RNS Number : 0207W
B.P. Marsh & Partners PLC
05 June 2008
Date: 5th June 2008
On behalf of: B. P. Marsh & Partners Plc ("B. P. Marsh" or "the Group")
Embargoed until: 0700hrs
B. P. Marsh & Partners Plc
Final Results
B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early stage
financial services businesses, announces its
audited Group final results for the year to 31st January 2008.
Chairman's Statement
I am pleased to present the final audited results for B. P. Marsh & Partners Plc (the
"Group"or B.P. Marsh) and its consolidated
statements for the year ended 31st January 2008.
Overview
During the financial year ended 31st January 2008, the Group made the following
investments:
* The Group acquired a 25% shareholding in JMD Specialist Insurance Services Group Limited
("JMD") for £0.6m and agreed to provide a
further £0.25m in loans to develop the business further. JMD is an accelerated premium
collection service based in the City of London and
provides a unique approach to the acceleration of insurance cash flow as well as effective
balance sheet management;
* The Group acquired a 22.5% shareholding in LEBC Holdings Limited ("LEBC") for a
consideration of £2.07m. LEBC is an Independent
Financial Advisor established in 2000 with 11 branches around the UK and 56 advisors which
provides services to individuals, corporates and
partnerships, principally in employee benefits, investment and life product areas;
* The Group participated in an additional £5.5m rights issue for Hyperion Insurance Group
Limited to further develop the business,
contributing its pro-rata share at £1.55m;
* The Group lent Summa Insurance Brokerage S.L. ("Summa"), a Madrid based consolidator
of regional brokerages in Spain, a further
EUR1.6m, part of an agreed EUR2m loan facility, to fund acquisitions of regional brokers. In
addition, the Group agreed to invest a further
EUR4m alongside EUR4m from a well respected private Spanish investor to facilitate the next
stage of Summa's expansion. The Group's EUR4m of
equity is expected to be invested in three tranches, with the first tranche invested just
before the year end. B.P. Marsh also converted
EUR1m of loans currently outstanding. As a result of this new investment, B.P. Marsh has
increased its stake from 35% to 48.625%
Overall, the investments within the Group*s portfolio made steady progress during the year and
performed in line with market expectations.Hyperion Insurance was listed as the 90th in the Sunday Times Deloitte Buyout Track 100 league
table and secured a major inward investment
after the year-end, underpinning our investment valuation in that company.
During the year we actively reviewed a number of prospective new investments. Three potential
investments were brought to an advanced stage
of negotiation and two of these, Amberglobe Limited and Trillium Partners Limited were
completed after the year-end.
The Group also received the final $0.9m of funds withheld in escrow from the sale of Carpenter
Moore Insurance Services, Inc as expected.
Financial Performance
At 31st January 2008, the net asset value of the Group was £45.6m (2007: £40.6m)
including a provision for deferred tax. This equates to
an increase in net asset value of 12.3% (2007: 13.2%).
The Directors are satisfied that the Group delivered an annual compound growth rate of
15.2% in Group net asset value after running
costs, realisations, losses, distributions and deferred tax since 1990.
Based upon the above figures, the Group's net asset value per share as at 31st January
2008 was 156p (2007: 139p).
The consolidated profit on ordinary activities after tax for the year was £4.8m (2007:
£4.5m).
Post year-end investments
The Group has made two investments post the year-end as follows:
* The Group acquired a 35% shareholding in Amberglobe Limited ("Amberglobe") for £0.07m
and has agreed to provide a further £0.25m in
loans to further develop the business. 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, restaurants, pubs and post
offices;
* The Group acquired a 25% shareholding in Trillium Partners Limited ("Trillium") for an
initial consideration of £0.5m and has agreed
to provide a further £0.75m in loans to further develop the business. Trillium is 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.
Post year-end realisations
The Group exited its investment in Principal Investment Holdings following its acquisition
by the Sanlam Group for £7.25m and also
received a preferred dividend entitlement of £0.17m. The consideration for the Group's
investment consisted of an immediate cash payment on
completion in March 2008 of £5.8m, representing 80% of the total anticipated capital
consideration. The remainder (£1.45m) will be paid on
the second anniversary of the sale subject to the performance of the FTSE 100. This was the
Group's first disposal since its flotation on
AIM and I believe the price offers an excellent return for our investors, especially
considering the recent turbulence in the financial
markets. The valuation as at 31st January 2008 reflects the market position at that time,
although over the course of the two year
performance period we have no reason to suspect that the full £7.25m will not be attained,
subject of course to the performance of the FTSE
index.
Post year-end events
In March 2008, the Group welcomed 3i as an investment partner in Hyperion Insurance Group.3i has made a £50m commitment to Hyperion
which we welcome as a major step forward in Hyperion's continued growth and development. As a
result of this transaction, the Group's
shareholding decreased from 27.89% to approx. 20% and Hyperion repaid the £2.35m loan
outstanding to the Group in full.
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. 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 £3.7m of funding for its existing
investments. After taking this into
consideration, the Group currently has approx. £5.0m of cash available for further
investments.
People
In November 2007, Mr Robert King who as Group Company Secretary has overseen the
development of the Group's compliance and legal
function following flotation, joined the Board as an Executive Director. We warmly welcomed
him, and I thank all the Directors and staff for
their unstinting contributions towards the progress of the Group. In March 2007 we said
farewell to Stephen Crowther, who had served as a
Director since 1998, and with whom we will, in his continuing capacity as a Director of one of
our investee companies, no doubt maintain a
mutually helpful relationship.
Outlook
These are difficult times for any company investing in financial services businesses.However, having reviewed our area of focus, we
remain positive about the field in which we operate. As will be seen, our investment portfolio
has so far managed to escape being adversely
affected by the US sub-prime market, the credit crunch or the consequential downturn in the UK
and US economies in particular.
The Directors consider that the Group remains unique in its investment sector and we
continue to see a large number of investment
opportunities with good management and business plans. The Board is confident about the future
prospects for the Group.
Brian Marsh OBE
4th June 2008
Investments
As at 31st January 2008 the Group's equity interests were as follows:
Berkeley (Insurance) Holdings Limited
(www.berkeleyinsurance.com)
In July 2002 the Group invested in Berkeley (Insurance) Holdings, a company that provides
its clients with independent advice on the
most suitable choice of insurance broker in specialist as well as mainstream insurance areas.
Date of investment: July 2002
Equity stake: 19.9%
31st January 2008 valuation: £nil
Besso Holdings Limited
(www.besso.co.uk)
In February 1995 the Group assisted a specialist team departing from insurance broker
Jardine Lloyd Thompson Group in establishing Besso
Holdings. The company specialises in insurance broking for the North American wholesale
market.
Date of investment: February 1995
Equity stake: 23.55%
31st January 2008 valuation: £8,236,000
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 2008 valuation: £189,000
Hyperion Insurance Group Limited
(www.hyperiongrp.com)
The Group first invested in Hyperion Insurance Group in 1994. The Hyperion Insurance Group
owns, amongst other things, an insurance
broker specialising in directors' and officers' ("D&O") and professional indemnity ("PI")
insurance. A subsidiary of Hyperion became a
registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing general
agency specialising in developing D&O and PI
business in Europe.
Date of investment: November 1994
Equity: 27.89%
31st January 2008 valuation: £20,447,000
JMD Specialist Insurance Services Group Limited
(www.jmd-sis.com)
In March 2007 the Group invested in JMD, a provider of leading-edge services to the
insurance industry. Their unique approach to
measurable cash flow and profit enhancements adds value to Lloyd's syndicates, UK and
international insurers and re-insurers.
Date of investment: March 2007
Equity stake: 25.0%
31 January 2008 valuation: £650,000
LEBC Holdings Limited
(www.lebc-group.com)
In April 2007 the Group invested in LEBC, an Independent Financial Advisory company
providing services to individuals, corporates and
partnerships, principally in employee benefits, investment and life product areas.
Date of investment: April 2007
Equity stake: 22.5%
31 January 2008 valuation: £2,266,000
Paterson Martin Limited
(www.patersonmartin.com)
Paterson Martin was founded by a group of professionals from the actuarial, capital
markets and reinsurance advisory sectors in
conjunction with the Group. The company uses sophisticated modeling techniques to assess risk,
with a view to providing counter-party risk
transaction advice.
Date of investment: April 2004
Equity stake: 22.5%
31st January 2008 valuation: £113,000
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 2008 valuation: £8,050,000
Principal Investment Holdings Limited
(www.principalinvestment.co.uk)
In December 1999 the Group invested in Principal, a predominantly discretionary fund
manager with both retail and institutional
clients.
Date of investment: December 1999
Equity stake: 18.22%
31st January 2008 valuation: £6,711,000
Public Risk Management Limited
(www.publicriskmanagement.co.uk)
In September 2003 the Group assisted in establishing Public Risk Management, a company
which specialises in the development and
provision of risk management services, including processes and procedures, to the public
sector.
Date of investment: September 2003
Equity stake: 44.0%
31st January 2008 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 2008 valuation: £3,092,000
These investments have been valued in accordance with the accounting policies on
Investments set out in note 1 of the Consolidated
Financial Statements.
The Group acquired equity interests in the following companies after 31st January 2008:
Amberglobe Limited (trading as The Business Sales Centre)
(www.businesssalescentre.com)
In March 2008 the Group assisted in establishing The Business Sales Centre, 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 2008 valuation: N/A
Trillium Partners Limited
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 2008 valuation: N/A
Consolidated Financial Statements
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31ST JANUARY 2008
Notes 2008 2007 Restated*
£'000 £'000 £'000 £'000
GAINS ON INVESTMENTS 1
Realised gains on disposal of 11 153 115
investments
Impairment of investments and loans 11,13 (488) -
Unrealised gains on investment 11 5,052 6,369
revaluation
4,717 6,484
INCOME
Dividends 1 1,336 825
Income from loans and receivables 1 682 453
Fees receivable 1 715 749
2,733 2,027
OPERATING INCOME 2 7,450 8,511
Operating expenses (2,249) (2,260)
OPERATING PROFIT 5,201 6,251
Financial income 4 183 347
Financial expenses 3 (30) (33)
Carried interest provision 14 (508) (253)
Exchange movements 7 180 45
(175) 106
PROFIT ON ORDINARY ACTIVITIES 5,026 6,357
BEFORE SHARE BASED PROVISION
Share based provision 18,22 (175) (222)
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 7 4,851 6,135
Income tax 8 (21) (1,619)
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION ATTRIBUTABLE TO EQUITY
HOLDERS
18 £4,830 £4,516
Earnings per share - basic and diluted 9 0.16 0.15
(pence)
The result for the year is wholly attributable to continuing activities.
*Restated for International Financial Reporting Standards (see note 26).
CONSOLIDATED & COMPANY BALANCE SHEETS
31ST JANUARY 2008
Group Company
Notes 2008 2007 Restated* 2008 2007 Restated*
£'000 £'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and 10 3 5 - -
fittings
Investments 11 49,754 38,834 35,852 30,724
Loans and receivables 12 771 3,091 10,155 10,155
50,528 41,930 46,007 40,879
CURRENT ASSETS
Trade and other receivables 13 3,135 1,056 - -
Cash and cash equivalents 1,701 6,989 1 1
TOTAL CURRENT ASSETS 4,836 8,045 1 1
TOTAL ASSETS 55,364 49,975 46,008 40,880
LIABILITIES
NON-CURRENT LIABILITIES
Carried interest provision 14 (1,558) (1,050) - -
Deferred tax liabilities 15 (7,476) (7,110) - -
TOTAL NON-CURRENT LIABILITES
(9,034) (8,160) - -
CURRENT LIABILITIES
Trade and other payables 16 (719) (1,209) - -
TOTAL CURRENT LIABILITES (719) (1,209) - -
TOTAL LIABILTIES (9,753) (9,369) - -
NET ASSETS £45,611 £40,606 £46,008
£40,880
CAPITAL AND RESERVES - EQUITY
Called up share capital 17 2,929 2,929 2,929 2,929
Shares to be issued 18 397 222 397 222
Share premium account 18 9,370 9,370 9,370 9,370
Fair value reserve 18 22,392 18,214 33,311 28,358
Reverse acquisition reserve 18 393 393 - -
Retained earnings 18 10,130 9,478 1 1
SHAREHOLDERS' FUNDS - EQUITY
£45,611 £40,606 £46,008
£40,880
*Restated for International Financial Reporting Standards (see note 26).
Approved and authorised for issue by the Board on 4th June 2008 and signed on its behalf
by B.P. Marsh and J.S. Newman.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST JANUARY 2008
Notes 2008 2007 Restated*
£*000 £*000
Cash from / (used by) operating
activities
Interest received on loans to investees 682 453
Dividends received 1,336 825
Fees received from investment activity 715 749
Operating expenses (2,249) (2,260)
(Increase) / decrease in receivables (166) 213
Increase / (decrease) in payables (145) (434)
Depreciation 10 2 4
Net cash from / (used by) operating 175 (450)
activities
Net cash from / (used by) investing
activities
Purchase of property, plant and - (1)
equipment
Purchase of investments 11 (6,011) (3,969)
Proceeds from investments 524 387
Net cash from / (used by) investing (5,487) (3,584)
activities
Net cash from / (used by) financing
activities
Repayment of long-term borrowings - (2,500)
Proceeds from issue of shares - 11,000
Placement costs - (845)
(Payments) / repayments of loans to / (166) 1,974
(from) investee companies
Financial income 4 183 347
Financial expenses 3 (30) (33)
Net cash from / (used by) financing (13) 9,943
activities
Change in cash and cash equivalents (5,325) 5,909
Cash and cash equivalents at beginning 6,989 1,084
of the period
Exchange gain/(loss) 37 (4)
Cash and cash equivalents at end of 1,701 6,989
period
*Restated for International Financial Reporting Standards (see note 26).
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST JANUARY 2008
Group
Company
FOR THE YEAR ENDED 2008 2007 Restated* 2008
2007 Restated*
£'000
£'000 £'000
£'000
Opening total equity 40,606 25,712
40,880 -
Total recognised income and 4,830 4,516
4,953 28,359
expense for period
Dividends - - -
-
Issue of shares - 13,143 -
13,143
Shares to be issued (share 175 222
175 222
based payments)
Placement costs - (844) -
(844)
Acquisition of subsidiary - (2,143) -
-
undertaking
TOTAL EQUITY £45,611 £40,606
£46,008 £40,880
*Restated for International Financial Reporting Standards (see note 26).
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31ST JANUARY 2008
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*), International Financial Reporting Committee (*IFRIC*)
interpretations and the Companies Act 1985 applicable to
Companies reporting under IFRS. These are the first financial statements prepared under IFRS.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.
IFRS Transition
IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions
from the full requirements of IFRS in the
transition period. The annual report has been prepared on the basis of the following
exemptions:
IFRS 2 *Share based payment* has been adopted from the transition date and is only
applied to relevant equity instruments granted
after 7th November 2002 which had not vested as at 1st January 2006;
Under IAS 39 Financial Instruments: Recognition and Measurement (*IAS 39*), all
equity instruments have been designated at the date
of transition to be assets at fair value through profit or loss; and
A reconciliation of profit and total equity under UK GAAP and IFRS required by IFRS 1 and
notes of the principal adjustments under IFRS are
shown in note 26.
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 profit or 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 profit for the
year of £4,953k(2007 restated: £5,013k).
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 accounts 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.
Investments
All investments are designated as *fair value through profit or loss* assets and are
initially recognised at the fair value of the
consideration. They are measured at subsequent reporting dates at fair value.
The Board conducts the valuations of investments. In valuing investments the Board
applies guidelines issued by the British
Venture Capital Association (BVCA). The following valuation methodologies have been used in
reaching fair value of investments, some of
which are in early stage companies:
a) at cost, unless there has been a significant round of new equity finance in which case
the investment is valued at the price paid by an
independent third party. Where subsequent events or changes to circumstances indicate that an
impairment may have occurred, the carrying
value is reduced to reflect the estimated extent of impairment;
b) by reference to underlying funds under management;
c) by applying appropriate multiples to the earnings and revenues of the investee company;
or
d) by reference to expected future cashflow from the investment where a realisation or
flotation is imminent.
Both realised and unrealised gains and losses arising from changes in fair value are taken to
the income statement for the year. 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 an executive in the event of a particular investment
being sold and is calculated on the fair value of
that investment at the balance sheet date.
Depreciation
Office equipment, fixtures and fittings are stated at cost less depreciation.Depreciation is provided at rates calculated to write
off the office equipment, fixtures and fittings cost less their estimated residual value, over
their expected useful lives on the following
bases:
Furniture & equipment - 5 years
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 Company 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 are not
effective for and have not been applied 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)
· IFRIC Interpretation 12: Service Concession Arrangements (effective as of 1st January
2008)
· IFRIC Interpretation 13: Customer Loyalty Programmes (effective as of 1st July 2008)
· IFRIC Interpretation 14: IAS 19 * The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction (effective
as of 1st January 2008)
The directors do not anticipate that the adoption of these standards and interpretations will
have a material impact on the Group*s
financial statements in the period of initial adoption. However, 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.
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: Geographic segment 2: Group
UK & Channel Islands Non-UK & Channel
Islands
2008 2007 2008 2007 2008 2007
£'000 £'000 £'000 £'000 £'000
£'000
Operating income 6,906 8,435 544 76 7,450 8,511
Operating expenses (2,085) (2,240) (164) (20) (2,249) (2,260)
Segment operating profit 4,821 6,195 380 56 5,201 6,251
Financial income 170 344 13 3 183 347
Financial expenses (28) (33) (2) - (30) (33)
Carried interest provision (508) (253) - - (508) (253)
Exchange movements 16 47 164 (2) 180 45
Share based provisions (162) (220) (13) (2) (175) (222)
Profit before tax 4,309 6,080 542 55 4,851 6,135
Income tax 142 (1,602) (163) (17) (21) (1,619)
Profit for the year 4,451 4,478 379 38 4,830 4,516
2008 2007 2008 2007 2008 2007
£'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Office equipment, fixtures and 3 5 - - 3 5
fittings
Investments 46,662 37,784 3,092 1,050 49,754 38,834
Loans and receivables 80 2,825 691 266 771 3,091
46,745 40,614 3,783 1,316 50,528 41,930
Current assets
Trade and other receivables 3,127 1,042 8 14 3,135 1,056
Cash and cash equivalents 1,701 6,989 - - 1,701 6,989
4,828 8,031 8 14 4,836 8,045
Total assets 51,573 48,645 3,791 1,330 55,364 49,975
Non-current liabilities
Carried interest provision (1,558) (1,050) - - (1,558) (1,050)
Deferred tax liabilities (7,405) (7,110) (71) - (7,476) (7,110)
(8,963) (8,160) (71) - (9,034) (8,160)
Current liabilities
Trade and other payables (719) (1,209) - - (719) (1,209)
Total liabilities (9,682) (9,369) (71) - (9,753) (9,369)
Net assets 41,891 39,276 3,720 1,330 45,611 40,606
The Group operates in one business segment, provision of consultancy services and making
and trading investments in financial services
businesses.
3. FINANCIAL EXPENSES 2008 2007
£*000 £*000
Other interest 30 33
4. FINANCIAL INCOME 2008 2007
£*000 £*000
Bank interest 138 341
Other interest 45 6
183 347
5. STAFF COSTS
The average number of employees, including directors, employed by the Group during
the period was 17 (2007: 19). All remuneration
was paid by B. P. Marsh & Company Limited.
The related staff costs were: 2008 2007
£*000 £*000
Wages and salaries 1,098 1,251
Social security costs 131 150
Pension costs 61 94
£1,290 £1,495
In addition staff were paid £nil (2007: £615,000) out of the B. P. Marsh Employee Benefit
Trust in the year. This cost was not reflected in
the income statement in 2007 as it was funded through prior year contributions.
6. DIRECTORS' EMOLUMENTS
2008 2007
The aggregate emoluments of the directors were: £*000 £*000
Management services 820 869
Fees 65 36
Pension contributions 40 54
£ 925 £ 959
Highest paid director
Emoluments 190 121
Long term incentive payment - 250
Pension contribution 11 9
£ 201 £ 380
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, 5 directors (2007: 4) accrued benefits under money purchase pension
schemes.
7. PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 2008 2007
£*000 £*000
The profit for the period is arrived at after charging /
crediting:
Depreciation of owned tangible fixed assets: 2 4
Auditors remuneration :-
Audit fees for the Company 19 16
Other services:
-Audit of subsidiaries* accounts 10 20
-Taxation 9 14
-Corporate finance transactions 10 -
-Other advisory 19 24
Exchange gain (180) (45)
Operating lease rentals of land and buildings 118 118
In addition the auditors were also paid £nil during the year (2007 : £85,000) with regard to
services provided in placing the shares of the
Company to the Alternative Investment Market. This cost was capitalised against the share
premium account for the new shares issued.
8. TAXATION 2008 2007 Restated*
£*000 £*000
The charge for tax comprises:
UKcorporation tax for the year (345) -
Deferred tax charge for the year (see note 366 1,619
15)
21 1,619
Factors affecting the charge for the year
Profit on ordinary activities before tax 4,851 6,135
Tax at 30% on profit on ordinary activities 1,455 1,840
Effects of:
Expenses not deductible for tax purposes 262 67
Non taxable income (1,542) (2,002)
Other effects:
Unutilised tax losses carried forward 198 95
Provisions against investments not allowable for tax 28 -
Non-taxable income (dividends received) (401) -
Over provision from prior years (345) -
Corporate tax charge / (credit) for the year (345) -
*Restated for International Financial Reporting Standards (see note 26).
9. EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS
2008 £*000 2007Restated*£*000
Earnings
Earnings for the purpose of basic and diluted 4,830 4,516
earnings per share being net profit
attributable to equity shareholders
Earnings per share * basic and diluted 16p 15p
Number of shares Number Number
Weighted average number of ordinary shares 29,286,143 29,286,143
for the purposes of basic earnings per share
Number of dilutive shares under option Nil Nil
Weighted average number of ordinary shares 29,286,143 29,286,143
for the purposes of dilutive earnings per
share
*Restated for International Financial Reporting Standards (see note 26).
10. OFFICE EQUIPMENT, FIXTURES AND FITTINGS Furniture &
Equipment
Group £*000
Cost
At 1st February 2007 99
Additions -
At 31st January 2008 99
Depreciation
At 1st February 2007 94
Charge for the year 2
At 31st January 2008 96
Net book value
At 31st January 2008 £ 3
At 31st January 2007 £ 5
11. NON-CURRENT INVESTMENTS
Group: Shares in investee companies
Total
£*000
At valuation
At 1st February 2007 previously reported under 37,784
UK GAAP
IFRS adjustment (see note 26) 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 cost
At 1st February 2007 12,460
Additions 6,011
Disposals (50)
Provisions (93)
At 31st January 2008 £18,328
The Group received $0.9m (£0.5m) as part of the funds withheld in a warranties/indemnities
escrow on the sale of Carpenter Moore Insurance
Services Inc (*CMIS*) in October 2005. A provision of 15% ($0.1m) on this amount was included
in the year to 31st January 2006, leaving a
net amount withheld in escrow of $0.8m. However no claims were made under the terms of the
escrow and the full amount was received,
resulting in a profit on disposal of fixed assets for the Group of £0.05m.
The Group also received $0.2m (£0.1m) as part of the funds withheld in escrow on the sale of
E-Risk Services LLC in October 2002. Full
provision had been made in the accounts for the year to 31st January 2003 and therefore on
receipt this resulted in a profit on disposal of
fixed assets for the Group.
£93,238 (2007: £nil) of equity investments have been provided against where the directors
consider that there may be a permanent diminution
in value.
The investee companies, which are registered in England except Summa Insurance Brokerage
S.L. (Spain), Preferred Asset Management Ltd
(Jersey) and New Horizons Ltd (Isle of Man), are as follows:
% holding Date Aggregate Post tax
of share information capital and profit/(loss)
Name of company capital available to reserves for the year
Principal activity
£ £
BerkeleyInsurance (Holdings) 19.90 31.10.06 80,000 34,000
Insurance holding
Limited
company
Besso Holdings 23.55 31.12.07 8,977,109 130,998
Investment holding
Limited
company
HQB Partners Limited 28.00 31.12.07 260,431 (11,303)
Investor relations
consultants
Hyperion Insurance 27.89 30.09.07 17,272,000 2,371,000
Insurance holding
Group Limited
company
JMD Specialist 25.00 31.10.07 479,426 72,049
Insurance collection
Insurance Services
services company
Group Limited
% holding Date Aggregate
Post tax
of share information capital and
profit/(loss)
Name of company capital available to reserves for
the year Principal activity
£
£
LEBC Holdings Limited 22.50 31.05.07 1,012,450
500,364 Independent
financial advisor
company
Paterson Martin Limited 22.50 31.12.06 504,113
110,016 Actuarial insurance/
reinsurance
consultants
Portfolio Design Group 20.00 31.12.07 7,136,710
4,351,673 Fund managers of
International Limited
traded endowment
policies
Morex Commercial Ltd 20.00 31.07.07 120,600
614,463 Trading in
secondary life
policies
Preferred Asset Management Ltd 20.00 30.09.07 161,396
(84,340) Fund management
company
New Horizons Ltd (formerly Surrenda-Link 20.00 31.12.04 654
Nil Investment holding
Nominees Ltd)
company
Principal Investment Holdings Limited 18.22 31.12.07 5,726,000
1,590,000 Fund management
company
Public Risk Management Limited 44.00 31.12.06 (277,057)
3,943 Public sector risk
management
consultants
Summa Insurance Brokerage, S.L. 48.62 31.12.06 1,070,657
(91,157) Consolidator of
regional insurance
brokers
The aggregate capital and reserves and profit for the year shown above is extracted from
the relevant GAAP accounts of the investee
companies.
Under FRS 25 the Paterson Martin Limited accounts have included the company*s 22.5%
interest as a long-term creditor. As this is in
reality an equity investment the aggregate capital and reserves shown have therefore been
adjusted to include this as equity and therefore
part of the total shareholders* funds.
Under FRS 25 the HQB Consulting Limited accounts have included the company*s 28% interest as a
long-term creditor. As this is in reality an
equity investment the aggregate capital and reserves shown have therefore been adjusted to
include this as equity and the profit has been
adjusted by the dividend paid out.
Under FRS 25 the Hyperion Insurance Group Limited accounts have included their Preferred
Ordinary Shares as a long-term creditor. As this is
in reality equity the aggregate capital and reserves shown have therefore been increased by
£4,125,000 to include this as equity and the
profit has been increased by £246,000 which relates to the dividend paid out.
LEBC Holdings Limited do not prepare consolidated accounts. The figures shown include the
aggregate capital and reserves of that company
(£106,005) and 90% of its subsidiary company*s (LEBC Group Limited) aggregate capital and
reserves (£1,007,161) and profit for the year
(£555,960) as an estimate of the consolidated position.
In November 2007 the Group acquired a 20% equity holding in London Endowments Limited. 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 (see note 26) (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 cost
At 1st February 2007 2,365
Additions 175
At 31st January 2008 £ 2,540
Shares in group undertakings
The details and results of group undertakings, which are registered in England 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 2008 2008 Principal
activity
£ £
B.P. Marsh & Company Limited 100 42,931,375 169,618 Consulting services
and
investment holding
company
Marsh Insurance Holdings 100 19,212,569 482,617 Investmentholding
company
Limited
B.P. Marsh & Co. Trustee 100 1,000 -
Dormant
Company Limited
Marsh Development Capital 100 1 -
Dormant
Limited
12. LOANS AND RECEIVABLES Group
Company
* NON-CURRENT
2008 2007 2008
2007
£*000 £*000 £*000
£*000
Loans to investee 771 3,091 -
-
companies
Amounts due from subsidiary - - 10,155
10,155
undertakings
£ 771 £ 3,091 £ 10,155
£ 10,155
See note 24 for terms of the loans.
13. TRADE AND OTHER Group Company
RECEIVABLES - CURRENT
2008 2007 2008 2007
£*000 £*000 £*000
£*000
Trade receivables 129 189 - -
Loans to investee companies 2,550 250 - -
Other receivables 11 410 - -
Prepayments and accrued income 445 207 - -
£ 3,135 £ 1,056 £ - £
-
Included within net trade receivables, £110,420 (2007: £129,351) is owed by the Group's
participating interests. Of this total
£nil(2007: £nil) is owed by the Company's participating interests.
£394,875 (2007: £nil) of loans to investee companies have been provided against. These
are amounts due to the Group under loan
arrangements where the directors consider that there may be a permanent diminution in value.
See note 24 for terms of the loans.
14. CARRIED INTEREST Group
Company
PROVISION
2008 2007Restated* 2008
2007
£*000 £*000
£*000 £*000
Carried interest 1,558 1,050 -
-
provision
£ 1,558 £ 1,050 £
- £ -
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.
No amounts were paid under this contract during the year (2007: £nil).
In the accounts 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 has now been
included within the balance sheet with any period
movements expensed through the income statement and thus the investments are now shown gross.
*Restated for International Financial Reporting Standards (see note 26).
15. DEFERRED TAX LIABILITIES * NON- CURRENT Group Company
£'000 £'000
At 1st February 2007 (restated - see note 26) 7,110 -
Charged to income statement 366 -
At 31st January 2008 £ 7,476 £ -
The directors estimate that, if the Group were to dispose of all its investments at the
amount stated in the Balance Sheet, £7,476,000
(2007: £7,110,000) of tax on capital gains would become payable by the Group at a corporation
tax rate of 28%.
16. TRADE AND OTHER PAYABLES CURRENT Group Company
2008 2007 2008 2007
£'000 £'000 £'000 £'000
Trade payables 56 68 - -
Corporation tax - 345 - -
Other taxation & social security costs 30 63 - -
Other loans 332 332 - -
Accruals and deferred income 301 401 - -
£ 719 £ 1,209 £ - £ -
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).
17. CALLED UP SHARE CAPITAL 2008 2007
£*000 £*000
Authorised
50,000,000 Ordinary shares of 10p each (2007: 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 (2007: 29,286,143) 2,929 2,929
£ 2,929 £ 2,929
18. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group Shares Share Fair Reverse
Share to be premium value acquisition Retained
capital issued account reserve reserve earnings
Total
£*000 £*000 £*000 £*000 £*000
£*000 £*000
At 1st February 2007 (note 26) 2,929 222 9,370 18,214 393 9,478
40,606
Profit forthe year - - - 4,178 - 652
4,830
Share based payments (note 22) - 175 - - - -
175
At 31st January 2008 £2,929 £397 £9,370 £22,392 £393
£10,130 £45,611
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 22) - 175 - - - 175
At 31st January 2008 £2,929 £397 £9,370 £33,311 £1
£46,008
19. OPERATING LEASE COMMITMENT
The Group and Company was committed to making the following future aggregate minimum lease
payments under non*cancellable operating leases:
2008 2007
Land and Land and
buildings buildings
£*000 £*000
Earlier than one year £ 108 £ -
Later than one year £ - £ 226
20. LOAN 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 2008 £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 2008 none of this facility had been drawn down.
21. 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 1st November 2010 the Group has agreed to pay bonuses totaling £250,000 together
with the Employers* National Insurance due
thereon. £50,000 of this is currently funded through an Employee Benefit Trust.
22. 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 Share options Share
appreciation rights
granted to advisors granted to advisors
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 0% 0%
0%
as a dividend yield
Settlement Shares Shares
Shares
% expected to vest (based upon 100% 100%
60%
leavers)
Number expected to vest 17,857 17,857
2,635,752
Fair value per granted 41.90 41.20
23.50
instrument (pence)
Charge for year ending 31 £nil £nil
£175,563
January 2008 (£)
Valuation model Black-Scholes Black-Scholes
Trinomial
The Company admitted its shares for trading on AIM on 2nd February 2006 and consequently, at
the date of valuation of the options, little
historical price data existed. As a consequence the volatilities of quoted companies that the
directors considered to be the most comparable
to the Group were used to determine the Group*s expected volatility over the life of the
options.
The risk free rates are based on the yield on UK Government Gilts of a term consistent with
the assumed option life.
No options were exercised during the year. 878,584 share appreciation rights representing 20%
of the available units granted during the year
to 31st January 2007 were forfeited before 31st January 2008. The expected number of units to
vest has therefore been adjusted accordingly
with no further expectation of forfeiture over the remaining life of the option.
23. 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 £1,701k (2007: £6,989k), 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 4.5% p.a. and between 5.3% p.a. in
the period (2007: ranged between 3.7 % p.a. and 5.1% p.a.). Maturity periods ranged between
immediate access and 7 days (both years).
Currency hedging
During the period, the Group did not engage in any form of currency hedging transaction (2007:
none).
Financial liabilities
The Company had no borrowings during the period (2007: none).
Fair values
All the financial assets and liabilities at 31 January 2008 were revalued where the directors
consider they are materially different from
their book values.
24. RELATED PARTY DISCLOSURES
The following loans owed by the associated companies of the Company and its subsidiaries were
outstanding at the year end:
2008 2007
£ £
HQB Partners Ltd 80,000 80,000
Hyperion Insurance Group Ltd 2,350,000 2,350,000
Paterson Martin Ltd 200,000 200,000
Public Risk Management Ltd - 445,500
Summa Insurance Brokerage S.L 691,137 265,534
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:
2008 2007
£ £
Berkeley(Insurance) Holdings Ltd 13,809 13,311
Besso Holdings Ltd 158,594 367,441
HQB Partners Ltd 28,744 27,144
Hyperion Insurance Group Ltd 629,249 457,787
JMD Specialist Insurance Services Group Ltd 15,499 -
Jump Group Ltd - 3,603
LEBC Group Ltd 15,743 -
Oakbridge Insurance Services LLC 40,669 41,735
Paterson Martin Limited 35,210 42,254
Portfolio Design Group International Ltd 36,917 25,000
Principal Investment Holdings Ltd 54,531 52,296
Public Risk Management Ltd 47,892 57,493
Summa Insurance Brokerage S.L 290,346 76,069
In addition the Group made management charges of £30,000 (2007: £36,000) and charitable
donations of £5,000 (2007: £nil) 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, who is the Chairman and majority shareholder of the Company, 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 2008 the Group owed £nil (2007: £nil) to Mr B.P. Marsh under this
arrangement. Interest (including any undrawn rate)
paid to him during the period amounted to £30,000 (2007: £32,541). 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
£1,558,000 (2007 restated: £1,050,000).
All the above transactions were conducted on an arms length basis.
25. POST BALANCE SHEET EVENTS
On 10th March 2008 the Group acquired a 35% shareholding in Amberglobe Limited (trading as The
Business Sales Centre) for £70,000. In
addition, a £630,000 loan facility was provided, of which £250,000 has been drawn down to
date.
On 14th March 2008 the Group sold its 18.22% equity investment in Principal Investment
Holdings Limited to Sanlam, a South African insurance
and financial services group. The Group*s consideration consisted of an initial capital
payment of £5,797,225, representing 80% of the total
anticipated capital consideration, with a further £1,449,307, representing 20%, being
payable, subject to certain conditions relating to the
performance of the FTSE 100 share index, in two years* time.
On 19th March 2008 the Group acquired a 25% shareholding in Trillium Partners Limited for
£500,000. In addition, a £750,000 loan facility
was provided, although this has not been drawn down to date.
On 2nd April 2008 Hyperion Insurance Group Limited repaid in full its £2,350,000
loan outstanding to the Group.
26. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
BP Marsh and Partners Plc reported under UK GAAP in its previously published
financial statements for the year ended 31st January
2007. The analysis below shows a reconciliation of net assets and profit as reported under UK
GAAP as at 31st January 2007 to the revised
net assets and profits under IFRS as reported in these financial statements. In addition,
there is a reconciliation of net assets under UK
GAAP to IFRS at the transition date for the Group, being 1st February 2006. These,
reconciliations have been provided for both the Group and
the Company, although a reconciliation of equity for the Company at 31st January 2006 has been
excluded as reporting under IFRS did not
impact the figures at that date.
Group
Reconciliation of equity Previous Effect of IFRS
at 31st January 2006 GAAP transition to IFRS
£*000 £*000
£*000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and 8 - 8
fittings
Investments 27,700 797¹ 28,497
Loans and receivables 3,231 - 3,231
30,939 797 31,736
CURRENT ASSETS
Trade and other receivables 3,413 - 3,413
Cash and cash equivalents 1,084 - 1,084
4,497 - 4,497
LIABILITIES
NON-CURRENT LIABILITIES
Loans and other payables (2,500) - (2,500)
Carried interest provision - (797)¹ (797)
Deferred tax liabilities - (5,491)² (5,491)
(2,500) (6,288) (8,788)
CURRENT LIABILITIES
Trade and other payables (1,733) - (1,733)
NET ASSETS 31,203 (5,491) 25,712
CAPITAL AND RESERVES - EQUITY
Called up share capital 2,520 - 2,520
Share premium 17 - 17
Shares to be issued - - -
Fair value reserve 19,209 (5,491)² 13,718
Reverse acquisition reserve - - -
Retained earnings 9,457 - 9,457
SHAREHOLDERS* FUNDS - EQUITY 31,203 (5,491) 25,712
Group (continued)
Reconciliation of equity Previous Effect of IFRS
at 31st January 2007 GAAP transition to IFRS
£*000 £*000 £*000
ASSETS
NON-CURRENT ASSETS
Office equipment, fixtures and 5 - 5
fittings
Investments 37,784 1,050¹ 38,834
Loans and receivables 3,091 - 3,091
40,880 1,050 41,930
CURRENT ASSETS
Trade and other receivables 1,056 - 1,056
Cash and cash equivalents 6,989 - 6,989
8,045 - 8,045
LIABILITIES
NON-CURRENT LIABILITIES
Loans and other payables - - -
Carried interest provision - (1,050)¹ (1,050)
Deferred tax liabilities - (7,110)² (7,110)
- (8,160) (8,160)
CURRENT LIABILITIES
Trade and other payables (1,209) - (1,209)
NET ASSETS 47,716 (7,110) 40,606
CAPITAL AND RESERVES - EQUITY
Called up share capital 2,929 - 2,929
Share premium 9,370 - 9,370
Shares to be issued 222 - 222
Fair value reserve 25,324 (7,110)² 18,214
Reverse acquisition reserve 393 - 393
Retained earnings 9,478 - 9,478
SHAREHOLDERS* FUNDS - EQUITY 47,716 (7,110) 40,606
Group (continued)
Reconciliation of consolidated net profits
for the year ended 31st January 2007
£*000
Profit under UK GAAP 20
Unrealised gains on investments 6,369
Stamp duty expenses (1)
Carried interest provision (253)
Deferred taxation (1,619)
Profit under IFRS 4,516
Company
Reconciliation of equity Previous Effect of IFRS
at 31st January 2007 GAAP transition to IFRS
£*000 £*000 £*000
ASSETS
NON-CURRENT ASSETS
Investments 37,834 (7,110)² 30,724
Loans and receivables 10,155 - 10,155
47,989 (7,110) 40,879
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents 1 - 1
1 - 1
LIABILITIES
CURRENT LIABILITIES
Trade and other payables - - -
NET ASSETS 47,990 (7,110) 40,880
CAPITAL AND RESERVES - EQUITY
Called up share capital 2,929 - 2,929
Share premium 9,370 - 9,370
Shares to be issued 222 - 222
Fair value reserve 35,468 (7,110)² 28,358
Retained earnings 1 - 1
SHAREHOLDERS* FUNDS - EQUITY 47,990 (7,110) 40,880
Company (continued)
Reconciliation of net profits
for the year ended 31st January 2007
£*000
Profit under UK GAAP 1
Unrealised gains on investments 5,012
Profit under IFRS 5,013
Notes:
(1) Under IFRS a provision needs to be made for carried interest. Under UK GAAP this
amount was offset against investments.
(2) Under IFRS a deferred tax liability is recorded in respect of assets held at fair
value to reflect the tax realisable upon the
eventual disposal of the asset, whereas under UK GAAP the potential tax payable is not
recognised in the financial statements.
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 31
January 2008 but is derived from those accounts. The statutory accounts for the year to 31
January 2008 have not yet been delivered to the
Registrar of Companies. The auditors have reported on those accounts and have given the
following opinion :-
* the financial statements give a true and fair view, in accordance with IFRS
as adopted by the European Union, of the
state of the affair of the Company and the Group as at 31st January 2008 and the profit of the
Group for the year then ended; and
* the financial statements have been properly prepared in accordance with the
Companies Act 1985.
Approval
The financial statements were approved by the Board of Directors on 4 June 2008 for
release on 5 June 2008.
Analyst Briefing
An analyst briefing given by Brian Marsh OBE, Executive Chairman, Francis de Zulueta, Director
of New Business Development and Jonathan
Newman, Finance Director, will be held at 09:30 am on Thursday 5 June 2008 at Redleaf
Communications Ltd, 9-13 St Andrew Street,
London EC4A 3AF.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
Brian Marsh OBE +44 (0)20
7730 2626
Nominated Adviser
Nabarro Wells & Co. Limited
David Nabarro/Marc Cramsie +44(0) 20 7634
4705
Redleaf Communications (PR to BP Marsh)
Emma Kane/Tom Newman +44 (0)20 7822
0200
-ends-
Notes to Editors:
About B.P. Marsh & Partners Plc
B.P. Marsh*s current portfolio contains twelve companies. More detailed
descriptions of the portfolio can be found at
www.bpmarsh.co.uk.
Over the past 18 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 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.
Francis de Zulueta is the Company*s Development Director. With a wide-ranging knowledge of the
financial services market, he seeks out,
researches and evaluates potential new investments for B.P. Marsh. Following a 23-year broking
career with Willis Faber and Aon, among
others, he took an active interest in the mergers, acquisitions and venture capital business
of Marsh McLennan.
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 the Group he has taken on responsibility for the legal, compliance and
secretarial functions and played a key role in the
flotation of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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