. In accordance with IFRS 2: Share-based Payment, the fair value of the expected cost of the award (measured at the date of grant) has been spread over the three-year vesting period.

There has been no movement during the period in terms of the numbers of shares to be exercised.

Share Incentive Plan

During the year to 31st January 2017 the Group established an HMRC approved Share Incentive Plan ("SIP").

During the period a total of 19,218 ordinary shares in the Company, which were held in Treasury as at 31st January 2019 (6 months to 31st July 2018 and also 12 months to 31st January 2019: 21,009 ordinary shares in the Company, which were either repurchased during those periods or held in Treasury as at 31st January 2018) were transferred to the B.P. Marsh SIP Trust ("SIP Trust"). As a result, together with 14,112 unallocated shares issued to the SIP Trust during the interim period to 31st July 2018 and full year to 31st January 2019, a total of 33,330 ordinary shares in the Company were available for allocation to the participants of the SIP (6 months to 31st July 2018 and also 12 months to 31st January 2019: 47,312 ordinary shares were available for allocation).

On 13th June 2019, a total of 11 eligible employees (including 4 executive directors of the Company) applied for the 2019-20 SIP and were each granted 1,212 ordinary shares ("19-20 Free Shares"), representing approximately £3,600 at the price of issue.

Additionally, on 13th June 2019, all eligible employees were also invited to take up the opportunity to acquire up to £1,800 worth of ordinary shares ("Partnership Shares"). For every Partnership Share that an employee acquired, the SIP Trust offered two ordinary shares in the Company ("Matching Shares") up to a total of £3,600 worth of shares. All 11 eligible employees (including 4 executive directors of the Company) took up the offer and acquired the full £1,800 worth of Partnership Shares (606 ordinary shares) and were therefore awarded 1,212 Matching Shares.

The 19-20 Free and Matching Shares are subject to a 1 year forfeiture period.

A total of 33,330 (6 months to 31st July 2018 and also 12 months to 31st January 2019: 35,222) Free, Matching and Partnership Shares were granted to the 11 (6 months to 31st July 2018 and also 12 months to 31st January 2019: 11) eligible employees during the period, including 12,120 (6 months to 31st July 2018 and also 12 months to 31st January 2019: 12,808) granted to 4 executive directors of the Company.

As at 31st July 2019 a total of 179,567 Free, Matching and Partnership Shares had been granted to 11 eligible employees under the SIP, including 74,268 granted to 4 executive directors of the Company.

£39,202 of the IFRS 2 charges (6 months to 31st July 2018: £37,921 and 12 months to 31st January 2019: £76,470) associated with the award of the SIP shares to the 11 (6 months to 31st July 2018 and also 12 months to 31st January 2019: 11) eligible directors and employees of the Company have been recognised in the Statement of Comprehensive Income as employment expenses.

The results of the SIP Trust have been fully consolidated within these financial statements on the basis that the SIP Trust is controlled by the Company.

10. PRIOR PERIOD RESTATEMENT

As detailed in Note 1 to the financial statements, IFRS 16: Leases ("IFRS 16") was adopted for the first time in this period.

The primary changes to the Group's Statement of Comprehensive Income within these interim consolidated financial statements are as follows:

a) The Group is no longer recognising rental costs associated with the operating lease on its office premises within its operating expenses. Instead, these rental costs are recognised as an effective repayment of the lease liability included within the Consolidated Statement of Financial Position.

b) The Group is now recognising an amortisation charge on the right-of-use asset which is included within its operating expenses in the Consolidated Statement of Comprehensive Income.

c) The Group is now recognising an interest charge calculated on the lease liability which is included under Financial Expenses within the Consolidated Statement of Comprehensive Income.

The prior period adjustments necessary for the adoption of the new IFRS 16 are detailed below:

Reconciliation of equity at 31st January 2018
	Consolidated Statement of Financial Position as previously reported	Effect of transition to IFRS 16	Restated Consolidated Statement of Financial Position
	£'000	£'000	£'000
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment	167	-	167
Right-of-use asset	-	1,650	1,650
Investments - equity portfolio	79,122	-	79,122
Investments - treasury portfolio	2,756	-	2,756
Loans and receivables	14,421	-	14,421
Deferred tax asset	32	-	32
	96,498	1,650	98,148
CURRENT ASSETS
Trade and other receivables	2,393	-	2,393
Cash and cash equivalents	2,648	-	2,648
	5,041	-	5,041
LIABILITIES

NON-CURRENT LIABILITIES
Lease liabilities	-	(1,532)	(1,532)
	-	(1,532)	(1,532)
CURRENT LIABILITIES
Trade and other payables	(1,472)	-	(1,472)
Lease liabilities	-	(152)	(152)
Corporation tax provision	(1,200)	-	(1,200)
	(2,672)	(152)	(2,824)

NET ASSETS	£98,867	£(34)	£98,833

CAPITAL AND RESERVES - EQUITY

Called up share capital	2,923	-	2,923
Share premium account	9,398	-	9,398
Fair value reserve	32,022	-	32,022
Reverse acquisition reserve	393	-	393
Capital redemption reserve	6	-	6
Capital contribution reserve	7	-	7
Retained earnings	54,118	(34)	54,084

SHAREHOLDERS' FUNDS - EQUITY	£98,867	£(34)	£98,833

Reconciliation of equity at 31st July 2018
	Consolidated Statement of Financial Position as previously reported	Effect of transition to IFRS 16	Restated Consolidated Statement of Financial Position
	£'000	£'000	£'000
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment	158	-	158
Right-of-use asset	-	1,560	1,560
Investments - equity portfolio	88,291	-	88,291
Investments - treasury portfolio	4	-	4
Loans and receivables	14,753	-	14,753
	103,206	1,560	104,766
CURRENT ASSETS
Trade and other receivables	2,412	-	2,412
Cash and cash equivalents	15,350	-	15,350
	17,762	-	17,762
LIABILITIES

NON-CURRENT LIABILITIES
Lease liabilities	-	(1,453)	(1,453)
	-	(1,453)	(1,453)
CURRENT LIABILITIES
Trade and other payables	(825)	-	(825)
Lease liabilities	-	(156)	(156)
Corporation tax provision	(61)	-	(61)
	(886)	(156)	(1,042)

NET ASSETS	£120,082	£(49)	£120,033

CAPITAL AND RESERVES - EQUITY

Called up share capital	3,599	-	3,599
Share premium account	25,327	-	25,327
Fair value reserve	37,562	-	37,562
Reverse acquisition reserve	393	-	393
Capital redemption reserve	6	-	6
Capital contribution reserve	10	-	10
Retained earnings	53,185	(49)	53,136

SHAREHOLDERS' FUNDS - EQUITY	£120,082	£(49)	£120,033

Reconciliation of equity at 31st January 2019
	Consolidated Statement of Financial Position as previously reported	Effect of transition to IFRS 16	Restated Consolidated Statement of Financial Position
	£'000	£'000	£'000
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment	158	-	158
Right-of-use asset	-	1,468	1,468
Investments - equity portfolio	101,947	-	101,947
Investments - treasury portfolio	14	-	14
Loans and receivables	14,509	-	14,509
	116,628	1,468	118,096
CURRENT ASSETS
Trade and other receivables	2,867	-	2,867
Cash and cash equivalents	7,855	-	7,855
	10,722	-	10,722
LIABILITIES

NON-CURRENT LIABILITIES
Lease liabilities	-	(1,372)	(1,372)
	-	(1,372)	(1,372)
CURRENT LIABILITIES
Trade and other payables	(1,064)	-	(1,064)
Lease liabilities	-	(160)	(160)
Corporation tax provision	(48)	-	(48)
	(1,112)	(160)	(1,272)

NET ASSETS	£126,238	£(64)	£126,174

CAPITAL AND RESERVES - EQUITY

Called up share capital	3,748	-	3,748
Share premium account	29,358	-	29,358
Fair value reserve	46,128	-	46,128
Reverse acquisition reserve	393	-	393
Capital redemption reserve	6	-	6
Capital contribution reserve	21	-	21
Retained earnings	46,584	(64)	46,520

SHAREHOLDERS' FUNDS - EQUITY	£126,238	£(64)	£126,174

Reconciliation of net profits
for the 6 months ended 31st July 2018
	£'000	£'000

Total Comprehensive Income as previously reported		6,263
Removal of operating lease costs relating to office premises	117
Amortisation charge relating to right-of-use asset	(90)
Interest charge relating to lease liability	(42)
		(15)

Restated Total Comprehensive Income		£6,248

Reconciliation of net profits
for the year ended 31st January 2019
	£'000	£'000

Total Comprehensive Income as previously reported		12,471
Removal of operating lease costs relating to office premises	236
Amortisation charge relating to right-of-use asset	(182)
Interest charge relating to lease liability	(84)
		(30)

Restated Total Comprehensive Income		£12,441

Reconciliation of movement in retained earnings reserve
	£'000

Adjustment to opening retained earnings as at 31st January 2018	(34)
Adjustment to retained earnings in respect of the year ended 31st January 2019	(30)

Total retained earnings reserve adjustment as at 31st January 2019	£(64)

Notes to Editors:

About B.P. Marsh & Partners Plc

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

Since formation over 25 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 five 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.

Alice Foulk joined B.P. Marsh in September 2011 having started her career at a leading Life Assurance company. In 2014 she took over as Executive Assistant to the Chairman, running the Chairman's Office and established herself as a central part of the management team.

In February 2015 she was appointed as a Director of B.P. Marsh and a member of the Investment Committee. In January 2016 Alice was appointed Managing Director of B.P. Marsh.

In her position as Managing Director, Alice is responsible for the overall performance of the Company and monitoring the Company's overall progress towards achieving the objectives and goals of the Company, as set by the Board.

Dan Topping is the Chief Investment Officer of B.P. Marsh, with over a decade of experience in the financial services sector. Dan graduated from the University of Durham in 2005 and is a member of the Securities and Investment Institute and the Institute of Chartered Secretaries and Administrators. Having spent two years at an independent London accountancy practice, he joined the company in 2007. He was appointed as a Director in 2011 and promoted to his current role in 2015.

Dan is a standing member of the B.P. Marsh Investment and Valuation Committees and currently serves as a Board Director across the portfolio.

Jonathan Newman is a Chartered Management Accountant and is the Group Director of Finance and has over 20 years' experience in the financial services industry. Jon graduated from the University of Sheffield with an honours degree in Business Studies and joined the Group in November 1999, following two years at Euler Trade Indemnity and two years at a Chartered Accountants. Jon is a Member of the Chartered Global Management Accountants, the Chartered Management Accountants and the Chartered Institute of Securities and Investment.

Jon was appointed a Director of B.P. Marsh & Company Limited in September 2001, and Group Finance Director in December 2003 and was instrumental in the admission of the Group to AIM in February 2006. Jon is a member of the B.P. Marsh Investment and Valuation Committees and currently serves as a Nominee Director on the Boards of three Investee Companies, and provides senior financial support and advice to all companies within the Group's portfolio as well as evaluating new investment opportunities.

- Ends -

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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B.P. Marsh & Partners (BPM)

Wednesday, 4th December 2024

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