Interim Results

B.P. Marsh & Partners PLC 24 October 2007 Date: 24th October 2007 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 2007. Chairman's Statement ____________________ I am pleased to present the unaudited interim results for B P Marsh & Partners Plc (the 'Group') and its consolidated statements for the six months ended 31st July 2007. This is the first occasion that the results have been presented in accordance with International Financial Reporting Standards and the comparative data for the six months to 31st July 2006 and the year to 31st January 2007 have been restated. A reconciliation of the Balance Sheet and Income Statement has been included in the notes to the accounts. Investments In the six months to 31st July 2007 the Group made the following investments: • The Group acquired a 25% shareholding in JMD Specialist Insurance Services Group Limited ('JMD') for £0.6 million and has agreed to provide a further £0.25 million in loans to further develop the business. JMD is an accelerated premium collection service based in the City of London and provides a unique approach to the acceleration of insurance cash flow as well as attractive balance sheet management; • The Group acquired a 22.5% shareholding in LEBC Holdings Limited ('LEBC') for an initial consideration of £1.8 million and a further payment of £0.2 million based on its subsidiary company's audited results to 31st May 2007. LEBC is an Independent Financial Adviser established in 2000 with 11 branches and 56 advisers around the UK and which provides services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas; • The Group participated in a further rights issue for Hyperion Insurance Group Limited to further develop the business, taking up its pro-rata share at £1.5 million and thereby retaining its 27.89% shareholding; • The Group lent Summa Insurance Brokerage S. L. an additional €1.6 million, part of an agreed €2 million loan facility, to fund further acquisitions of regional brokers in Spain. In addition, the Group has currently committed to provide a further £0.6 million of funding either through debt or deferred equity for its existing investments. After taking this into consideration, the Group currently has circa £1.2 million of cash available for further investments together with a £3 million loan facility. Business Strategy The Group typically invests amounts of up to £2.5 million and only takes minority equity positions, normally acquiring between 15% and 45% of a target company's total equity. The Group insists on its investee companies adopting certain minority shareholder protections and appointing one of its directors to the relevant board. The Group's successful track record is based upon a number of factors that include, amongst other things, a robust investment process, the management's considerable experience of the financial services sector, and a flexible approach towards exit-strategies. Financial Performance At 31st July 2007, the net asset value of the Group excluding deferred tax was up 12.8% to £50.6 million, compared with £44.9 million at 31st July 2006. Including deferred tax this was up 11.7% to £42.9 million (2006: £38.4 million). Compared to 31st January 2007, the net asset value of the Group rose by 6.1% excluding deferred tax and 5.7% including deferred tax. The Directors are pleased with this result considering the recent market turmoil. This represented a total increase in net asset value before deferred tax of £38 million (£30.3m after deferred tax) since the Group was originally formed in 1990, having adjusted for the £10.1 million net proceeds raised on AIM and the original capital investment of £2.5 million. The Directors are pleased that, since 1990, the Group has over 17.5 years achieved an annual compound growth rate of 16.8% after running costs, realisations, losses and distributions but excluding deferred tax (15.3% including deferred tax). Based upon the above figures the Group's undiluted net asset value per share as at 31st July 2007 was 172.9 pence excluding deferred tax (146.6 pence including deferred tax). The Group's investment portfolio movement during the year was as below: July 2006 Acquisitions Disposals at Valuations Adjusted July 2007 valuation at cost cost released to July 2006 valuation P&L at cost valuation ____________________________________________________________________________ £35.8 £4.0 million £nil £nil £39.8 £45.3 million million million ____________________________________________________________________________ This equates to an uplift of 13.8% before deferred tax. However, this assumes all acquisitions were made on the first day of the year and therefore the actual rate of increase is greater. The consolidated profit on ordinary activities before share based provisions for the six months to 31st July 2007 was £2.9 million (2006: £3.5 million). Adjusting for unrealised gains on investment revaluations and carried interest provisions the consolidated profit on ordinary activities before share based provisions for the six months to 31st July 2007 was £268,000 (2006: £187,000). The Directors note that at the current corporation tax rate of 30% the estimate of deferred tax is £7.7 million. However, under government proposals to reduce the corporation tax rate to 28% from April 2008 this would, based upon figures to 31st July 2007, reduce this contingent liability to £7.2 million. People In March 2007 we said farewell to Stephen Crowther, who had served as a Director since 1998 and with whom we maintain a mutually helpful relationship in his subsequent capacity as a Director of one of our main investee companies. I thank the Directors and staff for their unstinting contributions to the progress of the Group. Outlook The Group remains unique in its investment sector and we continue to see a large number of relatively small enterprises with excellent management and spirited business plans. These represent a challenge, which the BP Marsh team relishes. BP Marsh OBE Chairman Analyst Briefing An analyst briefing given by Brian Marsh OBE, Executive Chairman, Francis de Zulueta, Director of New Business Development and Jonathan Newman, Finance Director, will be held at 09:00 am on Wednesday 24 October 2007 at Redleaf Communications Ltd, 9-13 St Andrew Street, London EC4A 3AF. For further information: B.P. Marsh & Partners Plc www.bpmarsh.co.uk _________________ Brian Marsh OBE +44 (0)20 7730 2626 Nominated Adviser Nabarro Wells & Co. Limited David Nabarro/Marc Cramsie +44(0) 20 7710 7400 Redleaf Communications (PR to BP Marsh) Emma Kane/Tom Newman +44 (0)20 7822 0200 Investments As at 31st July 2007 the Group's equity interests were as follows: Berkeley (Insurance) Holdings Limited (www.berkeleyinsurance.com) In July 2002 the Group invested in Berkeley (Insurance) Holdings, a company that provides its clients with independent advice on the most suitable choice of insurance broker in specialist as well as mainstream insurance areas. Date of investment: July 2002 Equity stake: 19.9% 31st July 2007 valuation: £40,000 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: 23.55% 31st July 2007 valuation: £10,174,000 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 2007 valuation: £350,000 Hyperion Insurance Group Limited (www.hyperiongrp.com) The Group first invested in Hyperion Insurance Group in 1994. The Hyperion Insurance Group owns, amongst other things, an insurance broker specialising in directors' and officers' ('D&O') and professional indemnity ('PI') insurance. A subsidiary of Hyperion became a registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing general agency specialising in developing D&O and PI business in Europe. Date of investment: November 1994 Equity: 27.89% 31st July 2007 valuation: £16,549,000 JMD Specialist Insurance Services Group Limited (www.jmd-sis.com) In March 2007 the Group invested in JMD, a provider of leading-edge services to the insurance industry. Their unique approach to measurable cash flow and profit enhancements adds value to Lloyd's syndicates, UK and international insurers and re-insurers. Date of investment: March 2007 Equity stake: 25.0% 31 July 2007 valuation: £600,000 LEBC Holdings Limited (www.lebc-group.com) In April 2007 the Group invested in LEBC, an Independent Financial Advisory company providing services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas. Date of investment: April 2007 Equity stake: 22.5% 31 July 2007 valuation: £2,140,000 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 July 2007 valuation: £427,000 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 2007 valuation: £6,306,000 Principal Investment Holdings Limited (www.principalinvestment.co.uk) In December 1999 the Group invested in Principal, a predominantly discretionary fund manager with both retail and institutional clients. Date of investment: December 1999 Equity stake: 18.57% 31st July 2007 valuation: £7,371,000 Public Risk Management Limited (www.publicriskmanagement.co.uk) In September 2003 the Group assisted in establishing Public Risk Management, a company which specialises in the development and provision of risk management services, including processes and procedures, to the public sector. Date of investment: September 2003 Equity stake: 44.0% 31st July 2007 valuation: £110,000 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 July 2007 valuation: £1,238,000 Financial Statements CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 31ST JULY 2007 Notes Unaudited Unaudited * Audited * 6 months to 6 months to Year to 31st 31st July 2007 31st July 2006 January 2007 ______________ ______________ ____________ £'000 £'000 £'000 £'000 £'000 £'000 Gains on Investments Realised Gains on disposal of Investments 91 115 115 Unrealised Gains on investment revaluation 3 2,591 3,451 6,369 ______ ______ ______ 2,682 3,566 6,484 Income Dividends 491 419 825 Income from Loans and receivables 355 215 453 Fees receivable 406 374 749 ______ ______ ______ OPERATING INCOME 1,252 1,008 2,027 Operating expenses (1,139) (1,106) (2,260) _______ ______ _______ OPERATING PROFIT 2,795 3,468 6,251 Bank Interest receivable and similar income 91 167 347 Interest payable and similar charges (15) (17) (33) Carried Interest Provision 6 50 (120) (253) Exchange Movements (11) 20 45 ______ ______ ______ 115 50 106 _______ ______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE SHARE BASED PROVISIONS 2,910 3,518 6,357 Share Based Provisions 7 (131) (94) (222) _______ ______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 2,779 3,424 6,135 Income Tax 5 (588) (957) (1,619) _______ ______ _______ PROFIT ON ORDINARY ACTIVITIES FOR THE PERIOD 2,191 2,467 4,516 _______ ______ _______ Earnings Per Share Basic (pence) 0.07 0.08 0.15 Diluted (pence) 0.07 0.07 0.13 * Restated for International Financial Reporting Standards, see note 2. CONSOLIDATED BALANCE SHEET AS AT 31ST JULY 2007 Unaudited Unaudited* Audited* Notes 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _______________ £'000 £'000 £'000 £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, 4 6 5 fixtures and fittings Investments 3 45,305 35,764 38,834 Loans and Receivables 4,134 - 3,091 _______ ______ _______ 49,443 35,770 41,930 CURRENT ASSETS Trade and Other receivables 1,271 3,692 1,056 Cash and Cash equivalents 1,880 7,424 6,989 _______ ______ _______ 3,151 11,116 8,045 LIABILITIES NON-CURRENT LIABILITIES Loans and Other payables - - - Carried Interest Provision 6 (1,000) (917) (1,050) Deferred Tax Liabilities 5 (7,698) (6,448) (7,110) _______ ______ _______ (8,698) (7,365) (8,160) CURRENT LIABILITIES Trade and Other payables (969) (1,102) (1,209) _______ ______ _______ (969) (1,102) (1,209) _______ ______ _______ NET ASSETS 42,927 38,419 40,606 _______ ______ _______ EQUITY Called up share capital 2,929 2,928 2,929 Share premium 9,370 9,361 9,370 Shares to be issued 353 94 222 Fair Value Reserve 20,216 16,093 18,215 Reverse acquisition reserve 393 393 393 Distributable Reserve 9,666 9,550 9,477 _______ ______ _______ TOTAL EQUITY 42,927 38,419 40,606 _______ ______ _______ * Restated for International Financial Reporting Standards, see note 2. CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST JULY 2007 Unaudited Unaudited 31st July 2007 31st July 2006 ______________ ______________ £'000 £'000 Cash inflow/(outflow) from operating activities Interest received on loans to Investees 355 215 Dividends Received 491 419 Fees Received from investment activity 406 374 Operating Expenses (1,138) (1,084) (Increase) / Decrease in Debtors (214) 270 Increase / (Decrease) in Creditors (240) (631) ______ ______ Net Cash outflow from operating activities (340) (437) ______ ______ Net cash generated from / (used in) investing activity Purchase of Property, plant and equipment. - - Purchase of Investments (3,929) (3,815) Proceeds from Investments 91 387 ______ ______ Net cash out flow from investing activities (3,838) (3,428) ______ ______ Net cash generated from / (used in) financing activities Repayment of Long - term borrowings - (2,500) Proceeds from issue of shares - 11,019 Placement costs - (874) (Payments) / Repayments of Loans to / (from) Investee Companies (995) 2,390 Interest received 91 167 Interest paid (15) (17) ______ ______ Net cash outflow of financing activities (919) 10,185 ______ ______ Change in Cash and cash equivalents (5,097) 6,320 Cash and cash equivalent at beginning of the period 6,989 1,084 FX Loss on Escrow accounts (12) 20 ______ ______ Cash and cash equivalents at end of period. 1,880 7,424 RECONCILIATION IN MOVEMENT IN EQUITY FOR THE PERIOD ENDED 31ST JULY 2007 6 months to 6 months to 12 months to 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _________________ £'000 £'000 £'000 Opening total Equity 40,605 25,712 25,712 Total Recognised income and expense for period 2,191 2,467 4,516 Dividends - - - Issue of Shares - 13,134 13,143 Shares to be Issued 131 94 222 Placement Costs - (845) (845) Acquisition of subsidiary undertaking - (2,143) (2,143) ______ ______ ______ Total Equity 42,927 38,419 40,605 ______ ______ ______ NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED 31ST JULY 2007 1. ACCOUNTING POLICIES Basis of preparation of financial statements The next annual financial statements of B.P. Marsh and Partners Plc ('the Group') will be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EC applied in accordance with the provisions of the Companies Act 1985. Accordingly, the interim financial information in this report has been prepared using accounting policies consistent with IFRS. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretation Committee (IFRIC) and there is an ongoing process for review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the directors expect to be applicable as at 31st January 2008. The financial information has been prepared under the historic cost convention as modified by the revaluation of fair value through the profit and loss investments. The principal accounting policies set out below have been consistently applied to all periods presented. The financial information contained in this interim statement has not been audited or reviewed by the Group's Auditors and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. They have been prepared using accounting policies applicable to the year ended 31 January 2007 apart from IFRS. Those accounts, upon which the Group's Auditors issued an unqualified opinion, have been filed with the Registrar of Companies. IFRS Transition IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. The interim financial information has been prepared on the basis of the following exemptions: Business combinations prior to 1st January 2006 have not been restated to comply with IFRS 3 'Business Combinations'. IFRS 2 'Share based payments' has been applied retrospectively to those options that were issued after 7 November 2002 and had not vested by 1st January 2006. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 2. Investments All investments are designated as 'fair value through profit or loss' assets and are initially recognised at the fair value of the consideration. They are measured at subsequent reporting dates at fair value. The Board conducts the valuations of investments. In valuing investments the Board applies guidelines issued by the British Venture Capital Association (BVCA). The following valuation methodologies have been used in reaching fair value of investments, some of which are in early stage companies: a) at cost, unless there has been a significant round of new equity finance in which case the investment is valued at the price paid by an independent third party. Where subsequent events or changes to circumstances indicate that an impairment may have occurred, the carrying value is reduced to reflect the estimated extent of impairment; b) by reference to underlying funds under management; c) by applying appropriate multiples to the earnings and revenues of the investee company; or d) by reference to expected future cashflow from the investment where a realisation or flotation is imminent. Both realised and unrealised gains and losses arising from changes in fair value are taken to the income statement for the year, with transaction costs on acquisition or disposal of investment expensed. Taxation The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable is based on the estimated taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and of liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and it is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, 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 company to pay bonuses to employees and as such no provision has been made in the operating expenses within the income statement for the period to 31st July 2007 (as per the interims to 31st July 2006). However, the income statement to 31st January 2007 does include such provision where discretionary awards were made for the year-end. 2. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) B.P. Marsh & Partners Plc reported under UK GAAP in its previously published financial statements for the year ended 31st January 2007. The analysis below shows a reconciliation of net assets and profit as reported under UK GAAP as at 31 January 2007 to the revised net assets and profits under IFRS as reported in these financial statements. In addition, there is a reconciliation of net assets under UK GAAP to IFRS at the transition date for this company, being 1 February 2006. There is also a reconciliation of net assets under UK GAAP to IFRS at the comparative interim date, being 31 July 2006. Reconciliation of Equity Previous Effect of IFRS at 31st January 2007 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 5 - 5 Investments 37,784 1,049 38,833 Loans and Receivables 3,091 - 3,091 ______ _____ ______ 40,880 1,049 41,929 ______ _____ ______ CURRENT ASSETS Trade and Other receivables 1,056 - 1,056 Cash and Cash equivalents 6,989 - 6,989 ______ _____ ______ 8,045 - 8,045 ______ _____ ______ LIABILITIES NON-CURRENT LIABILITIES Loans and Other payables - - - Carried Interest Provision - (1,050) (1,050) Deferred Tax Liabilities - (7,110) (7,110) ______ _____ ______ - (8,160) (8,160) ______ _____ ______ CURRENT LIABILITIES Trade and Other payables (1,209) - (1,209) ______ _____ ______ NET ASSETS 47,716 (7,111) 40,605 ====== ===== ====== EQUITY Called up share capital 2,929 - 2,929 Share premium 9,370 - 9,370 Shares to be issued 222 - 222 Fair Value Reserve 25,324 (7,110) 18,214 Reverse acquisition Reserve 393 - 393 Distributable Reserve 9,478 (1) 9,477 _______ _______ ______ TOTAL EQUITY 47,716 (7,111) 40,605 ======= ======= ====== Reconciliation of Equity Previous Effect of IFRS at 31st July 2006 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 6 - 6 Investments 34,847 917 35,764 Loans and Receivables - - - ______ ______ ______ 34,853 917 35,770 ______ ______ ______ CURRENT ASSETS Trade and Other receivables 3,692 - 3,692 Cash and Cash equivalents 7,424 - 7,424 ______ ______ ______ 11,116 - 11,116 ______ ______ ______ LIABILITIES NON-CURRENT LIABILITIES Loans and Other payables - - - Carried Interest Provision - (917) (917) Deferred Tax Liabilities - (6,448) (6,448) ______ ______ ______ - (7,365) (7,365) ______ ______ ______ CURRENT LIABILITIES Trade and Other payables (1,102) - (1,102) ______ ______ ______ NET ASSETS 44,867 (6,448) 38,419 ====== ====== ====== EQUITY Called up share capital 2,928 - 2,928 Share premium 9,361 - 9,361 Shares to be issued 94 - 94 Fair Value Reserve 22,541 (6,448) 16,093 Reverse acquisition Reserve 393 - 393 Distributable Reserve 9,550 - 9,550 ______ ______ ______ TOTAL EQUITY 44,867 (6,448) 38,419 ====== ====== ====== Reconciliation of Equity Previous Effect of IFRS at 31st January 2006 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 8 - 8 Investments 27,700 797 28,497 Loans and Receivables 3,231 - 3,231 ______ ______ ______ 30,939 797 31,736 ______ ______ ______ CURRENT ASSETS Trade and other receivables 3,413 - 3,413 Cash and Cash equivalents 1,084 - 1,084 ______ ______ ______ 4,497 - 4,497 ______ ______ ______ LIABILITIES NON-CURRENT LIABILITIES Loans and Other payables (2,500) - (2,500) Carried Interest Provision - (797) (797) Deferred Tax Liabilities - (5,491) (5,491) ______ ______ ______ (2,500) (6,288) (8,788) ______ ______ ______ CURRENT LIABILITIES Trade and Other payables (1,733) - (1,733) NET ASSETS 31,203 (5,491) 25,712 EQUITY Called up share capital 2,520 - 2,520 Share premium 17 - 17 Shares to be issued - - - Fair Value Reserve 19,209 (5,491) 13,718 Reverse acquisition Reserve - - - Distributable Reserve 9,457 - 9,457 ______ ______ ______ TOTAL EQUITY 31,203 (5,491) 25,712 ====== ====== ====== Reconciliation of net Profits As at 31st January 2007 £'000 Profit under UK GAAP 20 Unrealised Gains on Investments 6,369 Stamp Duty expenses (1) Carried Interest Provision (253) Deferred Taxation (1,619) ______ Profit Under IFRS 4,516 ====== Reconciliation of net Profits As at 31st July 2006 £'000 Profit under UK GAAP 92 Unrealised Gains on Investments 3,452 Carried Interest Provision (120) Deferred Taxation (957) ______ Profit Under IFRS 2,467 ====== 3. NON-CURRENT ASSET INVESTMENTS Group Investments 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _________________ £'000 £'000 £'000 At valuation At 1st February 38,834 28,497 28,497 Additions 3,930 3,815 3,968 Disposal (50) - - Movement in valuation 2,591 3,452 6,369 ______ ______ ______ At 31st January 45,305 35,764 38,834 ====== ====== ====== At cost At 1st February 12,460 8,491 8,491 Additions 3,930 3,815 3,969 Disposal (50) - - ______ ______ ______ At 31st January 16,340 12,306 12,460 ====== ====== ====== The investee companies, which are registered in England except Summa Insurance Brokerage S.L. (Spain), Preferred Asset Management Ltd (Jersey) and New Horizons Ltd (Isle of Man), are as follows : % Holding Date Aggregate Post Tax Of share audited capital Profit/(loss) capital information and for the Principal Name of company Available to Reserves year activity _________ ___________ ________ _________ _________ £ £ Berkeley Insurance 19.90 31.10.06 80,000 24,000 Insurance (Holdings) Limited holding company Besso Holdings Limited 23.55 31.12.06 8,580,455 125,635 Investment holding company HQB Partners Limited 28.00 31.12.06 304,570 302,484 Investor relations consultants Hyperion Insurance 27.89 30.09.06 11,318,000 2,946,000 Insurance Group Limited holding company JMD Specialist Insurance 25.00 31.10.06 150,787 35,260 Insurance Services Ltd sector consultants LEBC Holdings Ltd 22.50 31.05.06 701,201 402,834 Independent Financial Advisory Company Paterson Martin Limited 22.50 31.12.06 504,113 110,016 Actuarial insurance/ reinsurance consultants Portfolio Design Group 20.00 31.12.06 5,228,504 1,672,080 Fund International Limited managers of traded endowment policies Morex Commercial Ltd 20.00 31.07.06 (493,864) 788,943 Trading in secondary life policies Preferred Asset 20.00 30.09.06 267,753 72,672 Fund Management Ltd management company New Horizons Ltd 20.00 31.12.04 654 Nil Investment (formerly Surrenda-Link holding Nominees Ltd) company Principal Investment 18.57 31.12.06 5,394,000 1,435,000 Fund Holdings Limited management company Public Risk Management 44.00 31.12.06 (277,057) 3,943 Public Limited sector risk consultants Summa Insurance 35.00 31.12.05 385,361 (126,648) Consolidator Brokerage, S.L. of regional insurance brokers Under FRS 25 the Paterson Martin Limited accounts have included the company's 22.5% interest as a long-term creditor. As this is in reality an equity investment the aggregate capital and reserves shown have therefore been adjusted to include this as equity and therefore part of the total shareholders' funds. Under FRS 25 the HQB Consulting Limited accounts have included the company's 28% interest as a long-term creditor. As this is in reality an equity investment the aggregate capital and reserves shown have therefore been adjusted to include this as equity and the profit has been adjusted by the dividend paid out. Under FRS 25 the Hyperion Insurance Group Limited accounts have included their Preferred Ordinary Shares as a long-term creditor. As this is in reality equity the aggregate capital and reserves shown have therefore been increased by £4,125,000 to include this as equity and the profit has been increased by £200,000, which relates to the dividend paid out. 4. LOAN COMMITMENTS On 31st January 2005 the Group entered into an agreement to provide a loan facility of €1,500,000 to Summa Insurance Brokerage S.L, an associated company and a company incorporated in Spain. On 29th January 2007 this was increased to €2,000,000. As at 31st January 2007 €400,000 of this facility had been drawn down with the remainder being drawn down on 19th February 2007. On 5th March 2007 the company entered into a loan agreement to provide a loan facility of £250,000 to JMD Specialist Insurance Services Ltd an associated company. At 31st July 2007 the loan facility had not been drawn down. On 15th April 2004 the Group entered into an agreement to provide a loan facility of £300,000 to Paterson Martin Limited, an associated company. On 31st July 2007 £200,000 of this facility had been drawn down. This loan is repayable on 31st March 2008. On 7th February 2005 the Group entered into an agreement to provide a loan facility of £140,000 to HQB Partners Limited, an associated company. As at 31st July 2007 £80,000 of this facility had been drawn down. 5. CONTINGENT LIABILITIES The Directors estimate that, if the Group were to dispose of all its investments at the amount stated in the Balance Sheet, £7.7m (2006: £6.4m) of tax on capital gains would become payable by the Group at the current corporation tax rate of 30%. No account has been made of the proposal to reduce this rate to 28% from April 2008. The Group has entered into long-term incentive arrangements with certain employees. Provided the employees remain in employment with the Group as at 1st November 2010 the Group has agreed to pay bonuses totaling £250,000 plus Employers' National Insurance. £50,000 of this is currently funded through an Employee Benefit Trust. On 10th April 2007 the Group acquired a 22.5% shareholding in LEBC Holdings Limited for an initial consideration of £1,783,250 with a potential further payment of up to £182,250 based upon their subsidiary company's audited 31st May 2007 accounts. 6. 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 year (2006: £nil). In the accounts to 31st January 2007 the valuations of these certain agreed investments of the Group and its subsidiaries were reduced by the respective entitlements to S.S. Clarke. However, under IFRS a provision has now been included within the balance sheet with any period movements expensed through the income statement and thus the investments are now shown gross. 7. SHARE BASED PAYMENT ARRANGEMENTS During the year ended 31 January 2007, B.P. Marsh & Partners Plc entered into a share-based payment arrangement with certain employees and advisors. The details of the arrangements are described in the following table: Nature of the Share options Share options Share arrangement granted to granted to appreciation advisors advisors rights _____________ _____________ _____________ ________________ Date of grant 2 February 2006 9 February 2006 19 April 2006 Number or instruments granted 17,857 17,857 4,392,921 Exercise price (pence) 140.00 140.00 140.00 Share price at grant (pence) 150.50 150.50 150.50 Vesting period (years) 5 5 Units vest 10 days after results to 31/01/09 reported, i.e. approx 3 years Vesting conditions None None 50% vest if IRR over exercise price exceeds 5% and 100% vest if IRR exceeds 8% after 3 years. Between 5% and 8% it is pro-rata. Option Life (years) 5 5 3.34 Expected volatility 15% 15% 15% Risk free rate 4.2% 4.15% 4.52% Expected dividends expressed as a dividend yield 0% 0% 0% Settlement Shares Shares Shares % expected to vest (based upon leavers) 100% 100% 80% Number expected to vest 17,857 17,857 3,514,337 Fair value per granted instrument (pence) 41.90 41.20 23.50 Charge for period ending 31 July 2007 (£) - - £130,667 Valuation model Black-Scholes Black-Scholes Trinomial The Company admitted its shares for trading on AIM on 2nd February 2006 and consequently, at the date of valuation of the options, little historical price data existed. As a consequence the volatilities of quoted companies that the directors considered to be the most comparable to the Group were used to determine the Group's expected volatility over the life of the options. The risk free rates are based on the yield on UK Government Gilts of a term consistent with the assumed option life. No options were exercised during the period. 878,583 share appreciation rights representing 20% of the available units originally granted were forfeited before 31st January 2007. The expected number of units to vest has therefore been adjusted accordingly with no further expectation of forfeiture over the remaining life of the option. This information is provided by RNS The company news service from the London Stock Exchange

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