TIDMBPM
RNS Number : 4056B
B.P. Marsh & Partners PLC
27 October 2009
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Date: 27th October 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")
Interim Results
B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early
stage financial services businesses, announces its unaudited Group results for
the six months ended 31 July 2009.
Chairman's Statement
Introduction
I am pleased to present the interim results for B. P. Marsh & Partners Plc ("B.
P. Marsh" or the "Group") and its consolidated statements for the six month
period ended 31st July 2009 (the "Period").
It has been a productive six months for B. P. Marsh with a number of new
investments being made in its portfolio companies, the details of which are set
out below. The share price trades at a 45.8 per cent discount to the Group's
published net asset value which remains a source of great frustration.
Nevertheless the board continues to apply its investment strategy with rigour
and confidence and adopts a prudent approach to valuations.
As described in more detail below, current economic and legislative changes have
produced a higher number of good quality opportunities than in the recent past
and there is reason to be optimistic about B. P. Marsh's prospects over the
medium term. Despite the challenging trading environment faced by our portfolio
businesses in the Period, a number of them have shown resilient growth and have
used this time to consolidate their market position.
Portfolio Update
Hyperion Insurance Group Limited ("Hyperion")
* As announced in June, the Group lent Hyperion GBP2.46m for working capital
purposes, to assist in supporting its international growth and expansion.
Hyperion has shown itself to be an increasingly high growth company, with an
annual compound growth rate of 15.7% on its profit from ordinary activities
before taxation and exceptional items, between its financial years ending 30th
September 2003 (GBP2.90m) and 30th September 2008 (GBP6.04m).
* The Group also agreed to subscribe EUR0.9m for Loan Notes in a subsidiary of
Hyperion as part of a EUR4.5m loan note issue, alongside other shareholders, which
was used to fund the acquisition of Hendricks & Co. GmbH, the leading specialist
Directors & Officers and Commercial Legal Expenses broker in Germany. The Group
funded its participation in the Loan Notes from its existing cash resources. The
participating shareholders also took up an offer from Hyperion to acquire shares
at par value as part of the loan note issue. The total percentage of shares to
be allotted to participating shareholders in the issue is 1% of the fully
diluted share capital, of which the Group has been allotted 0.2%.
* Hyperion continued to deliver increased revenue and EBITDA and this is forecast
to grow further in 2010.
Summa Insurance Brokerage S. L. ("Summa")
* The Group provided Summa a loan of EUR0.45m. These funds are being used to fund
further consolidation of regional brokers in Spain and this forms part of the
third capital increase of EUR1.3m. Summa now has operations in 15 towns and cities
in Spain and is the third largest independent broker in Spain.
Portfolio Design Group International Limited ("PDGI")
* In a temporary market-wide cessation of trading in endowment policies and life
interests, the valuation approach to the investment in PDGI has changed to a net
asset basis, reflecting a difficult current year but also the determination of
PDGI to reorganise and achieve sustainable profits going forward. As a result
our valuation of the investment has accordingly reduced by GBP2m from the value
as at January 2009 (GBP3.9m).
Trillium Partners Limited ("Trillium")
* As a result of difficult conditions in the media mergers and acquisitions market
Trillium was placed into administration on 3rd September 2009. It is unlikely
that the Group will recover its equity investment of GBP0.5m, which it has
provided against in full. In addition, the Group had originally agreed to
provide a GBP0.75m working capital loan to the business, of which GBP0.3m had
been drawn down.
* The Group considered that on the current cost base the business would require
considerable funding beyond its original commitments and, given the market
conditions at the time and likely time-lag before mandates would be converted
into revenues, decided to cease further funding. Although clearly disappointed
with the performance of this investment, the Board considered that it was in the
shareholders' best interests to protect the remaining GBP0.45m of loan funding
rather than continue to support Trillium. As a result GBP0.45m is now available
in cash to fund other investments with better long-term prospects.
Other Investments
* In addition the Group has currently committed to provide a further GBP1.6
million of funding either through debt or deferred equity to its existing
investments. After taking this into consideration and any long term incentive
schemes, the Group currently has circa GBP0.9 million of cash available for
further investments and remains ungeared.
Investment Portfolio
+----------------------------+------------+------------+-----------+----------+
| Investment | Investment | Fair | Fair | Stake |
| | cost * | market | market | |
| | (GBP'000) | value | value | |
| | | 31.07.09 | 31.01.09 | |
| | | (GBP'000) | (GBP'000) | |
+----------------------------+------------+------------+-----------+----------+
| Amberglobe Ltd | 70 | 70 | 70 | 35.00% |
+----------------------------+------------+------------+-----------+----------+
| Besso Holdings Ltd | 3,062 | 6,836 | 6,804 | 22.73% |
+----------------------------+------------+------------+-----------+----------+
| HQB Partners Ltd | 35 | 27 | 131 | 27.72% |
+----------------------------+------------+------------+-----------+----------+
| Hyperion Insurance Group | 4,345 | 23,213 | 22,932 | 21.20%| |
| Ltd | | | | |
+----------------------------+------------+------------+-----------+----------+
| JMD Insurance Specialist | 600 | 569 | 600 | 25.00% |
| Services Grp. Ltd | | | | |
+----------------------------+------------+------------+-----------+----------+
| LEBC Holdings Ltd | 2,066 | 2,418 | 2,066 | 21.95% |
+----------------------------+------------+------------+-----------+----------+
| Paterson Squared LLC | - | 175 | 180 | 22.50% |
+----------------------------+------------+------------+-----------+----------+
| Portfolio Design Group | 263 | 1,878 | 3,943 | 20.00% |
| International Ltd | | | | |
+----------------------------+------------+------------+-----------+----------+
| Summa Insurance Brokerage, | 3,896 | 4,595 | 4,591 | 48.625% |
| S.L. | | | | |
+----------------------------+------------+------------+-----------+----------+
| Trillium Partners Ltd *² | - | - | 352 | |
+----------------------------+------------+------------+-----------+----------+
| Total | 14,337 | 39,781 | 41,669 | |
+----------------------------+------------+------------+-----------+----------+
| This does not take into account the provision for sweet equity, which would
result in a shareholding of 19.4% for any value of Hyperion over GBP98m.
* This is the cash cost of investment. This differs from the Net Book Value cost
of investment, totalling GBP16,543,000 per the consolidated statements, which
includes some historic revaluations of investments where they had been
transferred between Group companies and required restatement at fair value at
that time.
*² Trillium Partners Ltd has recently been placed into administration.
Financial Performance
At 31st July 2009 the net asset value ("NAV") of the Group having made the
appropriate allowance for deferred tax was GBP42.7m (2.7% lower than NAV of
GBP43.9m at January 2009, and 5.5% lower than the NAV of GBP45.2 at July 2008) .
This was mainly as a direct result of the revaluations of Trillium and PDGI,
however during the same period we also saw growth in other investments, such as
Hyperion and Summa.
The reported NAV of GBP42.7m represents a total increase in net asset value of
GBP30.1m since the Group was originally formed in 1990 having adjusted for the
GBP10.1m net proceeds raised on AIM and the original capital investment of
GBP2.5m. Despite the reduction in NAV for the Period, the Directors note that
the Group has delivered an annual compound growth rate of 13% in Group NAV after
running costs, realisations, losses, distributions and deferred tax since 1990.
Based upon the above figures the NAV per share (having allowed for deferred tax)
as at 31st July 2009 was 146p (January 2009: 150p, July 2008: 154.4p).
The Group's investment portfolio movement during the period was as below:
+----------------------------------+-----------------+----------------+-------------------+
| | Unaudited | Unaudited | Audited |
| | 31st July 2009 | 31 July 2008 | 31 Jan 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------------+----------------+-------------------+
| Investments at fair value | 39,781 | 44,173 | 41,673 |
+----------------------------------+-----------------+----------------+-------------------+
| Net decrease in portfolio at 31 | | 9.9% (year) | 4.5% (6 months) |
| July 2009 over previous period | | | |
+----------------------------------+-----------------+----------------+-------------------+
The consolidated pre-tax loss before exceptional items for the Period increased
by 55.6% to GBP1.8m (July 2008: GBP0.8m loss).
Outlook
The Group remains a leader in its investment sector and the quality of our
management skills and market knowledge is endorsed by the frequency of enquiries
by third parties seeking our participation in investment opportunities. The
economic downturn, coupled with recent regulatory changes in the financial
services and pensions markets, has brought about the need for change in many
businesses. This in itself has produced several opportunities for B. P. Marsh.
As the year has unfolded, the quality of these undervalued opportunities has
increased. We remain focused on suitable investments for the Group as well as
being mindful of value enhancements or potential exits for our existing
portfolio.
The Group's investment strategy has generated substantial uplifts in net asset
value since B. P. Marsh was formed and the Directors are confident that, given
the number and quality of opportunities available at this stage in the economic
cycle, B. P. Marsh is well positioned to capitalise on the current market
conditions.
Brian Marsh OBE
Chairman
27th October 2009
Investments
As at 31st July 2009 the Group's equity interests were as follows:
Amberglobe Limited
(www.amberglobe.co.uk)
In March 2008 the Group assisted in establishing Amberglobe Limited, a business
sales platform that provides valuation and negotiation services for the sale of
SME businesses in the sub GBP3m sector.
Date of investment: March 2008
Equity stake: 35.0%
31st July 2009 valuation: GBP70,000
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 July 2009 valuation: GBP6,836,000
HQB Partners Limited
(www.hqbpartners.com )
In January 2005 the Group made an investment in HQB Partners, a company which
provides strategic transaction advice, proxy solicitation services, voting
analysis and investor relations services.
Date of investment: January 2005
Equity stake: 27.72%
31st July 2009 valuation: GBP27,000
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: 19.6%
31st July 2009 valuation: GBP23,213,000
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 July 2009 valuation: GBP569,000
LEBC Holdings Limited
(www.lebc-group.com)
In April 2007 the Group invested in LEBC, an Independent Financial Advisory
company providing services to individuals, corporates and partnerships,
principally in employee benefits, investment and life product areas.
Date of investment: April 2007
Equity stake: 21.95%
31st July 2009 valuation: GBP2,418,000
Paterson Squared, LLC
(www.paterson2.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 modelling techniques to assess risk, with a view
to providing counter-party risk transaction advice.
Date of investment: September 2008
Equity stake: 22.5%
31st July 2009 valuation: GBP175,000
Portfolio Design Group International Limited
(www.surrendalink.co.uk)
In March 1994 the Group invested in the Portfolio Design Group, a company which
sells with-profits life endowment policies to large financial institutions. In
2002 the company diversified into investment management.
Date of investment: March 1994
Equity stake: 20.0%
31st July 2009 valuation: GBP1,878,000
Summa Insurance Brokerage, S. L.
(www.grupo-summa.com)
In January 2005 the Group provided finance to a Spanish management team with the
objective of acquiring and consolidating regional insurance brokers in Spain.
Date of investment: January 2005
Equity stake: 48.63%
31st July 2009 valuation: GBP4,595,000
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 July 2009 valuation: GBP0
These investments have been valued in accordance with the accounting policies on
Investments set out in note 1 of the Consolidated Financial Statements.
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31ST JULY 2009
+--------------------------------------------------------------------------------------------------------------------+
| Notes Unaudited Unaudited Audited |
| 6 months to 6 months to Year to |
| 31st July 31st July 31st January |
| 2009 2008 2009 |
| GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 |
| LOSSES ON INVESTMENT |
| Realised losses on disposal of - (914) (966) |
| investments |
| Unrealised losses on investment 4 (2,188) (499) (2,886) |
| revaluation |
| (2,188) (1,413) (3,852) |
| INCOME |
| Dividends 140 560 948 |
| Income from loans and receivables 169 138 240 |
| Fees receivable 406 340 731 |
| 715 1,038 1,919 |
| INCOME NET OF LOSSES ON (1,473) (375) (1,933) |
| INVESTMENT |
| Operating expenses (678) (884) (1,944) |
| |
| OPERATING LOSS (2,151) (1,259) (3,877) |
| Financial income 21 166 292 |
| Financial expenses - (7) (7) |
| Carried interest provision 7 413 299 822 |
| Exchange movements (38) 44 201 |
| 396 502 1,308 |
| LOSS ON ORDINARY ACTIVITIES (1,755) (757) (2,569) |
| BEFORE |
| EXCEPTIONAL ITEMS |
| Exceptional items 8 - (88) (136) |
| |
| LOSS ON ORDINARY ACTIVITIES (1,755) (845) (2,705) |
| BEFORE TAXATION |
| Income tax 6 525 356 978 |
| LOSS ON ORDINARY ACTIVITIES AFTER GBP(1,230) GBP(489) GBP(1,727) |
| TAXATION ATTRIBUTABLE TO EQUITY |
| HOLDERS |
| Loss per share - basic and 3 (4.2)p (5.9)p |
| diluted (pence) (1.7)p |
| The result for the period is wholly attributable to |
| continuing activities. |
| |
+--------------------------------------------------------------------------------------------------------------------+
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31ST JULY 2009
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | Unaudited | | Unaudited | | Audited |
+-------------------------+-------+---------------------+--+---------------------+---+---------------------+
| |Notes | 31st July | | 31st July | | 31st January |
| | | 2009 | | 2008 | | 2009 |
+-------------------------+-------+---------------------+--+---------------------+---+---------------------+
| | |GBP'000 | GBP'000 | |GBP'000 | GBP'000 | |GBP'000 | GBP'000 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| ASSETS | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| NON-CURRENT ASSETS | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Property, plant and | | 61 | | | 3 | | | 72 | |
| equipment | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Investments | 4 | 39,781 | | | 44,173 | | | 41,673 | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Loans and receivables | | 4,899 | | | 1,461 | | | 1,955 | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | 44,741 | | | 45,637 | | | 43,700 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| CURRENT ASSETS | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Trade and other | | 647 | | | 776 | | | 776 | |
| receivables | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Cash and cash | | 4,078 | | | 7,755 | | | 7,341 | |
| equivalents | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | 4,725 | | | 8,531 | | | 8,117 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| LIABILITIES | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| NON-CURRENT LIABILITIES | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Carried interest | 7 | (323) | | | (1,259) | | | (736) | |
| provision | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Deferred tax | 6 | (5,974) | | | (7,120) | | | (6,498) | |
| liabilities | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | (6,297) | | | (8,379) | | | (7,234) |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| CURRENT LIABILITIES | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Trade and other | | (515) | | | (579) | | | (699) | |
| payables | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | (515) | | | (579) | | | (699) |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| NET ASSETS | | | GBP42,654 | | | GBP45,210 | | | GBP43,884 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| CAPITAL AND RESERVES - | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| EQUITY | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Called up share capital | | | 2,929 | | | 2,929 | | | 2,929 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Shares to be issued | | | - | | | 485 | | | - |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Share premium account | | | 9,370 | | | 9,370 | | | 9,370 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Fair value reserve | | | 16,941 | | | 18,638 | | | 17,396 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Reverse acquisition | | | 393 | | | 393 | | | 393 |
| reserve | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| Retained earnings | | | 13,021 | | | 13,395 | | | 13,796 |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
| SHAREHOLDERS' FUNDS - | | | GBP42,654 | | | GBP45,210 | | | GBP43,884 |
| EQUITY | | | | | | | | | |
+-------------------------+-------+---------+-----------+--+---------+-----------+---+---------+-----------+
The Interim Consolidated Financial Statements were approved by the Board of
Directors on 26th October 2009
and signed on its behalf by B.P. Marsh & J.S. Newman.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31ST JULY 2009
+-----------------------------------------------------------------------------------------------------------+----------+-------+--------+--------+
| Unaudited Unaudited Audited | | | | |
| 31st 31st 31st January 2009 | | | | |
| July July | | | | |
| 2009 2008 | | | | |
| GBP'000 GBP'000 GBP'000 | | | | |
| Cash (used by) / from operating | | | | |
| activities | | | | |
| Income from loans to investees 169 138 240 | | | | |
| Dividends 140 560 948 | | | | |
| Fees received from investment 406 340 731 | | | | |
| activity | | | | |
| Operating expenses (678) (884) (1,944) | | | | |
| Exceptional item - termination - - (136) | | | | |
| payment | | | | |
| Decrease / (increase) in 80 59 (42) | | | | |
| receivables | | | | |
| Decrease in payables (184) (140) (20) | | | | |
| Depreciation 11 1 14 | | | | |
| Net cash (used by) / from GBP(56) GBP74 GBP(209) | | | | |
| operating activities | | | | |
| Net cash from investing activities | | | | |
| Purchase of property, plant and - (1) (83) | | | | |
| equipment | | | | |
| Purchase of investments - (1,629) (1,629) | | | | |
| Proceeds from investments 4 5,797 5,858 | | | | |
| Net cash from investing activities GBP4 GBP4,167 GBP4,146 | | | | |
| Net cash (used by) / from financing | | | | |
| activities | | | | |
| (Payments) / repayments of loans (3,225) 1,650 1,350 | | | | |
| (to) / from investee companies | | | | |
| Financial income 21 166 292 | | | | |
| Financial expenses - (7) (7) | | | | |
| Net cash (used by) / from GBP(3,204) GBP1,809 GBP1,635 | | | | |
| financing activities | | | | |
| Change in cash and cash (3,256) 6,050 5,572 | | | | |
| equivalents | | | | |
| Cash and cash equivalents at 7,341 1,701 1,701 | | | | |
| beginning of the period | | | | |
| Exchange (loss) / gain* (7) 4 68 | | | | |
| Cash and cash equivalents at end GBP4,078 GBP7,755 GBP7,341 | | | | |
| of period | | | | |
| | | | | |
+-----------------------------------------------------------------------------------------------------------+----------+-------+--------+--------+
*The exchange (loss)/gain as noted in the Consolidated Statement of
Comprehensive Income is GBP(38)k (6 months to 31st July 2008: GBP44k & 12 months
to 31st January 2009: GBP201k). The exchange (loss)/gain in the Consolidated
Statement of Cash Flows excludes GBP(31)k (6 months to 31st July 2008: GBP40k &
12 months to 31st January 2009: GBP133k) 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 Statement of Cash Flows to
ensure the exchange (losses)/gains are comparable and consistent in both
periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31ST JULY 2009
+----------------------------------+----------+-----------+-----------+-----------+
| | |Unaudited |Unaudited | Audited |
+----------------------------------+----------+-----------+-----------+-----------+
| | | 6 months | 6 months |12 months |
| | | to | to | to |
+----------------------------------+----------+-----------+-----------+-----------+
| | |31st July | 31st | 31st |
| | | 2009 | July | January |
| | | | 2008 | 2009 |
+----------------------------------+----------+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------+----------+-----------+-----------+-----------+
| Opening total equity | | 43,884 | 45,611 | 45,611 |
+----------------------------------+----------+-----------+-----------+-----------+
| Total recognised income and | | (1,230) | (489) | (1,727) |
| expense for period | | | | |
+----------------------------------+----------+-----------+-----------+-----------+
| Shares to be issued (share based | | - | 88 | - |
| payments) | | | | |
+----------------------------------+----------+-----------+-----------+-----------+
| Total equity | | GBP42,654 | GBP45,210 | GBP43,884 |
+----------------------------------+----------+-----------+-----------+-----------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST JULY 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 revaluation 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.
These interim consolidated financial statements were approved by the Board on
26th October 2009. They have not been audited nor reviewed by the Group's
Auditors, as is the case with the comparatives to 31st July 2008, and do not
constitute statutory accounts within the meaning of section 434 of the Companies
Act 2006.
Except as described below, the financial statements have been prepared using the
accounting policies and presentation that were applied in the audited financial
statements for the year ended 31st January 2009. Those accounts, upon which the
Group's Auditors issued an unqualified opinion, have been filed with the
Registrar of Companies and do not contain a statement under section 237 (2) or
(3) of the Companies Act 1985.
IAS 1 (revised) Presentation of Financial Statements ("IAS 1") is mandatory for
accounting periods beginning on or after 1st January 2009. The revised standard
prohibits the presentation of items of income and expenditure within the
statement of changes in equity. All 'non-owner changes in equity' are required
to be shown in a performance statement. Entities can choose whether to present
one performance statement (the statement of comprehensive income) or two (the
income statement and statement of comprehensive income). The Group has elected
to present one performance statement, being the statement of comprehensive
income. IAS 1 has also introduced a number of changes in terminology, and as a
consequence the balance sheet has been renamed the 'consolidated statement of
financial position' and the cash flow statement has been renamed the
'consolidated statement of cash flows'. There have been no changes to the
reported results or financial position as a result of adopting IAS 1.
IFRS 8 Operating Segments, Amendment to IAS 23 Borrowing Costs and Amendment to
IFRS 2 Share Based Payments are effective for annual periods beginning on or
after 1st January 2009 and have been adopted in preparing these interim
consolidated financial statements. The adoption of these standards has not had a
significant impact on these interim financial statements.
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.
Business combinations are accounted for by using the acquisition accounting
method. This involves recognising identifiable assets and liabilities of the
acquired business at fair value. Goodwill represents the excess of the fair
value of the purchase consideration for the interests in subsidiary undertakings
over the fair value to the Group of the net assets and any contingent
liabilities acquired.
Intra-group balances and any recognised gains and losses or income and expenses
arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
Associates are those entities in which the Group has significant influence, but
not control, over the financial and operating policies. Investments that are
held as part of the Group's investment portfolio are carried in the Statement of
Financial Position at fair value even though the Group may have significant
influence over those companies. This treatment is permitted by IAS 28 Investment
in Associates ("IAS 28"), which requires investments held by venture capital
organisations to be excluded from its scope where those investments are
designated, upon initial recognition, as at fair value through profit or loss
and accounted for in accordance with IAS 39, with changes in fair value
recognised in profit or loss in the period of the change. The Group has no
interests in associates through which it carries on its business.
Employee services settled in equity instruments
The Group 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 fair value of investments, some of which are
in early stage companies:
* 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;
* by reference to underlying funds under management;
* by applying appropriate multiples to the earnings and revenues of the investee
company; or
* by reference to expected future cash flow from the investment where a
realisation or flotation is imminent.
Both realised and unrealised gains and losses arising from changes in fair value
are taken to the Statement of Comprehensive Income for the period. In the
Statement of Financial Position the unrealised gains and losses arising from
changes in fair value are shown within a "fair value reserve" separate from
retained earnings. Transaction costs on acquisition or disposal of investments
are expensed in the Statement of Comprehensive Income.
Income from investments
Income from investments comprises:
a) gross interest from loans, which is taken to the Statement of Comprehensive
Income on an accruals basis;
b) dividends from equity investments are recognised in the Statement of
Comprehensive Income when the shareholders rights to receive payment have been
established; and
c) advisory fees from management services provided to investee companies, which
are recognised on an accruals basis in accordance with the substance of the
relevant investment advisory agreement.
Carried interest provision
This represents the amount payable to a director in the event of a particular
investment being sold and is calculated on the fair value of that investment at
the reporting period.
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 Statement of
Comprehensive Income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group's liability for current tax is calculated
using tax rates that have been enacted or substantially enacted by the reporting
period.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and of liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and it is accounted for using the liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period
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 Statement of Comprehensive Income, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Bonus provision
There is no contractual obligation on the Group to pay bonuses to employees and
as such no provision has been made in the operating expenses within the
Statement of Comprehensive Income for the period to 31st July 2009 (as was also
the case with the interims to 31st July 2008). However, the income statement to
31st January 2009 does include such provision where discretionary awards were
made for the year-end.
2.SEGMENTAL REPORTING
The Group operates in one business segment, provision of consultancy services to
as well as making and trading investments in financial services businesses.
The Group identifies its reportable operating segments based on the geographical
location in which each of its investments is incorporated and primarily
operates. For management purposes, the Group is organised and reports its
performance by two geographic segments: UK and Channel Islands and Non-UK and
Channel Islands.
If material to the Group overall (where the segment revenues, reported profit or
loss or combined assets exceed the quantitative thresholds prescribed by IFRS 8
Operating Segments ("IFRS 8")), the segment information is reported separately.
The Group allocates revenues, expenses, assets and liabilities to the operating
segment where directly attributable to that segment. All indirect items are
apportioned based on the percentage proportion of revenue that the operating
segment contributes to the total Group revenue (excluding any unrealised gains
and losses on the Group's non-current investments).
Each reportable segment derives its revenues from three main sources. These are
described in further detail in Note 1 under 'Income from investments'.
All reportable segments derive their revenues entirely from external clients and
there are no inter-segment sales.
The transition from the provisions of IAS 14 Segment Reporting ("IAS 14") to
IFRS 8, which became mandatory for accounting periods beginning on or after 1st
January 2009, has not given rise to any specific changes in the way the Group
reports on its operating segments. However management have reviewed the current
segments and have confirmed the existing approach to be satisfactory under the
provisions of IFRS 8.
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | Geographic segment | Geographic segment | Group |
| | 1: | 2: | |
| | UK & Channel | Non-UK & Channel | |
| | Islands | Islands | |
+--------------------------+------------------------+-----------------------+-----------------------+
| | | | | | | |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | Unaudited |Unaudited |Unaudited |Unaudited |Unaudited |Unaudited |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | 6 months | 6 | 6 months | 6 months | 6 | 6 |
| | to 31st | months | to 31st | to 31st | months | months |
| | July | to 31st | July | July | to 31st | to 31st |
| | | July | | | July | July |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Income net of losses on | (1,629) | (481) | 156 | 106 | (1,473) | (375) |
| investment | | | | | | |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Operating expenses | (530) | (710) | (148) | (174) | (678) | (884) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Segment operating loss | (2,159) | (1,191) | 8 | (68) | (2,151) | (1,259) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Financial income | 16 | 133 | 5 | 33 | 21 | 166 |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Financial expenses | - | (6) | - | (1) | - | (7) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Carried interest | 413 | 299 | - | - | 413 | 299 |
| provision | | | | | | |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Exchange movements | (7) | 2 | (31) | 42 | (38) | 44 |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Exceptional items | - | (71) | - | (17) | - | (88) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Loss before tax | (1,737) | (834) | (18) | (11) | (1,755) | (845) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Income tax | 520 | 353 | 5 | 3 | 525 | 356 |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
| Loss for the period | GBP(1,217) | GBP(481) | GBP(13) | GBP(8) | (1,230) | GBP(489) |
+--------------------------+------------+-----------+-----------+-----------+-----------+-----------+
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Non-current assets | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Property, plant and | 54 | 3 | 7 | - | 61 | 3 |
| equipment | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Investments | 35,011 | 40,038 | 4,770 | 4,135 | 39,781 | 44,173 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Loans and receivables | 3,610 | 730 | 1,289 | 731 | 4,899 | 1,461 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | 38,675 | 40,771 | 6,066 | 4,866 | 44,741 | 45,637 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Current assets | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Trade and other | 246 | 684 | 401 | 92 | 647 | 776 |
| receivables | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Cash and cash | 4,078 | 7,755 | - | - | 4,078 | 7,755 |
| equivalents | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | 4,324 | 8,439 | 401 | 92 | 4,725 | 8,531 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Total assets | 42,999 | 49,210 | 6,467 | 4,958 | 49,466 | 54,168 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Non-current liabilities | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Carried interest | (323) | (1,259) | - | - | (323) | (1,259) |
| provision | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Deferred tax | (5,974) | (7,124) | - | 4 | (5,974) | (7,120) |
| liabilities | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | (6,297) | (8,383) | - | 4 | (6,297) | (8,379) |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Current liabilities | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Trade and other | (515) | (579) | - | - | (515) | (579) |
| payables | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Total liabilities | (6,812) | (8,962) | - | 4 | (6,812) | (8,958) |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
| Net assets | GBP36,187 | GBP40,248 | GBP6,467 | GBP4,962 | GBP42,654 | GBP45,210 |
+-------------------------+-----------+-----------+----------+----------+-----------+-----------+
2.SEGMENTAL REPORTING (continued)
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Geographic segment | Geographic segment | Group |
| | 1: | 2: | |
| | UK & Channel | Non-UK & Channel | |
| | Islands | Islands | |
+-------------------------+-----------------------+-----------------------+-----------------------+
| | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| |Unaudited |Unaudited |Unaudited |Unaudited |Unaudited |Unaudited |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 31st | 31st | 31st | 31st | 31st | 31st |
| | July | July | July | July | July | July |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Additions to property, | - | 1 | - | - | - | 1 |
| plant and equipment | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Depreciation of | 10 | 1 | 1 | - | 11 | 1 |
| property, plant and | | | | | | |
| equipment | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+-------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
+-------------------------+-------------------+--------------------+------------------+
| | Geographic |Geographic segment | Group |
| | segment 1: | 2: | |
| | UK & Channel | Non-UK & Channel | |
| | Islands | Islands | |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| | Audited | Audited | Audited |
+-------------------------+-------------------+--------------------+------------------+
| | 31st January | 31st January | 31st January |
+-------------------------+-------------------+--------------------+------------------+
| | 2009 | 2009 | 2009 |
+-------------------------+-------------------+--------------------+------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Income net of losses on | (2,802) | 869 | (1,933) |
| investment | | | |
+-------------------------+-------------------+--------------------+------------------+
| Operating expenses | (1,691) | (253) | (1,944) |
+-------------------------+-------------------+--------------------+------------------+
| Segment operating | (4,493) | 616 | (3,877) |
| (loss) / profit | | | |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Financial income | 254 | 38 | 292 |
+-------------------------+-------------------+--------------------+------------------+
| Financial expenses | (6) | (1) | (7) |
+-------------------------+-------------------+--------------------+------------------+
| Carried interest | 822 | - | 822 |
| provision | | | |
+-------------------------+-------------------+--------------------+------------------+
| Exchange movements | 65 | 136 | 201 |
+-------------------------+-------------------+--------------------+------------------+
| Exceptional items | (136) | - | (136) |
+-------------------------+-------------------+--------------------+------------------+
| (Loss) / profit before | (3,494) | 789 | (2,705) |
| tax | | | |
+-------------------------+-------------------+--------------------+------------------+
| Income tax | 1,199 | (221) | 978 |
+-------------------------+-------------------+--------------------+------------------+
| (Loss) / profit for the | GBP(2,295) | GBP568 | GBP(1,727) |
| year | | | |
+-------------------------+-------------------+--------------------+------------------+
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Non-current assets | | | |
+-------------------------+-------------------+--------------------+------------------+
| Property, plant and | 64 | 8 | 72 |
| equipment | | | |
+-------------------------+-------------------+--------------------+------------------+
| Investments | 36,902 | 4,771 | 41,673 |
+-------------------------+-------------------+--------------------+------------------+
| Loans and receivables | 1,030 | 925 | 1,955 |
+-------------------------+-------------------+--------------------+------------------+
| | 37,996 | 5,704 | 43,700 |
+-------------------------+-------------------+--------------------+------------------+
| Current assets | | | |
+-------------------------+-------------------+--------------------+------------------+
| Trade and other | 465 | 311 | 776 |
| receivables | | | |
+-------------------------+-------------------+--------------------+------------------+
| Cash and cash | 7,341 | - | 7,341 |
| equivalents | | | |
+-------------------------+-------------------+--------------------+------------------+
| | 7,806 | 311 | 8,117 |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Total assets | 45,802 | 6,015 | 51,817 |
+-------------------------+-------------------+--------------------+------------------+
| Non-current liabilities | | | |
+-------------------------+-------------------+--------------------+------------------+
| Carried interest | (736) | - | (736) |
| provision | | | |
+-------------------------+-------------------+--------------------+------------------+
| Deferred tax | (6,324) | (174) | (6,498) |
| liabilities | | | |
+-------------------------+-------------------+--------------------+------------------+
| | (7,060) | (174) | (7,234) |
+-------------------------+-------------------+--------------------+------------------+
| Current liabilities | | | |
+-------------------------+-------------------+--------------------+------------------+
| Trade and other | (699) | - | (699) |
| payables | | | |
+-------------------------+-------------------+--------------------+------------------+
| Total liabilities | (7,759) | (174) | (7,933) |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Net assets | GBP38,043 | GBP5,841 | GBP43,884 |
+-------------------------+-------------------+--------------------+------------------+
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Additions to property, | 73 | 10 | 83 |
| plant and equipment | | | |
+-------------------------+-------------------+--------------------+------------------+
| | | | |
+-------------------------+-------------------+--------------------+------------------+
| Depreciation of | 12 | 2 | 14 |
| property, plant and | | | |
| equipment | | | |
+-------------------------+-------------------+--------------------+------------------+
3. LOSS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | 31st July | | 31st July | | 31st January |
| | | 2009 | | 2008 | | 2009 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Loss | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Loss for the purposes of | | (1,230) | | (489) | | (1,727) |
| basic and diluted earnings | | | | | | |
| per share being net loss | | | | | | |
| attributable to equity | | | | | | |
| shareholders | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Loss per share - basic and | | (4.2)p | | (1.7)p | | (5.9)p |
| diluted | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Number of shares | | Number | | Number | | Number |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Weighted average number of | | 29,286,143 | | 29,286,143 | | 29,286,143 |
| ordinary shares for the | | | | | | |
| purposes of basic earnings | | | | | | |
| per share | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Number of dilutive shares | | Nil | | Nil | | Nil |
| under option | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Weighted average number of | | 29,286,143 | | 29,286,143 | | 29,286,143 |
| ordinary shares for the | | | | | | |
| purposes of dilutive earnings | | | | | | |
| per share | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
4.NON-CURRENT INVESTMENTS
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Group Investments | | Unaudited | | Unaudited | | Audited |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | 31st July | | 31st July | | 31st January |
| | | 2009 | | 2008 | | 2009 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At valuation | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At 1st February | | 41,673 | | 49,754 | | 49,754 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Additions | | - | | 1,629 | | 1,629 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Disposals | | (4) | | (6,711) | | (6,824) |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Movement in valuation / | | (1,888) | | (499) | | (2,886) |
| provisions | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At period end | | 39,781 | | 44,173 | | 41,673 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At cost | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At 1st February | | 17,043 | | 18,328 | | 18,328 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Additions | | - | | 1,629 | | 1,629 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Disposals | | - | | (2,801) | | (2,914) |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| Provisions | | (500) | | - | | - |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| At period end | | 16,543 | | 17,156 | | 17,043 |
+-------------------------------+--+--------------+--+--------------+--+---------------+
| | | | | | | |
+-------------------------------+--+--------------+--+--------------+--+---------------+
On 3rd September 2009 Trillium Partners Limited ("Trillium"), an associated
company, was placed into administration. As at 31st July 2009 the Group had
invested a total of GBP800,000 in Trillium (GBP500,000 equity and GBP300,000
loan financing). The directors consider that there may be a permanent diminution
in value as a result of the company's circumstances and have therefore deemed it
prudent to provide against the amount invested in full.
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:
+---------------------------+-----------+-------------+------------+---------------+------------------+------------------+
| |% holding | Date | Aggregate | Post tax | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | of share |information | capital |Profit/(loss) | |
| | | | and | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Name of company | capital | available | reserves | for the | Principal |
| | | to | | year | activity |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | GBP | GBP | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------------------+-------------+------------+---------------+------------------+------------------+
| Amberglobe Limited 35.00 | 30.04.08 | 139,285 | (60,715) | Business sales | |
| | | | | platform | |
+---------------------------------------+-------------+------------+---------------+------------------+------------------+
| | | | | | |
+---------------------------------------+-------------+------------+---------------+------------------+------------------+
| Besso Holdings Limited | 22.73 | 31.12.08 | 10,138,223 | 964,214 | Investment |
| | | | | | holding company |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| HQB Partners Limited | 27.72 | 31.12.08 | 166,057 | 40,583 | Investor |
| | | | | | relations |
| | | | | | consultants |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Hyperion Insurance | 19.60 | 30.09.08 | 37,253,000 | 1,929,000 | Insurance |
| Group Limited | | | | | holding company |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| JMD Specialist Insurance | 25.00 | 31.10.08 | 485,646 | 6,220 | Insurance |
| Services Group Limited | | | | | collection |
| | | | | | services company |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| LEBC Holdings Limited | 21.95 | 30.09.08 | 889,946 | 166,019 | Independent |
| | | | | | financial |
| | | | | | advisor company |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Portfolio Design Group | 20.00 | 31.12.08 | 9,592,387 | 4,081,188 | Fund managers of |
| International Limited | | | | | traded endowment |
| | | | | | policies |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Morex Commercial Limited | 20.00 | 31.12.08 | 312,379 | 191,780 | Trading in |
| | | | | | secondary life |
| | | | | | policies |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Preferred Asset | 20.00 | 30.09.08 | 396,545 | 235,149 | Fund management |
| Management Limited | | | | | company |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| New Horizons Limited | 20.00 | 31.12.08 | 1,595,863 | 66,732 | Investment |
| (formerly Surrenda-Link | | | | | holding company |
| Nominees Limited) | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Public Risk Management | 44.00 | 31.12.07 | (292,757) | (21,140) | Public sector |
| Limited | | | | | risk management |
| | | | | | consultants |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| | | | | | |
+---------------------------+-----------+-------------+------------+---------------+------------------+
| Summa Insurance | 48.625 | 31.12.07 | 376,897 | (782,957) | Consolidator of |
| Brokerage, S.L. | | | | | 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
27.72% interest as a long-term creditor. As this is in reality an equity
investment the aggregate capital and reserves shown have therefore been adjusted
to include this as equity and the profit has been adjusted by the dividend paid
out.
LEBC Holdings Limited does not prepare consolidated accounts. The figures shown
include the aggregate capital and reserves of that company of GBP106,005 and 90%
of its subsidiary company's (LEBC Group Limited) aggregate capital and reserves
of GBP871,045 and profit for the period of GBP184,466 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.
5. LOAN AND EQUITY COMMITMENTS
On 7th February 2005 the Group entered into an agreement to provide a loan
facility of GBP140,000 to HQB Partners Limited, an associated company. As at
31st July 2009 GBP80,000 of this facility had been drawn down.
On 21st March 2007 the Group entered into an agreement to provide a loan
facility of GBP250,000 to JMD Specialist Insurance Services Group Ltd, an
associated company. At 31st July 2009 GBP100,000 of this facility had been drawn
down.
On 29th June 2007 the Group entered into an agreement to provide additional
equity funding of EUR3,963,462 to Summa Insurance Brokerage S.L., an associated
company, payable in three equal tranches of EUR1,321,154. At 31st July 2009 two of
these tranches totaling EUR2,642,308 (GBP2,045,831) had been paid, with a final
tranche of EUR1,321,154 (GBP1,129,867) 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 GBP630,000 to Amberglobe Limited, an associated company. As at 31st
July 2009 GBP570,000 of this facility had been drawn down.
On 1st April 2009 the Group entered into an agreement to provide a loan facility
of GBP400,000 to LEBC Group Limited, an associated company. As at 31st July 2009
none of this facility had been drawn down.
On 2nd June 2009 the Group entered into an agreement with Hyperion Insurance
Group Limited to subscribe for EUR900,000 in loan notes to fund an acquisition,
being part of a EUR4,500,000 loan note issue alongside other shareholders. As at
31st July 2009 no amounts had been drawn down.
6. DEFERRED TAX AND CONTINGENT LIABILITIES
The Directors estimate that, if the Group were to dispose of all its investments
at the amount stated in the Statement of Financial Position, GBP6.0m (interim 6
months to 31st July 2008: GBP7.1m & full year to 31st January 2009: GBP6.5m) of
tax on capital gains would become payable by the Group at the current
corporation tax rate of 28%.
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 totalling
GBP600,000 together with the Employers' National Insurance due thereon.
GBP150,000, GBP50,000, GBP50,000, GBP100,000 and GBP250,000 are due to be paid
on 1st April 2010, 1st October 2010, 6th April 2011, 1st October 2011 and 1st
October 2012 respectively.
No amount has been included in these financial statements as the performance
conditions relating to these incentives had not been met at the time of the
reporting period.
7.DIRECTOR'S INTEREST IN CONTRACTS
S.S. Clarke is entitled to a maximum of 20% of any gain, after deducting
expenses and following the repayment of all loans, the redemption of all
preference shares, loan stock and equivalent finance provided by the Group, on
the sale of certain agreed investments of the Group and its subsidiaries.
No amounts were paid under this contract during the period (interim 6 months to
31st July 2008: GBPnil & full year to 31st January 2009: GBPnil). The Group has
included provisions for this entitlement based upon the fair value of these
investments, which totalled GBP0.3m at 31st July 2009 (interim 6 months to 31st
July 2008: GBP1.3m & full year to 31st January 2009: GBP0.7m).
8. EXCEPTIONAL ITEMS
(1) Share based payment arrangements - 6 months to 31st July 2008
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 in respect of the 6-month
period to 31st July 2008 are described in the following table:
+-----------------------+---------------+---------------+---------------------------+
| Nature of the | Share options | Share options | Share appreciation rights |
| arrangement | granted to | granted to | to employees |
| | advisors | advisors | |
+-----------------------+---------------+---------------+---------------------------+
| Date of grant | 2 February | 9 February | 19 April 2006 |
| | 2006 | 2006 | |
+-----------------------+---------------+---------------+---------------------------+
| Number or instruments | 17,857 | 17,857 | 4,392,921 |
| granted | | | |
+-----------------------+---------------+---------------+---------------------------+
| Exercise price | 140.00 | 140.00 | 140.00 |
| (pence) | | | |
+-----------------------+---------------+---------------+---------------------------+
| Share price at grant | 150.50 | 150.50 | 150.50 |
| (pence) | | | |
+-----------------------+---------------+---------------+---------------------------+
| Vesting period | 5 | 5 | Units vest 10 days after |
| (years) | | | 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 | 0% | 0% | 0% |
| expressed as a | | | |
| dividend yield | | | |
+-----------------------+---------------+---------------+---------------------------+
| Settlement | Shares | Shares | Shares |
+-----------------------+---------------+---------------+---------------------------+
| % expected to vest | 100% | 100% | 60% |
| (based upon leavers) | | | |
+-----------------------+---------------+---------------+---------------------------+
| Number expected to | 17,857 | 17,857 | 2,635,752 |
| vest | | | |
+-----------------------+---------------+---------------+---------------------------+
| Fair value per | 41.90 | 41.20 | 23.50 |
| granted instrument | | | |
| (pence) | | | |
+-----------------------+---------------+---------------+---------------------------+
| Charge for period | GBPnil | GBPnil | GBP87,541 |
| ending 31 July 2008 | | | |
| (GBP) | | | |
+-----------------------+---------------+---------------+---------------------------+
| Valuation model | Black-Scholes | Black-Scholes | Trinomial |
+-----------------------+---------------+---------------+---------------------------+
No options were exercised during the period covered by these financial
statements. Share appreciation rights representing 65% of the available units
granted were forfeited in prior years following the employees leaving the Group
and the remaining 35% of the units were subsequently waived by the relevant
employees in the year to 31st January 2009. The expected number of units to vest
was 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 were
transferred to retained earnings in the year to 31st January 2009.
(2) Termination payments - year ended 31st January 2009
In the year to 31st January 2009, one-off compensation payments totalling
GBP136,300 were made to two employees (including one director) who left the
Group during that year.
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 Tuesday 27 October 2009 at B.P. Marsh's office at
2nd Floor, 36 Broadway, London SW1H 0BH.
- Ends -
B.P. Marsh & Partners Plcwww.bpmarsh.co.uk
Brian Marsh OBE +44 (0)20 7233 3112
Nominated Adviser
Arbuthnot Securities
Nick Tulloch / Ed Gay +44 (0)20 7012 2105
Redleaf Communications (PR to BP Marsh)
Emma Kane / Alicia Jennings +44 (0)20 7566 6700
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 six 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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