Final Results

B.P. Marsh & Partners PLC 23 May 2006 Date: 23rd May 2006 On behalf of: B.P. Marsh & Partners Plc Embargoed until: 0700hrs B.P. Marsh & Partners Plc (B. P. Marsh or 'the Company') Final Results - 23 May 2006 B.P. Marsh & Partners Plc, a niche venture capital provider to early stage financial services businesses, today announces the audited group results of B.P. Marsh & Company Limited for the year to 31 January 2006. B.P. Marsh & Company Limited was the holding company of the group before it was acquired by B.P. Marsh & Partners Plc on 1 February 2006 prior to its admission to the Alternative Investment Market. These results therefore do not include the placing of shares on 2 February 2006 which raised £11 million before expenses. Group Financial Highlights • No new investments were made during year. • The Net Asset Value of the Group increased by 16.3% over the year (compared to an increase of 1.5% during the year ended 31st January 2005) before any contingent liabilities. Net of contingent liabilities the Net Asset Value of the Group increased by 16.4% over the year (compared to an increase of 1.1% during the year ended 31st January 2005). • Consolidated pre-tax profit for the year of £3,514 compared to a loss of £2,393,000 in 2005. • On 2nd September 2005 the Group sold its 27.37% stake in Carpenter Moore Insurance Services, Inc. to NASDAQ Insurance Agency, LLC for $4,364,000 after a net acquisition cost (after selling some shares to incentivise new management) of $322,500 - a multiple of 13.5 times the net equity cost. The Group had held this investment since July 1991. $1,376,000 of the sale proceeds were held in escrow and are repayable within 2 years subject to any potential warranty or indemnity claims. As at the date of this report $484,000 has already been released. • Underlying consolidated profit of £1.6m taking into account that £1,597,000 of profit was taken to the retained reserves from the revaluation reserve on successful completion of the sale of Carpenter Moore Insurance Services, Inc. • On 18 November 2005 a £1,500,000 loan was granted to Hyperion Insurance Group Limited which subsequently was converted into £1.43m of equity on 23rd February 2006 in a rights issue which maintained the group's equity stake at 27.9%. • On 27th January 2006 a £600,000 loan was granted to Besso Holdings Limited which subsequently was converted into redeemable cumulative preference shares on 23rd February 2006. • Since the Group's inception in 1990 the Group's Net Asset Value before contingent liabilities has risen by £28,700,000 from its original investment of £2,504,000. This equates to an increase of 17% per annum over 16 years. Including contingent liabilities this amounts to an increase of 15.7%. • As at 2nd February 2006 the Group had an effective Net Asset Value of £41.3m after the successful admission of its shares to AIM. • A dividend of £68,948 was paid in January 2006. The Directors do not recommend any further payment of dividend. Chairman's Statement Overview In the year under review, the Company sold its interest in Carpenter Moore Insurance Services, Inc, headquartered in San Francisco, to NASDAQ Insurance Agency, LLC at a substantial profit. The remaining nine of the Company's investments all made satisfactory progress in their chosen fields of business during the year. As a consequence, the Directors' valuation of the Company including its subsidiaries at 31st January 2006 maintained an acceptable annual growth rate of 17% compound since commencement on 1st February 1990. Although many investment opportunities were presented to us, no new investments were completed during the year. Post Balance Sheet Event On 1st February 2006, B. P. Marsh & Partners plc aquired 100% of the issued share capital of B. P. Marsh & Company Limited (formerly B. P. Marsh & Partners Limited) in a share for share exchange. References throughout the Financial Statements to the 'Company' refer to B. P. Marsh & Partners plc from 1st February 2006 and prior to that to B. P. Marsh & Company Limited. Two days after the year-end, the B. P. Marsh & Partners Group became a quoted company on the Alternative Investment Market ('AIM') of the London Stock Exchange. A total of 9.3 million shares (including just under 7.9 million new shares) were placed at £1.40 per share, raising gross proceeds of £11 million for the Company (£10 million net of expenses). On Admission to AIM, there were a total of 29.3 million shares in issue, resulting in an initial market-capitalisation of just over £41 million. The funds were raised to enable BP Marsh to continue to grow, by financing existing investments as well as funding new opportunities. In addition, I believe that the enhanced profile that being a public company gives us will greatly help in continuing to attract high-calibre professionals as well as incentivising our current team. This is essential as I endeavour to ensure that the future of BP Marsh lies in a wider and deeper shareholder base. People None of this would have been possible without the care and dedication of the Directors and staff to whom I would wish again to record my gratitude. Outlook We remain optimistic about the future for the Group. There are still a large number of financial services minnows with great teams and exciting business plans requiring funding which remain largely ignored by the venture capital markets. This is mainly as a result of the significantly higher levels of energy and expertise required to make informed investment decisions in these businesses - something the BP Marsh team relishes. Brian Marsh OBE Chairman Investments The Group has holdings in the following companies :- 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 2006 valuation: £90,000 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: 24.7% 31st January 2006 valuation: £6,752,000 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: 28.0% 31st January 2006 valuation: £116,000 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 specializing 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: 27.9% 31st January 2006 valuation: £9,353,000 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 2006 valuation: £530,000 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 2006 valuation: £3,439,000 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: 19.7% 31st January 2006 valuation: £6,850,000 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: 35.0% 31st January 2006 valuation: £206,000 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: 35.0% 31st January 2006 valuation: £364,000 Financial Statements B.P. MARSH & COMPANY LIMITED (formerly B.P. Marsh & Partners Limited) CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST JANUARY 2006 Notes 2006 2005 ----- £ ---- £ £ ---- £ TURNOVER 1 940,606 641,668 Staff costs 2 1,506,799 1,175,142 Depreciation 6 5,697 8,749 Other operating 708,384 1,177,291 charges ------------ ------------ Operating costs (2,220,880) (2,361,182) Income from 701,599 598,590 participating interests Income from other 285,359 743,258 fixed asset investments ------------ ------------ Other operating 986,958 1,341,848 income ------------ ------------ OPERATING LOSS (293,316) (377,666) Provision against (232,023) (2,330,875) investments and loans Profit on disposal 7 574,316 315,109 of fixed asset investments Interest 32,551 36,715 receivable and similar income Interest payable (78,014) (35,803) and similar charges ------------ ------------ 296,830 (2,014,854) ------------ ------------ PROFIT / (LOSS) ON 3 3,514 (2,392,520) ORDINARY ACTIVITIES BEFORE TAXATION Taxation 4 - 416,251 ------------ ------------ PROFIT / (LOSS) ON 3,514 (1,976,269) ORDINARY ACTIVITIES AFTER TAXATION Dividends 5, 11 (68,948) - ------------ ------------ LOSS FOR £ (65,434) £(1,976,269) THE PERIOD ============ ============ The result for the year is wholly attributable to continuing activities. BALANCE SHEET 31ST JANUARY 2006 Group Company ----- ------- Restated Restated -------- -------- Notes 2006 2005 2006 2005 ----- ---- ---- ---- ---- £ £ £ £ FIXED ASSETS Tangible assets 6 8,136 10,063 8,136 10,063 Investments 7 27,700,000 25,068,504 33,257,805 28,206,864 ------------ ------------ ------------ ------------ 27,708,136 25,078,567 33,265,941 28,216,927 ------------ ------------ ------------ ------------ DEBTORS: due 8 3,230,955 2,945,000 2,805,000 2,945,000 after more than one year ------------ ------------ ------------ ------------ CURRENT ASSETS Debtors 8 3,413,415 700,618 3,141,506 700,618 Cash at bank 1,083,896 591,839 1,083,896 591,839 and in hand ------------ ------------ ------------ ------------ 4,497,311 1,292,457 4,225,402 1,292,457 CREDITORS - 9 (1,733,034) (1,494,966) (1,304,982) (1,066,913) amounts falling due within one year ------------ ------------ ------------ ------------ NET CURRENT ASSETS 2,764,277 (202,509) 2,920,420 225,544 ------------ ------------ ------------ ------------ TOTAL ASSETS 33,703,368 27,821,058 38,991,361 31,387,471 LESS CURRENT LIABILITIES CREDITORS - 9 (2,500,000) (1,000,000) (7,787,993) (4,566,413) amounts falling due after more than one year ------------ ------------ ------------ ------------ £31,203,368 £26,821,058 £31,203,368 £26,821,058 ============ ============ ============ ============ CAPITAL AND RESERVES Called up 10 2,519,553 2,507,319 2,519,553 2,507,319 share capital Share premium 11 16,584 16,584 16,584 16,584 account Revaluation 11 19,209,299 16,358,075 20,870,576 16,342,862 reserve Capital 11 10 10 10 10 redemption reserve Profit and 11 9,457,922 7,939,070 7,796,645 7,954,283 loss account ------------ ------------ ------------ ------------ SHAREHOLDERS' £31,203,368 £26,821,058 £31,203,368 £26,821,058 FUNDS (including non-equity interests) ============ ============ ============ ============ Approved by the Board on 18 May 2006 for release on 23 May 2006 and signed on its behalf by B.P. Marsh and J.S. Newman. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST JANUARY 2006 Notes 2006 2005 ----- ---- ---- £ £ Cash outflow from operating activities 12 (329,651) (275,715) Returns on investment and 13 (45,463) 912 servicing of finance Taxation - 494,994 Capital expenditure and financial 14 (563,881) (3,290,746) investment Equity dividends (68,948) - ------------ ------------ Cash outflow before financing (1,007,943) (3,070,555) Financing 15 1,500,000 500,000 ------------ ------------ Increase / (decrease) in cash in the year 16 £ 492,057 £ (2,570,555) ============ ============ Reconciliation of net cash flow to movement in net debt Increase / (decrease) in cash in the 16 492,057 (2,570,555) period Cash outflow from change in debt (1,500,000) (1,000,000) Exchange movement in debt - (3,456) ------------ ------------ Movement in net debt in the period (1,007,943) (3,574,011) Opening net debt (740,475) 2,833,536 ------------ ------------ Closing net debt 16 £ (1,748,418) £ (740,475) ============ ============ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST JANUARY 2006 1. ACCOUNTING POLICIES Basis of preparation of financial statements The financial statements have been prepared under the historical cost convention modified to include the revaluation of investments and in accordance with applicable accounting standards. Basis of consolidation The group financial statements consolidate the results and net assets of the company and all of its subsidiary undertakings. No profit and loss account is prepared for the company, as permitted by Section 230 of the Companies Act 1985. The company incurred a loss for the period of £76,456 (2005 - £2,097,609). Change of accounting policy Investments held as fixed assets were previously stated at cost less provision for any permanent diminution in value. Fixed asset investments that had been subject to a reorganisation were held at their revalued amount. The board of directors considered that this method of accounting did not show a fair value of these investments and therefore the investments are now stated at fair value according to the policy as set out below. The effect of this change in accounting policy has been to increase group investment valuation, hence, group shareholders' funds at 1st February 2004 by £13,460,642 and at 1st February 2005 by £16,333,192 and to increase the company's shareholders' funds at 1st February 2004 by £13,348,971 and at 1st February 2005 by £16,342,862. Turnover Turnover represents the amounts receivable, excluding value added tax, in respect of the provision of consultancy services. All turnover is derived from the UK. Investments Investments are stated at fair value. The valuations of investments are conducted by the Board. 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 cashflows from the investment where a realisation or flotation is imminent. Realised surpluses or deficits on the disposal of investments are taken to the Profit & Loss account, unless they have already been taken to the Revaluation Reserve. Unrealised surpluses on the revaluation of investments are taken to the Revaluation Reserve. Permanent impairments in the value of investments are taken to the Profit & Loss account, except to the extent that they represent reversals of prior revaluations. All investments in portfolio companies are held as a means to benefit from increases in their marketable value and not as a medium through which the business of the company is carried out. Therefore in accordance with Financial Reporting Standard 9 'Associates and Joint Ventures', they are not accounted for as associates. Income from investments Income from investments comprises: a) gross interest from loan stock, which is taken to the profit and loss account on an accruals basis b) dividends from shares, which are taken to the profit and loss account when received, except for fixed yield dividends, which are accounted for on an accruals basis provided that the investee company has sufficient distributable reserves and is able to make such distributions. Depreciation Provision for depreciation of tangible assets is made on the straight line basis at rates calculated to write off the cost of the assets, less their estimated residual values, over their expected working lives, which are considered to be: Furniture & equipment - 5 years Foreign currencies Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Transactions denominated in foreign currencies are converted at the rate of exchange ruling on the date of the transaction. All translation differences are taken to the profit and loss account as they arise. Deferred taxation Provision is made in full for all taxation deferred in respect of timing differences that have originated but not reversed by the balance sheet date, except for gains on revaluation of fixed assets. No provision is made for taxation on permanent differences. Deferred tax assets are recognised to the extent that it is more likely than not that they will be reversed. 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 profit and loss account. Operating leases Rentals payable under operating leases are charged on a straight-line basis over the term of the lease. 2. STAFF COSTS The average number of employees, including directors, employed by the group during the period was 22 (2005: 22). All remuneration was paid by B. P. Marsh & Company Limited. The related staff costs were: 2006 2005 ---- ---- £ £ Wages and salaries 1,271,889 981,652 Social security costs 153,669 118,615 Pension costs 81,241 74,875 ------------ ------------ £1,506,799 £1,175,142 ============ ============ 3. PROFIT/ (LOSS) ON ORDINARY ACTIVITIES BEFORE 2006 2005 ---- ---- TAXATION £ £ The profit/ (loss) for the period is arrived at after charging: Depreciation of owned tangible fixed assets: 5,697 8,749 Auditors remuneration :- Audit fees (Company £26,500 (2005 £8,250)) 32,650 15,950 Other services (Company £21,057 (2005 £75,040)) 23,507 80,440 Operating lease rentals of land and buildings 117,975 118,139 ============ ============ 4. TAXATION 2006 2005 ---- ---- £ £ The charge for tax comprises: UK corporation tax for the year £ - £ 416,251 ============ ============ Factors affecting the charge for the year Profit / (loss) on ordinary activities before tax £ 3,514 £(2,392,520) ============ ============ Tax at 30% on profit / (loss) on ordinary activities 1,054 (717,756) Effects of: Expenses not deductible for tax purposes 49,404 23,352 Non taxable income (65, 274) - Impairment provision not deductible for tax purposes - 699,263 Depreciation in excess of capital allowances (8) 464 Other effects: Unutilised tax losses carried forward 39,567 362,118 Utilisation of tax losses during the period (472,374) - Net chargeable gains 550,995 - Provisions against investments not allowable for tax 46,800 - Taxable capital loss in excess of accounting loss - (86,068) Non-taxable income (dividends received) (150,164) (281,373) Over provision in relation to prior year - 416,251 ------------ ------------ Tax charge for the year £ - £ 416,251 ============ ============ 5. DIVIDENDS 2006 2005 ---- ---- £ £ Ordinary dividends Interim dividend paid on: 'A' Ordinary shares 68,948 - ------------ ------------ £ 68,948 £ - ============ ============ 6. TANGIBLE FIXED ASSETS Furniture & Equipment ----------- Group and Company £ Cost At 1st February 2005 94,155 Additions 3,770 ----------- At 31st January 2006 97,925 ----------- Depreciation At 1st February 2005 84,092 Charge for the year 5,697 ----------- At 31st January 2006 89,789 ----------- Net book value At 31st January 2006 £ 8,136 ============ At 31st January 2005 £ 10,063 ============ 7. FIXED ASSET INVESTMENTS Other Investments Group investments : Participating other than --------------------- interests Loans Total ----------- ------- ------ £ £ £ At valuation At 1st February 2005 (restated) 21,615,504 3,453,000 25,068,504 Additions 271,378 - 271,378 Disposals (792,358) - (792,358) Impairment (provision)/reversal (16,000) 292,369 276,369 Valuation released to Profit & Loss account on disposal (1,597,000) - (1,597,000) Movement in valuation 1,368,476 3,104,631 4,473,107 ------------ ------------ ------------ At 31st January 2006 £20,850,000 £ 6,850,000 27,700,000 ============ ============ ============ At cost At 1st February 2005 6,375,725 2,359,587 8,735,312 Additions 271,378 - 271,378 Disposals (792,358) - (792,358) Impairment (provision)/reversal (16,000) 292,369 276,369 ------------ ------------ ------------ At 31st January 2006 £ 5,838,745 £ 2,651,956 £ 8,490,701 ============ ============ ============ Included within the group's profit and loss account are profits on disposal of fixed asset investments of £574,316 (2005: £315,109). Of this £390,970 (2005: £315,109) relates to income received from investments written off in prior years and the reversal of an impairment provision. £183,346 relates to a profit on disposal of Carpenter Moore Insurance Services, Inc. in excess of the £2,297,000 valuation as at 31st January 2005. Shares in Investments Company investments : Group Participating other than ----------------------- Undertakings interests Loans Total -------------- ----------- ------- ------- £ £ £ £ At valuation At 1st February 2005 (restated) 16,017,114 8,736,750 3,453,000 28,206,864 Additions 480 271,378 - 271,858 Disposals - (25,000) - (25,000) Impairment (provision)/reversal - (16,000) 292,369 276,369 Movement in valuation (268,789) 1,691,872 3,104,631 4,527,714 ------------ ------------ ------------ ------------ At 31st January 2006 £15,748,805 £10,659,000 £ 6,850,000 £33,257,805 ============ ============ ============ ============ At cost At 1st February 2005 6,523,845 2,980,308 2,359,849 11,864,002 Additions 480 271,378 - 271,858 Disposals - (25,000) - (25,000) Impairment (provision)/reversal - (16,000) 292,369 276,369 ------------ ------------ ------------ ------------ At 31st January 2006 £ 6,524,325 £ 3,210,686 £ 2,652,218 £12,387,229 ============ ============ ============ ============ Included within the company's profit and loss account are profits on disposal of fixed asset investments of £356,735 (2005: £315,109). This relates to income received from investments written off in prior years and the reversal of an impairment provision. Shares in group undertakings The results of group undertakings, which are registered in England and Wales are as follows: Profit/ Aggregate (loss) % capital and for the Holding reserves at year to of share 31st January 31st January Name of company Capital 2006 2006 Principal activity ----------------- --------- ------ ------ -------------------- £ £ Marsh Insurance 100 15,747,805 79,970 Investment Holdings Limited holding company B.P. Marsh & Co. Trustee 100 1,000 - Dormant Company Limited Marsh Development 100 1 - Dormant Capital Limited Participating interests The participating interests (holdings of at least 20%), all of which are registered in England and are as follows:- % holding Date Aggregate Post Tax Of share information capital and Profit/(loss) Name of capital Available to Reserves for the year Principal activity company --------- -------------- ---------- -------------- -------------------- £ £ Hyperion 27.89 30.09.05 5,574,000 2,464,000 Insurance holding company Insurance Group Limited Public Risk 35.00 31.12.05 (282,550) (36,778) Public sector risk Management management consultants Limited Besso Holdings 24.69 31.12.04 7,575,271 1,525,409 Investment holding Limited company Paterson Martin 22.50 31.12.05 494,097 112,402 Actuarial insurance/ Limited reinsurance consultants Portfolio 20.00 31.12.05 4,406,424 592,711 Fund managers of Design Group traded endowment policies International Limited * Morex Commercial 20.00 31.07.05 (1,282,807) (20,567) Trading in Ltd * secondary life policies Preferred Asset* 20.00 30.09.04 (1,218) (43,222) Fund management company Management Ltd Surrenda-Link 20.00 31.12.04 654 Nil Investment holding company Nominees Ltd * 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. The company has a 35% interest in shares of Summa Insurance Brokerage, S.L. as at 31st January 2006. The company was incorporated in Spain on 23rd December 2004. Their first period of accounts will be to 31st December 2005 and there are no statutory figures available as yet. The company has a 28% interest in the shares of HQB Partners Limited as at 31st January 2006. The company was incorporated on 14th September 2004 and their first period of accounts will be to 31st December 2005. There are no statutory figures available as yet. On 2nd September 2005 the company entered into a sale and purchase agreement to sell its 27.37% holding in Carpenter Moore Insurance Services, Inc which completed on 30th September 2005. On 4th August 2005 Jump Group Limited, in which the company has a 22.5% interest, was placed into administration. Full provision has been made against this investment. * The valuation of these four investments have been consolidated under the valuation of Portfolio Design Group International Limited and for the purposes of these financial statements have been treated as a single investment. 8. DEBTORS Group Company ------- --------- 2006 2005 2006 2005 ---- ---- ---- ---- £ £ £ £ Due within one year Trade debtors 245,092 182,342 245,092 182,342 Loans to participating interests 2,510,000 357,143 2,510,000 357,143 Other debtors 302,388 24,758 30,479 24,758 Prepayments and accrued income 355,935 136,375 355,935 136,375 ------------ ------------ ------------ ------------ £ 3,413,415 £ 700,618 £ 3,141,506 £ 700,618 ============ ============ ============ ============ Due after one year Loans to participating interests 2,805,000 2,945,000 2,805,000 2,945,000 Other debtors 425,955 - - - ------------ ------------ ------------ ------------ £ 3,230,955 £ 2,945,000 £ 2,805,000 £ 2,945,000 ============ ============ ============ ============ On 23rd February 2006 £1,429,661 of the £1,500,000 loan owed within one year by Hyperion Insurance Group Limited was converted into 5,277 Ordinary shares of £1 each and 4,662 preferred cumulative shares of £1 each in Hyperion Insurance Group Limited. The remainder of the balance was repaid to the company. On 21st March 2006 the £600,000 loan owed within one year by Besso Holdings Limited was converted into 600,000 redeemable preference shares of £1 each. 9. CREDITORS Group Company ------- --------- 2006 2005 2006 2005 ---- ---- ---- ---- £ £ £ £ Due within one year Trade creditors 40,388 7,620 40,388 7,620 Amounts owed to group - - 1,000 1,000 undertakings Corporation Tax 429,040 429,040 - - Other taxation & social 58,639 34,060 58,639 34,060 security costs Other loans 332,314 332,314 332,314 332,314 Other creditors 12 13 - - Accruals and 872,641 691,919 872,641 691,919 deferred income ------------ ------------ ------------ ------------ £ 1,733,034 £ 1,494,966 £ 1,304,982 £ 1,066,913 ============ ============ ============ ============ Group Company ------- --------- 2006 2005 2006 2005 ---- ---- ---- ---- £ £ £ £ Due after one year Amounts owed to group - - 5,287,993 3,566,413 undertakings Other loans 2,500,000 1,000,000 2,500,000 1,000,000 ------------ ------------ ------------ ------------ £ 2,500,000 £ 1,000,000 £ 7,787,993 £ 4,566,413 ============ ============ ============ ============ The other loan due after one year relates to amounts lent to the company by Mr B.P. Marsh as part of a £3,000,000 facility, and is secured on the assets of the company. The loan accrues interest at a rate of 2% above the UK base rate, and is repayable in full by June 2009. Interest is payable on a quarterly basis. On 8th February 2006 the £2,500,000 loan drawn down to date was repaid in full following the Group's admission to AIM and this loan was replaced with a new £3,000,000 facility with B.P. Marsh & Partners Plc. This new facility is on the same interest and repayment terms but also has a charge of 1% p.a. on any undrawn amount. 10. CALLED UP SHARE CAPITAL 2006 2005 ---- ---- £ £ Authorised 152,007,829 'A' Ordinary shares of 1p each (2005: 153,179,452) 1,520,078 1,531,795 2,502,509 deferred shares of £1 each (2005: 2,502,509) 2,502,509 2,502,509 668,648 'B' shares of 1p each (2005: 47,648) 6,687 476 600,623 'C' shares of 1p each (2005: 49,623) 6,006 496 50,000 'D' shares of 1p each 500 500 No undesignated shares of 1p each (2005: 377) - 4 ------------ ------------ £ 4,035,780 £ 4,035,780 ============ ============ Allotted, called up and fully paid 489,655 'A' Ordinary shares of 1p each (2005: 435,250) 4,897 4,352 2,502,509 deferred shares of £1 each (2005: 2,502,509) 2,502,509 2,502,509 662,336 'B' shares of 1p each (2005: 23,568) 6,623 236 551,378 'C' shares of 1p each (2005: 21,223) 5,514 212 1,000 'D' shares of 1p each (2005: 1,000) 10 10 ------------ ------------ £ 2,519,553 £ 2,507,319 ============ ============ POST BALANCE SHEET REORGANISATION OF SHARE CAPITAL On 1st February 2006 a special resolution was passed to convert all shares into one class of ordinary shares of 1p each. On 2nd February 2006 the holders of the ordinary shares exchanged them for shares in B.P. Marsh & Partners Plc and from that date the company became a single member company. 11. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group Share Capital Profit ------- Share premium Revaluation Redemption and loss capital account reserve reserve account Total --------- --------- --------- --------- --------- ------- £ £ £ £ £ £ At 1st 2,507,319 16,584 16,358,075 10 7,939,070 26,821,058 February 2005 Profit for - - - - 3,514 3,514 the year Dividends paid - - - - (68,948) (68,948) Bonus issue 6,442 - - - (6,442) - of 'B' shares Bonus issue 5,792 - - - (5,792) - of 'C' shares Acquisition - - - - (480) (480) of subsidiary Undertaking Realised - - (24,883) - - (24,883) revaluation deficit on sale of investments Valuation - - (1,597,000) - 1,597,000 - released to Profit & Loss account on disposal Surplus on - - 4,473,107 - - 4,473,107 revaluation of investments ----------- ---------- ------------ ---------- ----------- ------------ At 31st £2,519,553 £ 16,584 £19,209,299 £10 £9,457,922 £31,203,368 January 2006 =========== ========== ============ ========== =========== ============ Company Share Capital Profit --------- Share premium Revaluation Redemption and loss capital account reserve reserve account Total --------- --------- --------- --------- --------- ------- £ £ £ £ £ £ At 1st 2,507,319 16,584 16,342,862 10 7,954,283 26,821,058 February 2005 Loss for - - - - (76,456) (76,456) the year Dividends paid - - - - (68,948) (68,948) Bonus issue 6,442 - - - (6,442) - of 'B' shares Bonus issue 5,792 - - - (5,792) - of 'C' shares Surplus on - - 4,527,714 - - 4,527,714 revaluation of investments ----------- ---------- ------------ ---------- ----------- ------------ At 31st £2,519,553 £ 16,584 £20,870,576 £10 £7,796,645 £31,203,368 January 2006 =========== ========== ============ ========== =========== ============ 12. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2006 2005 ---- ---- £ £ Operating loss (293,316) (377,666) Depreciation charges 5,697 8,749 (Increase) / decrease in trade debtors, prepayments and other debtors (288,031) 9,847 (Decrease) in creditors 238,069 83,355 Foreign exchange loss provision on profit on sale of investments 7,930 - ----------- ----------- Net cash outflow from operating activities £ (329,651) £ (275,715) =========== =========== 13. RETURNS ON INVESTMENT AND SERVICING OF FINANCE 2006 2005 ---- ---- £ £ Interest received 32,551 36,715 Interest paid (78,014) (35,803) ----------- ----------- £ (45,463) £ 912 =========== =========== 14. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 2006 2005 ---- ---- £ £ Purchase of fixed assets (3,770) (3,901) Purchase of investments (271,378) (591,597) Proceeds on sale of tangible fixed assets 1,864,603 358,752 (Payment)/Repayment of loans (to)/from investee companies (2,153,336) (3,054,000) ----------- ----------- £ (563,881) £(3,290,746) =========== =========== 15. FINANCING 2006 2005 ---- ---- £ £ Loan advances received in the period 1,500,000 1,000,000 Shares redeemed during the period - (500,000) ----------- ----------- £ 1,500,000 £ 500,000 =========== =========== 16. ANALYSIS OF CHANGES IN NET DEBT At 1st Cash At 31st February 2005 Flows January 2006 --------------- ------- -------------- £ £ £ Cash at bank and in hand 591,839 492,057 1,083,896 ------------ ------------ ------------ Debt due within one year (332,314) - (332,314) Debt due after one year (1,000,000) (1,500,000) (2,500,000) ------------ ------------ ------------ £ (740,475) £(1,007,943) £(1,748,418) ============ ============ ============ 17. LOAN COMMITMENTS On 31st January 2005 the company entered into an agreement to provide a participative-subordinated loan of €1,368,615 (£939,994) and a loan facility of €1,500,000 (£1,024,870) to Summa Insurance Brokerage S.L, an associated company and a company incorporated in Spain. €368,615 (£254,217) of the participative-subordinated loan was paid on 7th February 2005 with the remaining €1,000,000 (£685,777) paid on 3rd March 2006. As at 31st January 2006 the loan facility had not been drawn on. On 15th April 2004 the company entered into an agreement to provide a loan facility of £300,000 to Paterson Martin Limited, an associated company. At 31st January 2006 this loan had not been drawn on. 18. CONTINGENT LIABILITIES The directors estimate that, if the group were to dispose of all its investments at the amount stated in the Balance Sheet, £5,490,909 (2005: £4,725,806) of tax on capital gains would become payable by the group. Of this the directors estimate that the company's liability is £2,918,161 (2005: £1,536,146). 19. RELATED PARTY DISCLOSURES The following loans owed by the associated companies of the Company and its subsidiaries were outstanding at the year end: 2006 2005 ---- ---- £ £ Besso Holdings Limited 600,000 - HQB Partners Limited 80,000 - Hyperion Insurance Group Limited 3,850,000 2,350,000 Public Risk Management Ltd 375,000 345,000 Portfolio Design Group International Limited - 357,143 Jump Group Limited 1,400,000 1,350,000 The company made a provision of £50,000 in 2006 (£1,350,000 in 2005) against the loans made to Jump Group Limited. Income receivable, consisting of consultancy fees and interest on loans credited to the profit and loss account in respect of the associated companies of the Company and its subsidiaries for the year were as follows: 2006 2005 ---- ---- £ £ Besso Holdings Limited 134,990 53,254 Carpenter Moore Group 329,810 199,131 Hyperion Insurance Group Limited 504,259 336,707 Jump Group Limited - 95,038 Marine Reinsurance International Limited - 58,999 Marsh Christian Trust 46,000 45,000 Portfolio Design Group International Limited 41,952 60,812 Public Risk Management Ltd 55,355 48,350 Paterson Martin Limited 43,614 27,257 HQB Partners Limited 25,443 - Summa Insurance Brokerage S.L 54,777 - As at 31st January 2006 the company owed £2,500,000 (2005: £1,000,000) to Mr B.P. Marsh, who is the Chairman and majority shareholder of the company. Interest paid to him during the period amounted to £78,014 (2005: £21,803). All the above transactions were conducted on an arms length basis. 20. 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 company, on the sale of certain agreed investments of the company and its subsidiaries. Accordingly, S.S. Clarke was paid £12,676 on 21st February 2005, in relation to Jump Group Limited. The valuations of these certain agreed investments of the company and its subsidiaries have been reduced by the respective entitlements to S.S. Clarke. 21. POST BALANCE SHEET EVENTS a) As disclosed in Note 9, the loan of £2,500,000 from Mr B. P. Marsh was repaid in full after the year end following the Group's admission to AIM which generated the cash necessary for this repayment. At the year end, it was uncertain as to whether the loan would be repaid as it depended upon whether the Group's admission to AIM would be successful. Therefore the loan is shown as being due for repayment after one year according to its terms. b) On 1st February 2006 B.P. Marsh & Partners Plc acquired all of the share capital of the company in a share for share exchange. References throughout the Annual Report and Financial Statements to the 'company' refer to B.P. Marsh & Company Limited (formerly B.P. Marsh & Partners Limited) prior to 1 February 2006 and B.P. Marsh & Partners Plc from that date. On 2nd February 2006 B.P. Marsh & Partners Plc was admitted to AIM and raised £11million before expenses. Notice The financial information set out above does not constitute B.P. Marsh & Company Limited's statutory accounts for the year to 31 January 2006 but is derived from those accounts. The statutory accounts for the year to 31 January 2006 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 United Kingdom Generally Accepted Accounting Practice, of the state of the affairs of the company and the group as at 31st January 2006 and the profit and cash flows 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 18 May 2006 for release on 23 May 2006. Analyst Briefing An analyst briefing given by Brian Marsh OBE, Executive Chairman, Francis de Zulueta, Development Director and Jonathan Newman, Finance Director, will be held at 09:30 am on Tuesday 23 May 2006 at Redleaf Communications Ltd, 9-13 St Andrew Street, London EC4A 3AF. - ends - For further information: B.P. Marsh & Partners Plc www.bpmarsh.co.uk Brian Marsh OBE +44 (0)20 7730 2626 Redleaf Communications (PR to BP Marsh) Emma Kane +44 (0)20 7955 1410 Janakie Mallawa-Arachi +44 (0)20 7955 1410 Nabarro Wells & Co. Limited David Nabarro +44 (0)20 7710 7400 Marc Cramsie +44 (0)20 7710 7400 Notes to Editors: Additional information about BP Marsh and its management: BP Marsh's current portfolio contains nine companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk. Over the past 16 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 three and a half years. Prior to Brian Marsh's involvement in the Company, he spent many years in insurance broking and underwriting in Lloyd's as well as the London and overseas market. He has over 30 years' experience in building, buying and selling financial services businesses, particularly in the insurance sector. Managing Director, Natasha Dunbar, has over 10 years' experience in the financial services industry. Having joined the Company in 1994 she was made managing director in March 2002. Natasha is responsible for the day to day running of all operational aspects of the business and works closely with Brian Marsh in defining the strategic development of the Company. Investment Director Stephen Crowther joined the Company in 1998. He has over 27 years' experience in the London insurance market, in both broking and underwriting. He researches potential investments, advises investee businesses and monitors their progress. 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 BP 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. This information is provided by RNS The company news service from the London Stock Exchange

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