Final Results

RNS Number : 2493T

B.P. Marsh & Partners PLC

03 June 2009

 



Date:                            3rd June 2009

On behalf of:                 B.P. Marsh & Partners Plc 

Embargoed until:           0700hrs

B.P. Marsh & Partners Plc

('B. P. Marsh', 'the Company' or 'the Group')

Final Results

B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early stage financial services businesses, announces its audited Group final results for the year to 31st January 2009.

Chairman's Statement

I am pleased to present the final audited results for B. P. Marsh & Partners Plc (the 'Group') and its consolidated statements for the year ended 31st January 2009.

Overview

During the financial year ended 31st January 2009 the Group made the following investments:

 

·        We invested a further £1.06m (€1.33m) in Summa Insurance Brokerage S.L. (“Summa”). Based in Madrid, Summa is a consolidator of regional Spanish brokerages. This investment represents the second of three agreed tranches (totalling €4m) of investment, and was made alongside another €4m investment from a well-respected private Spanish investor, to facilitate the next stage of Summa’s expansion. Summa itself completed a number of acquisitions in several regions of Spain during the year under review, bringing its total number of acquisitions to 15 to date;

 

·        We provided a £0.4m loan to Besso Holdings Limited (“Besso”) to fund business development in Australia. Besso is a longstanding investment, acquired by the Group in February 1995, which has experienced steady growth in previous years and seeks to expand further;

 

·        We invested £0.5m in Trillium Partners Limited (“Trillium”), an independent financial advisory firm serving the European Media and Information sector, and we have agreed to provide a further £0.75m in loans, subject to performance, to develop the business further of which £0.25m has been drawn down to date. Trillium was founded in 2004 and has advised corporations, private equity firms and high net worth individuals in relation to a broad range of assignments including acquisitions, disposals, mergers and fund raisings;

 

·        We acquired a 35% shareholding in Amberglobe Limited (“Amberglobe”) for consideration of £0.07m and we have agreed to provide a further £0.63m in loans to develop the business, of which £0.51m has been drawn down to date. Amberglobe is a business that acts as an agent for the sellers of SME businesses in the sub £3m price bracket, such as childcare centres, care homes, corner shops and restaurants.

 

During this period the Group also made the following realisations:

 

·        We sold our investment in Principal Investment Holdings Limited (“Principal”) to the Sanlam Group for an immediate cash payment of £5.8m and a preferred dividend entitlement of £0.17m. The Group was also anticipating further consideration of up to £1.45m, payable on the first and second anniversaries of the sale, subject to the performance of the FTSE 100 index over the years to 31st December 2008 and 31st December 2009 respectively. However, due to the recent turbulence in the financial markets and the poor performance of the FTSE 100 index, the Group has currently written off its expectation of receiving any further consideration from the sale.

 

·        We also sold off the UK Division of Paterson Martin Limited to EMB Consulting Limited for £0.06m whilst maintaining our investment in the North American arm of the business, now renamed Paterson Squared, LLC.

During the year under review, Hyperion Insurance Group Limited ('Hyperion') secured the backing of 3i, a world leader in private equity, who acquired a 29% shareholding in the company in exchange for an investment commitment of £50m. Hyperion repaid the £2.35m loan outstanding to the Group in full. We welcome 3i as an investment partner in Hyperion, which we see as a major step forward in its continued growth and development. As a result of this transaction, the Group's shareholding decreased from 27.89% to 20.02%.

Hyperion was ranked 90th in the 2008 Sunday Times Buyout Track 100. It was also ranked 27th in the 2008 Insurance Times Top 50 UK Brokers league table and 10th in Post Magazine's 2008 Top 25 City Brokers report.

Our colleagues at JMD Specialist Insurance Services Group Limited successfully launched a new Premium Payment Reporting package, which will provide London market organisations with the tools to measure and monitor the Key Performance Indicators for premium processing and payment and enabling them to monitor the impact of the Market Reform changes as well as quantifying their effect on their own organisation. 

In November our colleagues at LEBC Holdings Limited established The Retirement Advisor, an independent financial advisory service that specialises in Pension Funds, particularly with regard to annuities.  

We made a £3.0m profit upon the sale of Principal over the cost of the original investment. However, as the value of the Group's holding in Principal decreased from 31st January 2008 until the sale, it reported a £0.9m loss in the Income Statement. This reduction was due to the economic downturn which directly affected Principal's revenues and lead to a lower valuation. 

In addition we have taken a £4.1m reduction in our valuation of Portfolio Design Group International Limited. 

We currently hold a total of 11 investments, in companies at various stages of development. I have been impressed with their resilience in the light of the current recession that is hitting businesses across the world, but particularly in the financial services industry, and I am confident of the continued success of our portfolio in the forthcoming year. 

In my interim statement in October 2008, I gave thought to the future options that lay open to the Group. I can confirm that although we are continuing as before, these are still under review and being tested by the Board.

Financial Performance

Difficult conditions have been experienced by the market in general during the year under review. According to analysis of statistics provided by the London Stock Exchange, the average market value of companies trading on AIM dropped by 53.9%, from £54m in January 2008 to £24.9m in January 2009. During the same period, the quoted share price of the Group decreased by 51.3%.

By contrast, at 31st January 2009, the net asset value of the Group was £43.9m (2008: £45.6m) after making allowance for deferred Corporation Tax, a decrease of 3.8%.

The directors have noted that the Group has therefore achieved an annual compound growth rate of 13.7% after running costs, realisations, losses and distributions and having made an appropriate allowance for deferred Corporation Tax since its establishment in 1990.

Based upon the above figures, the Group's net asset value per share as at 31st January 2009 was 150p (2008: 156p).

Reflecting the unrealised losses on revaluation of the portfolio, the consolidated loss on ordinary activities after tax for the year was £1.7m (2008: profit of £4.8m). However, excluding portfolio movement the Group made a pre-exceptional items profit of £0.4m (2008: profit of £0.5m).

Business Strategy

The Group typically invests amounts of up to £2.5m and only takes minority equity positions, normally acquiring between 15% and 40% of an investee company's total equity, and based on our current portfolio, the average investment has been held for approximately six years. The Group requires its investee companies to adopt certain minority shareholder protections and appoints a director to the relevant board. The Group's successful track record is based upon a number of factors that include, amongst other things, a robust investment process, the management's considerable experience of the financial services sector, and a flexible approach towards exit strategies. 

The Group currently has committed to provide a further £5.9m of funding for its existing investments. 

This can be broken down into;

£4.6m     - Loan commitments to existing investee companies

£1.3m     - Third capital increase to Summa

After taking this into consideration, the Group currently has approximately £0.9m of cash available for further investments, excluding any realisations.

People

In December 2008 we said farewell to Francis de Zulueta, who had been with the Group for over seven years and who had served as a director since the beginning of 2006. The Board would like to thank him for his dedicated contribution to the Group and wish him every success in the future.

We also said farewell to Clare Ferguson who resigned as non-executive director of the Group with effect from 31st January 2009. She had served the Group as a member of the Board since August 2006 and we would like to thank Clare for her significant contribution to the Group. 

The directors consider that the Group remains unique in its investment sector. We continue to see a large number of investment opportunities with good management and business plans that fit with our tried and tested business strategy.

Brian Marsh OBE

2nd June 2009

Investments

As at 31st January 2009 the Group's equity interests were as follows:

Amberglobe Limited

(www.amberglobe.co.uk)

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

Date of investment: March 2008

Equity stake: 35.0%

31st January 2009 valuation: £70,000

Berkeley (Insurance) Holdings Limited

(www.berkeleyinsurance.com)

In July 2002 the Group invested in Berkeley (Insurance) Holdings, a company that provides its clients with independent advice on the most suitable choice of insurance broker in specialist as well as mainstream insurance areas.

Date of investment: July 2002

Equity stake: 19.9%

31st January 2009 valuation: £4,000

Besso Holdings Limited

(www.besso.co.uk)

In February 1995 the Group assisted a specialist team departing from insurance broker Jardine Lloyd Thompson Group in establishing Besso Holdings. The company specialises in insurance broking for the North American wholesale market.

Date of investment: February 1995

Equity stake: 22.73%

31st January 2009 valuation: £6,804,000

HQB Partners Limited

(www.hqbpartners.com )

In January 2005 the Group made an investment in HQB Partners, a company which provides strategic transaction advice, proxy solicitation services, voting analysis and investor relations services.

Date of investment: January 2005

Equity stake: 27.72%

31st January 2009 valuation: £131,000

Hyperion Insurance Group Limited

(www.hyperiongrp.com)

The Group first invested in Hyperion Insurance Group in 1994. The Hyperion Insurance Group owns, amongst other things, an insurance broker specialising in directors' and officers' ('D&O') and professional indemnity ('PI') insurance. A subsidiary of Hyperion became a registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing general agency specialising in developing D&O and PI business in Europe.

Date of investment: November 1994

Equity: 20.02%

31st January 2009 valuation: £22,932,000

JMD Specialist Insurance Services Group Limited

(www.jmd-sis.com)

In March 2007 the Group invested in JMD, a provider of leading-edge services to the insurance industry. Their unique approach to measurable cash flow and profit enhancements adds value to Lloyd's syndicates, UK and international insurers and re-insurers.

Date of investment: March 2007

Equity stake: 25.0%

31st January 2009 valuation: £600,000

LEBC Holdings Limited

(www.lebc-group.com)

In April 2007 the Group invested in LEBC, an Independent Financial Advisory company providing services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas.

Date of investment: April 2007

Equity stake: 22.5%

31st January 2009 valuation: £2,066,000

Paterson Squared, LLC

(www.paterson2.com)

Paterson Squared was founded by a group of professionals from the actuarial, capital markets and reinsurance advisory sectors in conjunction with the Group. The company uses sophisticated modeling techniques to assess risk, with a view to providing counter-party risk transaction advice.

Date of investment: April 2004

Equity stake: 22.5%

31st January 2009 valuation: £180,000

Portfolio Design Group International Limited

(www.surrendalink.co.uk)

In March 1994 the Group invested in the Portfolio Design Group, a company which sells with-profits life endowment policies to large financial institutions. In 2002 the company diversified into investment management.

Date of investment: March 1994

Equity stake: 20.0%

31st January 2009 valuation: £3,943,000

Public Risk Management Limited

(www.publicriskmanagement.co.uk)

In September 2003 the Group assisted in establishing Public Risk Management, a company which specialises in the development and provision of risk management services, including processes and procedures, to the public sector. This business has now ceased trading.

Date of investment: September 2003

Equity stake: 44.0%

31st January 2009 valuation: £nil

Summa Insurance Brokerage, S. L.

(www.grupo-summa.com)

In January 2005 the Group provided finance to a Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Spain.

Date of investment: January 2005

Equity stake: 48.63%

31st January 2009 valuation: £4,591,000

Trillium Partners Limited

(www.trilliumpartners.co.uk)

In March 2008 the Group invested in Trillium, an independent financial advisory firm serving the European Media and Information sector. Founded in 2004, Trillium has advised corporations, private equity firms and high net worth individuals in relation to a broad range of assignments including acquisitions, disposals, mergers and fund raisings.

Date of investment: March 2008

Equity stake: 25.0%

31st January 2009 valuation: £352,000

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 INCOME STATEMENT

FOR THE YEAR ENDED 31ST JANUARY 2009

	Notes	2009		2008
		£’000	£’000	£’000	£’000
(LOSSES) / GAINS ON INVESTMENTS	1
Realised (losses) / gains on disposal of investments	12	(966)		153
Impairment of investments and loans	12,14	-		(488)
Unrealised (losses) / gains on investment revaluation	12	(2,886)		5,052
			(3,852)		4,717
INCOME
Dividends	1	948		1,336
Income from loans and receivables	1	240		682
Fees receivable	1	731		715
			1,919		2,733
OPERATING (LOSS) / INCOME	2		(1,933)		7,450
Operating expenses	2		(1,944)		(2,249)
OPERATING (LOSS) / PROFIT			(3,877)		5,201
Financial income	2,4	292		183
Financial expenses	2,3	(7)		(30)
Carried interest provision	15	822		(508)
Exchange movements	2,8	201		180
			1,308		(175)
(LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE EXCEPTIONAL ITEMS			(2,569)		5,026
Exceptional items	7		(136)		(175)
(LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION	8		(2,705)		4,851
Income tax	9		978		(21)
(LOSS) / PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS	19		£(1,727)		£4,830
(Loss) / earnings per share – basic and diluted (pence)	10		(5.9)p		16.5p

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

  CONSOLIDATED & COMPANY BALANCE SHEETS

31ST JANUARY 2009

		Group			Company
	Notes	2009	2008		2009	2008
		£'000	£'000		£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	11	72	3		-	-
Investments	12	41,673	49,754		33,728	35,852
Loans and receivables	13	1,955	771		10,155	10,155
		43,700	50,528		43,883	46,007
CURRENT ASSETS
Trade and other receivables	14	776	3,135		-	-
Cash and cash equivalents		7,341	1,701		1	1
TOTAL CURRENT ASSETS		8,117	4,836		1	1
TOTAL ASSETS		51,817	55,364		43,884	46,008
LIABILITIES
NON-CURRENT LIABILITIES
Carried interest provision	15	(736)	(1,558)		-	-
Deferred tax liabilities	16	(6,498)	(7,476)		-	-
TOTAL NON-CURRENT LIABILITIES		(7,234)	(9,034)		-	-
CURRENT LIABILITIES
Trade and other payables	17	(699)	(719)		-	-
TOTAL CURRENT LIABILITIES		(699)	(719)		-	-
TOTAL LIABILITIES		(7,933)	(9,753)		-	-
NET ASSETS		£43,884	£45,611		£43,884	£46,008
CAPITAL AND RESERVES - EQUITY
Called up share capital	18	2,929	2,929		2,929	2,929
Shares to be issued	19	-	397		-	397
Share premium account	19	9,370	9,370		9,370	9,370
Fair value reserve	19	17,396	22,392		31,584	33,311
Reverse acquisition reserve	19	393	393		-	-
Retained earnings	19	13,796	10,130		1	1
SHAREHOLDERS' FUNDS - EQUITY		£43,884	£45,611		£43,884	£46,008

The Financial Statements were approved by the Board of Directors and authorised for issue on 2nd June 2009

and signed on its behalf by:

B.P. Marsh & J.S. Newman

  CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST JANUARY 2009

	Notes		2009		2008
			£’000		£’000
Cash (used by) / from operating activities
Income from loans to investees			240		682
Dividends			948		1,336
Fees received from investment activity			731		715
Operating expenses			(1,944)		(2,249)
Exceptional item – termination payment	7		(136)		-
Increase in receivables			(42)		(166)
Decrease in payables			(20)		(145)
Depreciation	11		14		2
Net cash (used by) / from operating activities			(209)		175
Net cash from / (used by) investing activities
Purchase of property, plant and equipment	11		(83)		-
Purchase of investments	12		(1,629)		(6,011)
Proceeds from investments			5,858		524
Net cash from / (used by) investing activities			4,146		(5,487)
Net cash from / (used by) financing activities
Repayments / (payments) of loans from / (to) investee companies			1,350		(166)
Financial income	4		292		183
Financial expenses	3		(7)		(30)
Net cash from / (used by) financing activities			1,635		(13)
Change in cash and cash equivalents			5,572		(5,325)
Cash and cash equivalents at beginning of the period			1,701		6,989
Exchange gain			68*		37*
Cash and cash equivalents at end of period			£7,341		£1,701

*The exchange gain as noted in the Income Statement is £201k (2008: £180k). The exchange gain in the Consolidated Cash Flow Statement excludes £133k (2008: £143k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement. The comparative amounts in respect of the exchange gain for 2008, which have had no effect on the overall cash balances, have been restated in the Consolidated Cash Flow Statement to ensure the exchange gains are comparable and consistent in both years.

COMPANY CASH FLOW STATEMENT

No Company Cash Flow Statement has been prepared as there has been no cash flow movement in the Company during the current and previous periods. Accordingly the Company's 'cash and cash equivalents' balance as at 31st January 2009 is £1k (2008: £1k).

  STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST JANUARY 2009

	Group		Company
FOR THE YEAR ENDED	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Opening total equity	45,611	40,606	46,008	40,880
Total recognised income and expense for period	(1,727)	4,830	(2,124)	4,953
Shares to be issued (share based payments)	-	175	-	175
TOTAL EQUITY	£43,884	£45,611	£43,884	£46,008

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST JANUARY 2009

1.      ACCOUNTING POLICIES

 

         Basis of preparation of financial statements

 

         These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use by the European Union (“IFRS”), including standards and interpretations issued by the International Accounting Standards Board.

 

         The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluations of financial assets and financial liabilities through the profit or loss.

 

         The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates particularly in relation to investment valuation. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

 

          Basis of consolidation

 

          The Group financial statements consolidate the results and net assets of the Company and all of its subsidiary undertakings. 

 

Business combinations

 

The results of subsidiary undertakings are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 

 

All business combinations are accounted for by using the acquisition accounting method except as noted in the “reverse acquisition accounting” noted below. 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 balance sheet at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28 Investment in Associates (“IAS 28”), which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the profit and loss in the period of the change. The Group has no interests in associates through which it carries on its business.

 

No income statement is prepared for the Company, as permitted by Section 230 of the Companies Act 1985. The Company made a loss for the year of £2,124k (2008: profit of £4,953k).

 

Reverse acquisition accounting

 

On 1st February 2006 B.P. Marsh & Partners Plc became the legal parent company of B.P. Marsh & Company Limited in a share-for-share exchange transaction. The former B.P. Marsh & Company Limited shareholders became the majority holders of the share capital of the enlarged group. Furthermore, the Company’s continuing operations and executive management were those of B.P. Marsh & Company Limited. Therefore the substance of the combination was that B.P. Marsh & Company Limited acquired B.P. Marsh & Partners Plc in a reverse acquisition.

 

Under the requirements of the Companies Act 1985, it would normally be necessary for the Company’s consolidated financial statements to follow the legal form of the business combination. This would mean that the difference between the book value of the shares issued by B.P. Marsh & Partners Plc as consideration for the acquisition of B.P. Marsh & Company Limited and the share capital in B.P. Marsh & Company Limited be accounted for as goodwill. The directors have considered the substance of this transaction and conclude reverse acquisition accounting should be adopted as outlined in IFRS3 as the basis of consolidation in order to give a true and fair view. This compliance with IFRS requires departure from the Companies Act 1985 to follow legal form of the business combination.

 

There are a number of effects on the consolidated financial statements of adopting reverse acquisition accounting. The principal effect of consolidating using reverse acquisition accounting is that no goodwill arose on consolidation. A merger reserve is created which reflects the difference between the book value of the shares issued by B.P. Marsh & Partners Plc as consideration for the acquisition of B.P. Marsh & Company Limited and the share capital in B.P. Marsh & Company Limited. Under normal acquisition accounting the goodwill arising on the investment by B.P. Marsh & Partners Plc in B.P. Marsh & Company Limited would be shown on the consolidated balance sheet and tested annually for impairment in accordance with IAS 38. The directors believe that by adopting reverse acquisition accounting the consolidated income statement more fairly reflects the actual trading results of the Group.

 

Employee services settled in equity instruments

 

The Group issued equity settled share-based awards to certain employees and advisors. A fair value for the equity settled share awards is measured at the date of grant. The Group measured the fair value using the valuation technique most appropriate to value each class of award, either the Black-Scholes or a Trinomial valuation method.

 

The fair value of each award is recognised as an expense over the vesting period on a straight-line basis, after allowing for an estimate of the share awards that will eventually vest. The level of vesting is reviewed annually; and the charge is adjusted to reflect actual or estimated levels of vesting with the corresponding entry to equity.

 

Cancellation of the rights to the equity settled share-based awards by the employees is accounted for as if the relevant employees have left the Group with the related amounts recorded previously in reserves being transferred to retained earnings.

 

          Investments

 

          All investments are designated as “fair value through profit or loss” assets and are initially recognised at the fair value of the consideration. They are measured at subsequent reporting dates at fair value.

 

          The Board conducts the valuations of investments. In valuing investments, the Board applies guidelines issued by the International Private Equity and Venture Capital Valuation (“IPEVCV”). The following valuation methodologies have been used in reaching the fair value of investments, some of which are in early stage companies:

 

a)      at cost, unless there has been a significant round of new equity finance in which case the investment is valued at the price paid by an independent third party. Where subsequent events or changes to circumstances indicate that an impairment may have occurred, the carrying value is reduced to reflect the estimated extent of impairment;

b)      by reference to underlying funds under management;

c)      by applying appropriate multiples to the earnings and revenues of the investee company; or

d)      by reference to expected future cashflow from the investment where a realisation or flotation is imminent.

 

Both realised and unrealised gains and losses arising from changes in fair value are taken to the income statement for the year. In the balance sheet the unrealised gains and losses arising from changes in fair value are shown within a “fair value reserve” separate from retained earnings. Transaction costs on acquisition or disposal of investments are expensed in the income statement.

 

          Income from investments

 

          Income from investments comprises:

 

a)       gross interest from loans, which is taken to the income on an accruals basis;

 

b)       dividends from equity investments are recognised in the income statement when the shareholders rights to receive payment have been established; and

 

c)       advisory fees from management services provided to investee companies, which are recognised on an accruals basis in accordance with the substance of the relevant investment advisory agreement.

 

Carried interest provision

 

This represents the amount payable to a director in the event of a particular investment being sold and is calculated on the fair value of that investment at the balance sheet date.

 

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 - five years

                   Leasehold fixtures and fittings – over the life of the lease

         

Foreign currencies

 

          Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate ruling at the balance sheet date.

 

          Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.

 

          Exchange gains and losses are recognised in the income statement.

 

          Taxation

 

The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable is based on the estimated taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and of liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and it is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be 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 balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current assets and liabilities on a net basis.

 

Pension costs

 

          The Group operates a defined contribution scheme for some of its employees. The contributions payable to the scheme during the period are charged to the income statement.

 

          Operating leases

 

          Rentals under operating leases are charged on a straight line basis over the lease term.

 

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the period until the date the rent is expected to be adjusted to the prevailing market rate.

 

          Financial assets and liabilities

 

Financial instruments are recognised in the balance sheet when the Group becomes party to the contractual provisions of the instrument. De-recognition occurs when rights to cash flows from a financial asset expire, or when a liability is extinguished.

 

Loans and receivables

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. 

 

          Loans and borrowings

 

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowings. After initial recognition, these are subsequently measured at amortised cost using the effective interest method, which is the rate that exactly discounts the estimated future cash flows through the expected life of the liabilities. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

 

Trade and other receivables

 

Trade and other receivables in the balance sheet are initially measured at original invoice amount and subsequently measured after deducting any provision for impairment.

 

Cash and cash equivalents

 

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the cash flow statement, cash and cash equivalents comprise cash and short-term deposits as defined above and other short-term highly liquid investments that are readily convertible into cash and are subject to insignificant risk of changes in value, net of bank overdrafts.

 

Trade and other payables

 

Trade and other payables are stated based on the amounts which are considered to be payable in respect of goods or services received up to the balance sheet date.

 

          International Financial Reporting Standards in issue but not yet effective

 

At the date of authorisation of these consolidated financial statements, the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”) have issued the following standards and interpretations which are effective for annual accounting periods beginning on or after the stated effective date. These standards and interpretations have not been applied early in the preparation of these consolidated financial statements:

 

 

·         IFRS 8: Operating Segments (effective as of 1st January 2009)

 

·         IAS 1: Presentation of Financial Statements (revised) (effective as of 1st January 2009)

 

·         IFRS 3: Business Combinations (revised) (effective as of 1st July 2009)

 

·         IAS 27: Consolidated and Separate Financial Statements (amended) (effective as of 1st July 2009)

 

·         IAS 23: Borrowing Costs (amended) (effective as of 1st January 2009)

 

 

The directors are aware that the application of IFRS 8 may significantly alter the amount and complexity of disclosure contained in the Group’s financial statements. IFRS 1 (revised) sets out overall requirements for the presentation of the financial statements. The revision will introduce a statement of comprehensive income and make changes to the presentation of equity.

 

Other standards, amendments and interpretations have been issued but are not yet effective, and are not expected to be relevant to the Group’s operations. These are not referred to above.

 

 2.    SEGMENTAL REPORTING

PRIMARY REPORTING SEGMENT - GEOGRAPHIC SEGMENTS

For management purposes, the Group is organised and reports its performance by two geographic segments: UK and Channel Islands and non-UK and Channel Islands.

	Geographic segment 1:  UK & Channel Islands		Geographic segment 2: Non-UK & Channel Islands		Group
	2009	2008	2009	2008	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
Operating (loss) / income	(2,802)	6,906	869	544	(1,933)	7,450
Operating expenses	(1,691)	(2,085)	(253)	(164)	(1,944)	(2,249)
Segment operating (loss) / profit	(4,493)	4,821	616	380	(3,877)	5,201
Financial income	254	170	38	13	292	183
Financial expenses	(6)	(28)	(1)	(2)	(7)	(30)
Carried interest provision	822	(508)	-	-	822	(508)
Exchange movements	65	16	136	164	201	180
Exceptional items	(136)	(162)	-	(13)	(136)	(175)
Loss / (profit) before tax	(3,494)	4,309	789	542	(2,705)	4,851
Income tax	1,199	142	(221)	(163)	978	(21)
Loss / (profit) for the year	£(2,295)	£4,451	£568	£379	£(1,727)	£4,830

	2009	2008	2009	2008	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	64	3	8	-	72	3
Investments	36,902	46,662	4,771	3,092	41,673	49,754
Loans and receivables	1,030	80	925	691	1,955	771
	37,996	46,745	5,704	3,783	43,700	50,528
Current assets
Trade and other receivables	465	3,127	311	8	776	3,135
Cash and cash equivalents	7,341	1,701	-	-	7,341	1,701
	7,806	4,828	311	8	8,117	4,836
Total assets	45,802	51,573	6,015	3,791	51,817	55,364
Non-current liabilities
Carried interest provision	(736)	(1,558)	-	-	(736)	(1,558)
Deferred tax liabilities	(6,324)	(7,405)	(174)	(71)	(6,498)	(7,476)
	(7,060)	(8,963)	(174)	(71)	(7,234)	(9,034)
Current liabilities
Trade and other payables	(699)	(719)	-	-	(699)	(719)
Total liabilities	(7,759)	(9,682)	(174)	(71)	(7,933)	(9,753)
Net assets	£38,043	£41,891	£5,841	£3,720	£43,884	£45,611

	Geographic segment 1:  UK & Channel Islands		Geographic segment 2: Non-UK & Channel Islands		Group
	2009	2008	2009	2008	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
Additions to property, plant and equipment	73	-	10	-	83	-
Depreciation of property, plant and equipment	12	2	2	-	14	2

The Group operates in one business segment, provision of consultancy services to and making and trading investments in financial services businesses.

3.    FINANCIAL EXPENSES

	2009	2008
	£'000	£'000
Other interest	£ 7	£ 30

4.    FINANCIAL INCOME

	2009	2008
	£'000	£'000
Bank interest	288	138
Other interest	4	45
	£ 292	£ 183

5.       STAFF COSTS

 

         The average number of employees, including directors, employed by the Group during the year was 17 
(2008: 17). All remuneration was paid by B. P. Marsh & Company Limited.

The related staff costs were:	2009	2008
	£'000	£'000
Wages and salaries	1,009	1,098
Social security costs	119	131
Pension costs	50	61
	£1,178	£1,290

In addition to the above there were termination payments made to staff (inclusive of pension costs) of £136,300 (2008: £nil). Please see Note 7 for further information.

6.      DIRECTORS' EMOLUMENTS 

	2009	2008
The aggregate emoluments of the directors were:	£'000	£'000
Management services - remuneration	751	820
Management services - termination payment (Note 7)	114	-
Fees	29	65
Pension contributions - remuneration	32	40
Pension contributions - termination payment (Note 7)	7	-
	£ 933	£ 925
Highest paid director
Emoluments*	246	190
Pension contribution*	20	11
	£ 266	£ 201

*Includes termination payments made to director. Please see Note 7 for further information.

The Company contributes into personal pension plans on behalf of certain employees and directors. Contributions payable are charged to the income statement in the period to which they relate.

During the period, 3 directors (2008: 5) accrued benefits under money purchase pension schemes.

7.     EXCEPTIONAL ITEMS

	2009	2008
	£'000	£'000
Share based payment provision (Note 23)	-	175
Termination payments made to directors and employees (Note 5)	136	-
	£ 136	£ 175

During the year, one-off compensation payments totalling £136,300 (2008: £nil) were made to two employees (including one director) who left the Group during the year.  

8.          (LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE

             TAXATION

	2009	2008
	£'000	£'000
The (loss) / profit for the period is arrived at after charging / (crediting):
Depreciation of owned tangible fixed assets:	14	2
Auditors remuneration :-
Audit fees for the Company	20	19
Other services:
-Audit of subsidiaries' accounts	10	10
-Taxation	7	9
-Corporate finance transactions	-	10
-Other advisory	10	19
Exchange gain	(201)	(180)
Operating lease rentals of land and buildings	153	118

9.    TAXATION 

	2009	2008
	£'000	£'000
The (credit) / charge for tax comprises:
UK corporation tax charge / (credit) for the year	-	(345)
Deferred tax charge for the year (Note 16)	(978)	366
	£ (978)	£ 21

  Factors affecting the charge for the year

(Loss) / profit on ordinary activities before tax	(2,705)	4,851
Tax at 28% on (loss) / profit on ordinary activities (2008: 30%)	(757)	1,455
Effects of:
Expenses not deductible for tax purposes	22	262
Non taxable expenses / (income)	578	(1,542)
Capital gains on disposal of investments	1,095	-
Other effects:
Capital loss claims brought forward	(361)	-
Unutilised tax losses carried forward	-	198
Management expenses utilised	(745)	-
Provisions against investments not allowable for tax	-	28
Non-taxable income (dividends received)	(238)	(401)
Over provision from prior years	-	(345)
Tax payable on deferred consideration relating to the sale of an investment	406	-
Corporate tax charge / (credit) for the year	£ -	£ (345)

10.     (LOSS) / EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

	2009 £'000	2008 £'000
(Loss) / earnings
(Loss) / earnings for the purpose of basic and diluted earnings per share being net (loss) / profit attributable to equity shareholders	(1,727)	4,830
(Loss) / earnings per share - basic and diluted	(5.9)p	16.5p
Number of shares	Number	Number
Weighted average number of ordinary shares for the purposes of basic earnings per share	29,286,143	29,286,143
Number of dilutive shares under option	Nil	Nil
Weighted average number of ordinary shares for the purposes of dilutive earnings per share	29,286,143	29,286,143

11.    PROPERTY, PLANT AND EQUIPMENT

	Furniture & Equipment £'000	Leasehold Fixtures & Fittings £'000	Total £'000
Group
Cost
At 1st February 2007	99	-	99
Additions	-	-	-
Disposals	-	-	-
At 31st January 2008	99	-	99
At 1st February 2008	99	-	99
Additions	32	51	83
Disposals	(74)	-	(74)
At 31st January 2009	57	51	108
Depreciation
At 1st February 2007	94	-	94
Charge for the year	2	-	2
At 31st January 2008	96	-	96
At 1st February 2008	96	-	96
Eliminated on disposal	(74)	-	(74)
Charge for the year	9	5	14
At 31st January 2009	31	5	36
Net book value
At 31st January 2009	£ 26	£ 46	£ 72
At 31st January 2008	£ 3	£ -	£ 3
At 31st January 2007	£ 5	£ -	£ 5

12.     NON-CURRENT INVESTMENTS

Group		Shares in investee companies
		Total
		£’000
At valuation
At 1st February 2007 previously reported under UK GAAP		37,784
IFRS adjustment		1,050
At 1st February 2007 restated under IFRS		38,834
Additions		6,011
Disposals		(50)
Provisions		(93)
Unrealised gains in this period		5,052
At 31st January 2008		£49,754
At 1st February 2008		49,754
Additions		1,629
Disposals		(6,824)
Provisions		-
Unrealised losses in this period		(2,886)
At 31st January 2009		£41,673

Group		Shares in investee companies
		Total
		£’000
At cost
At 1st February 2007		12,460
Additions		6,011
Disposals		(50)
Provisions		(93)
At 31st January 2008		£18,328
At 1st February 2008		18,328
Additions		1,629
Disposals		(2,914)
Provisions		-
At 31st January 2009		£17,043

The principal additions and disposals in the period are outlined on pages 9 to 10 of the Group Report of the Directors.  

The directors consider that no additional provision is required against the cost of equity investments (2008: £93,328).

The investee companies, which are registered in England except Summa Insurance Brokerage S.L. (Spain), Preferred Asset Management Ltd (Jersey), New Horizons Ltd (Isle of Man) and Paterson Squared, LLC (USA), are as follows:

Name of company	% holding of share capital	Date information available to	Aggregate capital and reserves	Post tax profit/(loss) for the year	Principal activity
			£	£
Amberglobe Limited	35.00	30.04.08	139,285	(60,715)	Business sales platform
Berkeley Insurance (Holdings) Limited	19.90	31.10.07	18,000	(62,000)	Insurance holding company
Besso Holdings Limited	22.73	31.12.08	10,138,223	964,214	Investment holding company
HQB Partners Limited	28.00	31.12.08	166,057	40,583	Investor relations consultants
Hyperion Insurance Group Limited	20.02	30.09.08	37,253,000	1,929,000	Insurance holding company
JMD Specialist Insurance Services Group Limited	25.00	31.10.07	479,426	72,049	Insurance collection services company
LEBC Holdings Limited	22.50	30.09.08	889,946	166,019	Independent financial advisor company
Portfolio Design Group International Limited	20.00	31.12.08	9,592,387	4,081,188	Fund managers of traded endowment policies
Morex Commercial Ltd	20.00	31.12.08	312,379	191,780	Trading in secondary life policies
Preferred Asset Management Ltd	20.00	30.09.08	396,545	235,149	Fund management company
New Horizons Ltd (formerly Surrenda-Link Nominees Ltd)	20.00	31.12.08	1,595,863	66,732	Investment holding company
Public Risk Management Limited	44.00	31.12.07	(292,757)	(21,140)	Public sector risk management consultants
Summa Insurance Brokerage, S.L.	48.625	31.12.06	1,070,657	(91,157)	Consolidator of regional insurance brokers
Trillium Partners Limited	25.00	31.12.08	171,052	(359,137)	Independent corporate advisory company

 

The aggregate capital and reserves and profit for the year shown above are extracted from the relevant GAAP accounts of the investee companies.

Under FRS 25 the HQB Consulting Limited accounts have included the Group's 28% interest as a long-term creditor. As this is in reality an equity investment the aggregate capital and reserves shown have therefore been adjusted to include this as equity and the profit has been adjusted by the dividend paid out.

LEBC Holdings Limited does not prepare consolidated accounts. The figures shown include the aggregate capital and reserves of that company of £106,005 and 90% of its subsidiary company's (LEBC Group Limited) aggregate capital and reserves of £871,045 and profit for the period of £184,466 as an estimate of the consolidated position. The figures shown are for a six month period only due to the company changing its accounting period from 31st May to 30th September.

Under FRS 25 the Trillium Partners Limited accounts have included the Group's 25% interest as a long- term creditor. As this is in reality an equity investment the aggregate capital and reserves shown have therefore been adjusted to include this as equity.

In November 2007 the Group acquired a 20% equity holding in London Endowments Limited. No statutory financial information is available at this time.

In September 2008 the Group acquired a 22.5% equity holding in Paterson Squared, LLC (a US company). As the Company was only incorporated in September 2008, no statutory financial information is available at this time.

	Shares in
Company	group
	undertakings
	£’000
At valuation
At 1st February 2007 previously reported under UK GAAP	37,834
IFRS adjustment	(7,110)
At 1st February 2007 restated under IFRS	30,724
Additions	175
Unrealised gains in this period	4,953
At 31st January 2008	£     35,852
At 1st February 2008	35,852
Additions	-
Unrealised losses in this period	(2,124)
At 31st January 2009	£     33,728

	Shares in
Company	group
	undertakings
	£’000
At cost
At 1st February 2007	2,365
Additions	175
At 31st January 2008	£       2,540
At 1st February 2008	2,540
Additions	-
Adjustment to Share Appreciation Rights	(397)
At 31st January 2009	£       2,143

Company

          Shares in group undertakings

All group undertakings are registered in England and Wales. The details and results of group undertakings, which are extracted from the UK GAAP accounts of these companies, are as follows:

		Aggregate		Profit/(loss)
	%	capital and		for the
	Holding	reserves at		year to
	of share	31st January		31st January
Name of company	Capital	2009		2009	Principal activity
		£		£
B.P. Marsh &    Company Limited	100	40,226,364	(641,397)		Consulting services and investment holding company
Marsh Insurance   Holdings Limited	100	14,495,569	-		Investment holding company
B.P. Marsh & Co. Trustee   Company Limited	100	1,000	-		Dormant
Marsh Development   Capital Limited	100	1	-		Dormant

13.    LOANS AND  RECEIVABLES - NON-CURRENT

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
Loans to investee companies (Note 25)	1,955	771		-	-
Amounts due from subsidiary undertakings	-	-		10,155	10,155
	£ 1,955	£ 771		£ 10,155	£ 10,155

See Note 25 for terms of the loans.

14.    TRADE AND OTHER RECEIVABLES - CURRENT

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
Trade receivables	257	160		-	-
Less provision for impairment of receivables	(10)	(31)		-	-
	247	129		-	-
Loans to investee companies (Note 25)	150	2,550		-	-
Other receivables	13	11		-	-
Prepayments and accrued income	366	445		-	-
	£ 776	£ 3,135		£ -	£ -

Included within trade receivables is £228,593 (2008: £110,420) owed by the Group's participating interests.  

Trade receivables are provided for based on estimated irrecoverable amounts from the fees and interest charged to investee companies, determined by the Group's management based on prior experience and their assessment of the current economic environment.

Movement in the allowance for doubtful debts:

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
Balance at 1st February	31	-		-	-
(Decrease) / increase in allowance recognised in the income statement	(21)	31		-	-
Balance at 31st January	£ 10	£ 31		£ -	£ -

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.  

The Group's net trade receivable balance includes debtors with a carrying amount of £245,843 (2008: £128,045) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances.

Ageing of past due but not impaired:

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
0 - 30 days	142	102		-	-
31 - 60 days	52	17		-	-
61 - 90 days	-	-		-	-
More than 90 days	52	9		-	-
	£ 246	£ 128		£ -	£ -

No new provision has been made against loans to investee companies in the year and therefore the provision remains unchanged in line with 2008 at £394,875.

See Note 25 for terms of the loans and Note 24 for further credit risk information.

 15.    CARRIED INTEREST PROVISION

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
Carried interest provision	736	1,558		-	-
	£ 736	£ 1,558		£ -	£ -

This carried interest provision represents S.S. Clarke's entitlement to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries.

No amounts were paid under this contract during the year (2008: £nil).

In the financial statements up to 31st January 2007 the valuations of these certain agreed investments of the Company and its subsidiaries were reduced by the respective entitlements to S.S. Clarke. However, under IFRS a provision is now included within the balance sheet with any period movements expensed through the income statement and thus the investments are now shown gross.

16.    DEFERRED TAX LIABILITIES - NON- CURRENT

			Group			Company
			£'000			£'000
At 1st February 2007			7,110			-
Charged to income statement			366			-
At 31st January 2008			£ 7,476			£   -
At 1st February 2008			7,476			-
Credited to income statement			(978)			-
At 31st January 2009			£ 6,498			£   -

The directors estimate that, if the Group were to dispose of all its investments at the amount stated in the Balance Sheet, £6,498,000 (2008: £7,476,000) of tax on capital gains would become payable by the Group at a corporation tax rate of 28%.  

17.    TRADE AND OTHER PAYABLES - CURRENT

	Group			Company
	2009	2008		2009	2008
	£'000	£'000		£'000	£'000
Trade payables	41	56		-	-
Other taxation & social security costs	31	30		-	-
Other loans	332	332		-	-
Accruals and deferred income	295	301		-	-
	£ 699	£ 719		£ -	£ -

The other loan due within one year is an amount which is unsecured, interest free and repayable on the finalisation of the liquidation of Whitmor Holdings Limited (formerly Glenvaal Dewar Rand Limited).

18.    CALLED UP SHARE CAPITAL

	2009	2008
	£'000	£'000
Authorised
50,000,000 Ordinary shares of 10p each (2008: 50,000,000)	5,000	5,000
	£ 5,000	£ 5,000
Allotted, called up and fully paid
29,286,143 Ordinary shares of 10p each (2008: 29,286,143)	2,929	2,929
	£ 2,929	£ 2,929

19.       RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

Group		Shares	Share		Reverse
	Share	to be	premium	Fair value	acquisition	Retained
	capital	issued	account	reserve	reserve	earnings	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1st February 2007	2,929	222	9,370	18,214	393	9,478	40,606
Profit for the year	-	-	-	4,178	-	652	4,830
Share based payments (Note 23)	-	175	-	-	-	-	175
At 31st January 2008	£2,929	£397	£9,370	£22,392	£393	£10,130	£45,611

 

At 1st February 2008	2,929	397	9,370	22,392	393	10,130	45,611
Loss for the year	-	-	-	(1,086)	-	(641)	(1,727)
Share based payments (Note 23)	-	(397)	-	-	-	397	-
Transfers on sale of investments				(3,910)		3,910	-
At 31st January 2009	£2,929	£   -	£9,370	£17,396	£393	£13,796	£43,884

 

 

Company			Share
	Share	Shares to	premium	Fair value	Retained
	capital	be issued	account	reserve	earnings	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 1st February 2007	2,929	222	9,370	28,358	1	40,880
Profit for the year	-	-	-	4,953	-	4,953
Share based payments (Note 23)	-	175	-	-	-	175
At 31st January 2008	£2,929	£397	£9,370	£33,311	£1	£46,008

 

At 1st February 2008	2,929	397	9,370	33,311	1	46,008
Loss for the year	-	-	-	(2,124)	-	(2,124)
Share based payments (Note 23)	-	(397)	-	397	-	-
At 31st January 2009	£2,929	£   -	£9,370	£31,584	£1	£43,884

 

20.    OPERATING LEASE COMMITMENT

The Group and Company was committed to making the following future aggregate minimum lease payments under 
non-cancellable operating leases:

	2009	2008
	Land and	Land and
	buildings	buildings
	£'000	£'000
Earlier than one year	£ 132	£ 108
Between two and five years	£ 253	£ -

21.    LOAN AND EQUITY COMMITMENTS

On 7th February 2005 the Group entered into an agreement to provide a loan facility of £140,000 to HQB Partners Limited, an associated company. As at 31st January 2009 £80,000 of this facility had been drawn down.

On 21st March 2007 the Group entered into an agreement to provide a loan facility of £250,000 to JMD Specialist Insurance Services Group Limited. As at 31st January 2009 £100,000 of this facility had been drawn down.

On 29th June 2007 the Group entered into an agreement to provide additional equity funding of €3,963,462 to Summa Insurance Brokerage S.L., an associated company, payable in three equal tranches of €1,321,154. At 31st January 2009 two of these tranches totaling €2,642,308 (£2,045,831) had been paid, with a final tranche of €1,321,154 (£1,174,359) payable on a future date to be agreed. This investment increased the Group's shareholding from 35% to 48.625%.

On 10th March 2008 the Group entered into an agreement to provide a loan facility of £630,000 to Amberglobe Limited, an associated company. As at 31st January 2009 £250,000 of this facility had been drawn down.

On 19th March 2008 the Group entered into an agreement to provide a loan facility of £750,000 to Trillium Partners Limited, an associated company. As at 31st January 2009 £200,000 of this facility had been drawn down.

  22.    CONTINGENT LIABILITIES

The Group has entered into long-term incentive arrangements with certain employees. Provided the employees remain in employment with the Group as at specified dates in the future, the Group has agreed to pay bonuses totaling £650,000 together with the Employers' National Insurance due thereon. £250,000, £150,000 and £250,000 are due to be paid on 1st November 2010, 1st October 2011 and 1st October 2012 respectively.  

No amount has been included in these financial statements as the performance conditions relating to these bonuses had not been met at the time of the balance sheet date.

23.    SHARE BASED PAYMENT ARRANGEMENTS 

        During the year ended 31st January 2007, B.P. Marsh & Partners Plc entered into a share-based payment arrangement with
        certain employees and advisors. The details of the arrangements are described in the following table:

Nature of the arrangement	Share options granted to advisors	Share options granted to advisors	Share appreciation rights  to employees
Date of grant	2 February 2006	9 February 2006	19 April 2006
Number or instruments granted	17,857	17,857	4,392,921
Exercise price (pence)	140.00	140.00	140.00
Share price at grant (pence)	150.50	150.50	150.50
Vesting period (years)	5	5	Units vest 10 days after results to 31/01/09 reported, i.e. approx 3 years
Vesting conditions	None	None	50% vest if IRR over exercise price exceeds 5% and 100% vest if IRR exceeds 8% after 3 years. Between 5% and 8% it is pro-rata.
Option Life (years)	5	5	3.34
Expected volatility	15%	15%	15%
Risk free rate	4.2%	4.15%	4.52%
Expected dividends expressed as a dividend yield	0%	0%	0%
Settlement	Shares	Shares	Shares
% expected to vest (based upon leavers)	0%	0%	0%
Number expected to vest	None	None	None
Fair value per granted instrument (pence)	41.90	41.20	23.50
Charge for year ending 31 January 2009 (£)	£nil	£nil	£nil
Valuation model	Black-Scholes	Black-Scholes	Trinomial

No options were exercised during the year. Share appreciation rights representing 40% of the available units granted were forfeited in prior years following the employees leaving the Group. Of the rights to the remaining units granted, 25% of the units were forfeited on employees leaving the Group and 35% were waived by the relevant employees during the current year. The expected number of units to vest has therefore been adjusted accordingly. As a consequence, no further charge in respect of these share arrangements has been made in these financial statements and the amounts recorded in reserves in respect of the earlier periods' charges have been transferred to retained earnings.

  24.    FINANCIAL INSTRUMENTS

The Group's financial instruments comprise loans to participating interests, cash and liquid resources and various other items, such as trade debtors, trade creditors and other debtors and creditors. These arise directly from the Group's operations.

         The Group has not entered into any derivatives transactions.

It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group's financial instruments are price risk, credit risk, liquidity risk, interest rate cash flow risk and currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised in the director's report under 'Financial Risk Management'.

         Interest Rate Profile

The Group has cash balances of £7,341k (2008: £1,701k), which are part of the financing arrangements of the Company. The cash balances comprise bank current accounts and deposits placed at investment rates of interest, which ranged between 0.8% p.a. and 5.2% p.a. in the period (2008: ranged between 4.5% p.a. and 5.3% p.a.). Maturity periods ranged between immediate access and one month (2008: periods ranged between immediate access and seven days).

         Currency hedging

During the period, the Group did not engage in any form of currency hedging transaction (2008: none).

         Financial liabilities

         The Company had no borrowings during the period (2008: none).

         Fair values

All the financial assets and liabilities at 31 January 2009 were revalued where the directors consider they are materially different from their book values.

25.    RELATED PARTY DISCLOSURES

The following loans owed by the associated companies of the Company and its subsidiaries were outstanding at the year end:

	2009	2008
	£	£
Amberglobe Ltd	250,000	-
Besso Holdings Ltd	400,000	-
HQB Partners Ltd	80,000	80,000
Hyperion Insurance Group Ltd	-	2,350,000
JMD Specialist Insurance Services Group Ltd	100,000	-
Paterson Martin Ltd	-	200,000
Paterson Squared, LLC	250,000	-
Trillium Partners Ltd	200,000	-
	€	€
Summa Insurance Brokerage S.L.	927,990	927,990

The loans are typically secured on the assets of the investee companies and an appropriate interest rate is charged based upon the risk profile of that company.

  Income receivable, consisting of consultancy fees and interest on loans credited to the income statement in respect of the associated companies of the Company and its subsidiaries for the year were as follows:

	2009	2008
	£	£
Amberglobe Ltd	50,938	-
Berkeley (Insurance) Holdings Ltd	-	13,809
Besso Holdings Ltd	145,063	158,594
HQB Partners Ltd	28,943	28,744
Hyperion Insurance Group Ltd	264,138	629,249
JMD Specialist Insurance Services Group Ltd	57,308	15,499
LEBC Group Ltd	31,103	15,743
Oakbridge Insurance Services, LLC	46,191	40,669
Paterson Martin Ltd	-	35,210
Paterson Squared, LLC	15,544	-
Portfolio Design Group International Ltd	36,000	36,917
Principal Investment Holdings Ltd	6,596	54,531
Public Risk Management Ltd	4,313	47,892
Summa Insurance Brokerage S.L.	187,626	290,346
Trillium Partners Ltd	70,773	-

In addition the Group made management charges of £30,000 (2008: £30,000) and charitable donations of £7,250 (2008: £5,000) to Marsh Christian Trust. Mr B.P. Marsh, the Chairman and majority shareholder of the Company, is also the Trustee and Settlor of Marsh Christian Trust.

Mr B.P. Marsh provided a £3,000,000 loan facility to the Company, secured on its assets. Any undrawn amount incurred a charge of 1%.

As at 31st January 2009 the Group owed £nil (2008: £nil) to Mr B.P. Marsh under this arrangement. Interest (including any undrawn rate) paid to him during the period amounted to £7,397 (2008: £30,000). On 30th April 2008 this loan facility was cancelled in full.

S.S. Clarke is entitled to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries. The carried interest provided for at the year end was £736,000 (2008: £1,558,000).

        All the above transactions were conducted on an arms length basis.

26.    POST BALANCE SHEET EVENTS

On 5th March 2009 the Group provided a further £200,000 of an agreed £630,000 loan facility to Amberglobe Limited in order to fund an acquisition and for general working capital requirements. A further £60,000 of this facility was provided on 22nd May 2009. A total of £510,000 has been drawn down to date.

On 1st April 2009 the Group agreed a £400,000 loan facility with LEBC Group Limited to fund further development of the business, although this has not been drawn down to date.

On 21st May 2009 the Group provided a further £50,000 of an agreed £750,000 loan facility to Trillium Partners Limited for general working capital requirements. A total of £250,000 has been drawn down to date.

On 2nd June 2009 the Group provided a £2,460,000 loan facility to Hyperion Insurance Group Limited ('Hyperion') as part of a total £3 million shareholder loan facility, with the remaining £540,000 provided by Hyperion's other shareholders. This loan facility is expected to be drawn down in full by 5th June 2009. In addition, the Group agreed to subscribe €900,000 for loan notes to fund an acquisition, being part of a €4,500,000 loan note issue alongside other shareholders.

27.    ULTIMATE CONTROLLING PARTY 

The directors consider Brian Marsh to be the ultimate controlling party.

Notice

The financial information set out above does not constitute B.P. Marsh & Partners Plc's statutory accounts for the year to 31st January 2009 but is derived from those accounts. The statutory accounts for the year to 31st January 2009 have not yet been delivered to the Registrar of Companies. The auditors have reported on those accounts and have given the following opinion:-

• the Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union, of the state of the Group's affairs as at 31st January 2009 and of its loss and cash flows for the year then ended;

• the Company financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the Company's affairs as at 31st January 2009 and cash flows for the year then ended; and

• the financial statements and the auditable part of the Report of the Remuneration Committee have been properly prepared in accordance with the Companies Act 1985.

Approval

The financial statements were approved by the Board of Directors on 2nd June 2009 for release on 3rd June 2009.

Analyst Briefing

An analyst briefing, given by Brian Marsh OBE, Executive Chairman, Jonathan Newman, Finance Director and Robert King, Director and Group Company Secretary will be held at 9:30 a.m., on Wednesday 3rd June 2009 at Redleaf Communications Limited, 11-33 St John Street, London, EC1M 4AA.

For further information:

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

Brian Marsh OBE                                              [phone]

Nominated Adviser

Arbuthnot Securities

Katie Shelton/Nick Tulloch/Ed Gay                    [phone]

Redleaf Communications (PR to BP Marsh)

Emma Kane/Alicia Jennings                                [phone]

-ends-

Notes to Editors:

About B.P. Marsh & Partners Plc

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

Over the past 19 years, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Many of the directors have worked with each other in previous roles, and all have worked with each other for at least five and half years.

Prior to Brian Marsh's involvement in the Company, he spent many years in insurance broking and underwriting in Lloyd's as well as the London and overseas market. He has over 30 years' experience in building, buying and selling financial services businesses, particularly in the insurance sector. 

Jonathan Newman is the Group Director of Finance and has over 10 years' experience in the financial services industry. Jonathan advises investee companies through several non-executive board appointments and evaluates new investment opportunities. 

Robert King is a Director and Group Company Secretary. He joined B.P. Marsh in May 2003 having started his career at PricewaterhouseCoopers. Since joining B.P. Marsh he has taken on responsibility for the Group's legal, compliance and secretarial functions and played a key role in the flotation of the Company.

 

END

 

 

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