Interim Results

RNS Number : 2635P

B.P. Marsh & Partners PLC

23 October 2012

 



Date:                     23^rd October 2012

On behalf of:        B. P. Marsh & Partners Plc ("B.P. Marsh", "the Company" or

                             "the Group")

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^st July 2012.

Chairman's Statement

Financial Highlights

·    Net Asset Value ("NAV") during six month period up 3.8% to £52.0m from £50.1m at 31^st January 2012

·    NAV year on year increase of 7.3% from £48.5m at 31^st July 2011

·    NAV per share of 178p, an increase of 12p from 166p at 31^st July 2011

·    Average compound NAV growth of 11.8% p.a. since 1990 (excl. £10.1m raised on flotation)

·    Profit after tax of £2.2m (unaudited), an increase from £2.0m for the six months to 31^st July 2011

·    £3.3m cash at period-end plus a further £4.325m loan facility available (£2.9m committed to current investments, £0.4m available)

Overview

We are pleased to announce 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 31^st July 2012 (the "Period").

"Sometimes I sits and thinks and sometimes I just sits"

So famously declared American Baseball Player Leroy "Satchel" Paige.

During the period under review, we here in London experienced the Olympic Games going on all around us. Whilst Paige's well-remembered words provide, of course, no motto for B.P. Marsh & Partners, we do nonetheless understand what he meant. This is especially the case when we find ourselves reviewing the monthly and quarterly results from our nine investee companies, where more than two thousand people work in a variety of financial service activities.

Distilled from all these endeavours, however, at the half-way point this year, we are pleased that we have again been able to increase our NAV, during this period by 3.8%, and we remain calm and positive in our expectations for the second half of the year.

Key Developments

Hyperion Insurance Group Limited ("Hyperion")

Sale of CFC Underwriting Limited ("CFC")

In June 2012 Hyperion sold its majority holding in CFC Underwriting Group Ltd, the specialist IT-focused D&O and PI underwriting agency for SMEs to a team of investors. The proceeds of the sale were used to reduce the amount of funds required to acquire Windsor Limited.

Completion of acquisition of Windsor Limited ("Windsor")

Regulatory approval was granted for the acquisition by Hyperion of Windsor from its management, employees and institutional backer Hutton Collins Partners LLP and completion of the acquisition took place on 3^rd July 2012.

Majority Acquisition of Conset Seguros

In October 2012 Hyperion entered the Brazilian market by acquiring a 51% stake in Conset Seguros, a specialist broker in the construction industry. This acquisition provides Hyperion a great opportunity to enter the Brazilian market, one of the world's fastest growing economies. Conset Seguros's experience shall also be of benefit to Hyperion's existing clients both in Latin America and Spain.  

US Risk (UK) Limited ("US Risk (UK)")

Acquisition of James Hampden International Insurance Brokers Limited ("JHI") and Abraxas Insurance AG ("Abraxas")

On 5^th March 2012, US Risk (UK), in which the Group invested in June 2010, acquired the specialist international reinsurance and insurance broking company JHI. Headquartered in London it operates in the Lloyd's and international insurance markets. As part of this acquisition US Risk (UK) additionally acquired JHI's 75% shareholding in Abraxas, an MGA based in Zürich, Switzerland.

The acquisition, part funded by the Group's equity investment in 2010, is in line with US Risk (UK)'s strategy for growth and development, and further adds to its capabilities as a specialist insurance intermediary in the Lloyd's and London Market. As a result of the acquisition the Group's holding in US Risk (UK) reduced from 30% to 28.4%.

Amberglobe Limited ("Amberglobe")

Acquisition of ongoing business of Turner Butler

On 27^th July 2012 Amberglobe acquired the assets of Turner & Co (GB) Limited and Turner Butler Limited, the national business sales agent. The acquisition brings together two business brokerages, Amberglobe and Turner Butler, specialists in the SME sales market in the UK and will create a predominant force in that sector. Turner Butler has a proven business model and has demonstrated consistent profitability despite the current economic climate.

The Group provided for the acquisition of the assets of Turner Butler through loan financing, which is expected to be repaid within three years.

Subsequent to this acquisition, the Group's holding has been hived up into a new holding company, The Broucour Group Limited ("Broucour"), under the same terms and equity as per the original holding in Amberglobe, with Amberglobe and Turner Butler Limited as its two wholly owned trading subsidiaries.

Jonathan Newman has been appointed as the Group's nominee director on the Boards of all three companies within the Broucour group, having served previously as the Group's nominee director on the Board of Amberglobe.

The Group views the acquisition as an excellent opportunity to establish Broucour as the leader of the SME sales market in the UK, enabling it to capitalise on this strong positioning over the coming years.

Portfolio Update

Hyperion Insurance Group Limited ("Hyperion")

Howden completes acquisition of Indonesian broker

Howden Broking Group Limited, the broking subsidiary of Hyperion, completed the acquisition of Accette Insurance Group's Indonesian operation, PT Accette Brokers Asuransi on 6^th August 2012.  The business has been renamed PT Howden Insurance Brokers Indonesia, and will trade under the Howden brand.

Tim Coles, CEO of Howden Broking Group, commented: "With the world's fourth largest population and a robust and growing economy, Indonesia is an important global market.  The huge infrastructure development currently planned and taking place in the country, combined with a growing affluent community and low levels of insurance penetration, mean that it is also a market of great opportunity which we intend to be a major part of."

DUAL, winners of Underwriter of the Year

The DUAL Group was named Underwriting Agency of the Year at the British Insurance Awards on 4^th July 2012.

US Risk (UK) Limited

Extension of loan facility

On investment in US Risk (UK) Limited in June 2010, the Group provided a £1.95m loan facility for a two year term. The loan was not drawn down and on expiry, it was agreed to provide a new two year facility to July 2014. The loan is intended to enable the company to build on the successful acquisition of James Hampden International Insurance Brokers Limited and Abraxas AG in 2012 with further acquisitions and team lifts.

Group Strategy, Market Overview and Investment Opportunities

The Group makes minority investments in financial services businesses, with a particular focus on insurance intermediaries, typically taking an equity stake of between 15% and 45% with initial investment of up to £2.5m.

Over the preceding two years, the Group has taken a prudent approach to new investment opportunities and has prioritised assisting growth and development in its existing investee companies. During the period to 31^st July 2012, the investee companies within the portfolio made several acquisitions in the UK and overseas, with which the Group has provided funding and assistance.

However, the inflow of potential new opportunities to the Group remains interesting and two current proposals, in financial services and insurance broking, with geographic focus in the UK and Northern Europe, are being investigated.

Shareholders

The Board remains committed to its stated aim of narrowing the discount to NAV and delivering shareholder returns that reflect performance. As part of this strategy, a small share buy-back was undertaken in August 2012; unfortunately this did not have any measurable effect. Efforts to engage with existing and new shareholders by means of increased news flow and meetings have also continued. The Board also approved a dividend for the year ended 31^st January 2012 (as described below).

The Directors believe that the Group's investment portfolio is demonstrating steady growth and that the portfolio will continue to increase in value.

Dividends

The Group declared a final dividend of 1p per share for its year ended 31^st January 2012, which was paid to its shareholders on 30^th July 2012. The Board does not have a policy of recommending interim dividends and accordingly is not minded to recommend an interim dividend for the period to 31^st July 2012.

Outlook

Whilst the general outlook remains so unsettled, the Group will continue with its steady approach, continuing to support its existing portfolio to achieve growth targets and retaining a prudent approach to new investment opportunities. Despite some encouraging recent signs in the UK and US economies, the global outlook remains extremely uncertain and the Group will by necessity maintain a measured course.

The Board continues to review all exit opportunities for its portfolio investments and for the Group itself, as and when these may arise.

Brian Marsh OBE

Chairman

23^rd October 2012

Investments

As at 31st July 2012 the Group's equity interests were as follows:

Besso Insurance Group 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 Limited. The company specialises in insurance broking for the North American wholesale market.

Date of investment: February 1995

Equity stake: 30.00%

31st July 2012 valuation: £4,292,000

The Broucour Group Limited

(www.amberglobe.co.uk)

(www.turnerbutler.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 £3m sector. The Broucour Group Limited is the parent company of both Amberglobe Limited and Turner Butler Limited, the national business sales agent which was acquired by The Broucour Group in July 2012.

Date of investment: March 2008

Equity stake: 49.0%

31st July 2012 valuation: £98,000

Hyperion Insurance Group Limited

(www.hyperiongrp.com)

The Group first invested in Hyperion in 1994. Hyperion owns, amongst other things, a registered Lloyd's insurance broker specialising in directors' and officers' ("D&O") and professional indemnity ("PI") insurance. 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: 13.84% with the Group retaining an economic interest of approx. 14.6%.

31st July 2012 valuation: £31,132,000

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 2012 valuation: £3,213,000

Paterson Squared, LLC

(www.paterson2.com)

Paterson Squared was founded by a group of professionals from the actuarial, capital markets and reinsurance advisory sectors in conjunction with the Group. The company uses sophisticated modelling 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 2012 valuation: £0

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 2012 valuation: £1,718,000

Randall & Quilter Investment Holdings plc

(www.rqih.com)

Randall & Quilter Investment Holdings is an AIM listed run-off management service provider and acquirer of solvent insurance companies in run-off. The Group invested in Randall & Quilter in January 2010, the result of a share exchange with the Group's shareholding in JMD Specialist Insurance Services Group Limited, which Randall & Quilter have now wholly acquired.

Date of investment: January 2010

Equity stake: 1.35%

31st July 2012 valuation: £691,000

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 2012 valuation: £4,180,000

US Risk (UK) Limited

(www.oxfordinsurancebrokers.co.uk)

(www.jhinternational.co.uk)

In July 2010 the Group completed its investment in US Risk (UK), the parent company of Oxford Insurance Brokers Limited, a London-based Lloyd's insurance and reinsurance broker and James Hampden International Insurance Brokers Ltd, a specialist international reinsurance and insurance broking company.

Date of investment: July 2010

Equity stake: 28.43%

31st July 2012 valuation: £2,674,000

These investments have been valued in accordance with the accounting policies on Investments set out in note 1 of the Consolidated Financial Statements.

Consolidated Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31ST JULY 2012

Notes Unaudited Unaudited Audited 6 months to 6 months to Year to 31st July 2012 31st July 2011 31st January 2012 £'000 £'000 £'000 £'000 £'000 £'000 GAINS / (LOSSES) ON INVESTMENT Realised gains / (losses) on disposal of investments 5 1 (20) (20) Impairment of investments and loans - (239) (339) Unrealised gains on investment revaluation 4 2,217 2,639 4,592 2,218 2,380 4,233 INCOME Dividends 16 130 661 Income from loans and receivables 441 415 859 Fees receivable 322 219 594 779 764 2,114 INCOME NET OF GAINS / (LOSSES) ON INVESTMENT 2,997 3,144 6,347 Operating expenses (727) (761) (1,817) OPERATING INCOME 2,270 2,383 4,530 Financial income 2 - - Financial expenses (43) (47) (104) Carried interest provision 9 6 3 32 Exchange movements (82) 30 (51) (117) (14) (123) PROFIT ON ORDINARY ACTIVITIES BEFORE EXCEPTIONAL ITEMS 2,153 2,369 4,407 Exceptional items 10 - (30) (30) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,153 2,339 4,377 Income tax 8 54 (331) (732) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS £2,207 £2,008 £3,645 Earnings per share  - basic and diluted (pence) 3 7.5p 6.9p 12.4p The result for the period is wholly attributable to continuing activities.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31ST JULY 2012

		Unaudited			Unaudited			Audited
	Notes	31st July 2012			31st July 2011			31st January 2012
		£'000	£'000		£'000	£'000		£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		10			24			14
Investments	4	47,998			48,692			50,624
Loans and receivables		7,459			6,329			5,983
			55,467			55,045			56,621
CURRENT ASSETS
Trade and other receivables		1,487			1,757			2,093
Cash and cash equivalents		3,256			448			666
			4,743			2,205			2,759
LIABILITIES
NON-CURRENT LIABILITIES
Loans and other payables	11	(100)			(1,250)			(1,250)
Carried interest provision	9	(293)			(328)			(299)
Deferred tax liabilities	8	(7,361)			(7,014)			(7,415)
			(7,754)			(8,592)			(8,964)
CURRENT LIABILITIES
Trade and other payables		(421)			(174)			(295)
			(421)			(174)			(295)
NET ASSETS			£52,035			£48,484			£50,121
CAPITAL AND RESERVES -
EQUITY
Called up share capital			2,929			2,929			2,929
Share premium account			9,370			9,370			9,370
Fair value reserve			23,120			22,909			24,656
Reverse acquisition reserve			393			393			393
Retained earnings			16,223			12,883			12,773
SHAREHOLDERS' FUNDS - EQUITY	6		£52,035			£48,484			£50,121

The Interim Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 22nd October 2012

and signed on its behalf by B.P. Marsh & J.S. Newman

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31ST JULY 2012

Unaudited Unaudited Audited 31st July 2012 31st July 2011 31st January  2012 £'000 £'000 £'000 Cash from / (used by) operating activities Income from loans to investees 441 415 859 Dividends 16 130 661 Fees received from investment activity 322 219 594 Operating expenses (727) (761) (1,817) Exceptional item - termination payment - (30) (30) (Increase) / decrease in receivables (135) 66 (95) Increase / (decrease) in payables 225 (102) 20 Depreciation 4 12 23 Net cash from / (used by) operating activities 146  (51) 215 Net cash from / (used by) investing activities Purchase of property, plant and equipment - (3) (4) Purchase of investments (3) (735) (735) Proceeds from investments 4,847 30 51 Net cash from / (used by) investing activities 4,844  (708)  (688) Net cash (used by) / from financing activities (Repayment) / advances of directors' loans (1,250) 1,250 1,250 Net payments of loans to investee companies (808) (510) (515) Financial income 2 - - Financial expenses (43) (47) (104) Dividends paid (293) - - Net cash (used by) / from financing activities (2,392) 693  631 Change in cash and cash equivalents 2,598 (66) 158 Cash and cash equivalents at beginning of the period 666 515 515 Exchange movement * (8) (1) (7) Cash and cash equivalents at end of period £3,256 £448 £666

*The exchange movement as noted in the Consolidated Statement of Comprehensive Income is £(82)k (6 months to 31st July 2011: £30k & 12 months to 31st January 2012: £(51)k).  The movement in the Consolidated Statement of Cash Flows excludes an exchange loss of £74k (6 months to 31st July 2011: gain £31k & 12 months to 31st January 2012: loss £44k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement.

 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31ST JULY 2012

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		31st July 2012	31st July 2011	31st January 2012
		£'000	£'000	£'000
Opening total equity		50,121	46,476	46,476
Total recognised income for period		2,207	2,008	3,645
Dividends paid		(293)	-	-
Total equity		£52,035	£48,484	£50,121

Refer to Note 6 for detailed analysis of the changes in the components of equity.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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"), and in accordance with the Companies Act 2006. 

The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain 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 22nd October 2012.  They have not been audited nor reviewed by the Group's Auditors, as is the case with the comparatives to 31st July 2011, and do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

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 2012.  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 498 (2) or (3) of the Companies Act 2006.

Basis of consolidation

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

Business Combinations

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

All business combinations are accounted for by using the acquisition accounting method. This involves recognising identifiable assets and liabilities of the acquired business at fair value. Goodwill represents the excess of the fair value of the purchase consideration for the interests in subsidiary undertakings over the fair value to the Group of the net assets and any contingent liabilities acquired. 

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Investments that are held as part of the Group's investment portfolio are carried in the Consolidated 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 the profit or loss in the period of the change. The Group has no interests in associates through which it carries on its business.

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") Committee. 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 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 Consolidated Statement of Comprehensive Income for the period.  In the Consolidated 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 Consolidated Statement of Comprehensive Income.

Income from investments

Income from investments comprises:

a)   gross interest from loans, which is taken to the Consolidated Statement of Comprehensive Income on an accruals basis;

b)   dividends from equity investments are recognised in the Consolidated 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 end of each reporting period.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation.  Depreciation is provided at rates calculated to write off the property, plant and equipment cost, less their estimated residual value, over their expected useful lives on the following bases:

     Furniture & equipment - 5 years

     Leasehold fixtures and fittings - over the life of the lease

Foreign currencies

Monetary assets and liabilities denominated in foreign currencies at the reporting period are translated at the exchange rate ruling at the reporting period.

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

Exchange gains and losses are recognised in the Consolidated Statement of Comprehensive Income.

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 Consolidated 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 date of the Consolidated Statement of Financial Position.

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 date of the Consolidated Statement of Financial Position 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 Consolidated 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 Consolidated Statement of Comprehensive Income for the period to 31st July 2012 (as was also the case with the interims to 31st July 2011). However, the Consolidated Statement of Comprehensive Income to 31st January 2012 does include such a provision where discretionary awards were made for the year-end.

International Financial Reporting Standards in issue but not yet effective

At the date of authorisation of these consolidated financial statements, the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") have issued the following standards, which are effective for annual accounting periods beginning on or after the stated effective date.

Effective for periods beginning on or after

IFRS 10 - Consolidated Financial Statements	1st January 2013
IFRS 13 - Fair Value Measurement	1st January 2013
IFRS 9 - Financial Instruments	1st January 2015

The Group is currently assessing the impact of IFRS 13 and IFRS 9.  All other standards and interpretations are not expected to have a material impact on the consolidated financial statements.

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).

2.       SEGMENTAL REPORTING (continued)

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.

	Geographic segment 1: UK & Channel Islands		Geographic segment 2: Non-UK & Channel Islands		Group
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July	6 months to 31st July
	2012	2011	2012	2011	2012	2011
	£'000	£'000	£'000	£'000	£'000	£'000
Income net of losses on investment	3,586	2,962	(589)	182	2,997	3,144
Operating expenses	(598)	(691)	(129)	(70)	(727)	(761)
Segment operating profit / (loss)	2,988	2,271	(718)	112	2,270	2,383
Financial income	2	-	-	-	2	-
Financial expenses	(35)	(43)	(8)	(4)	(43)	(47)
Carried interest provision	6	3	-	-	6	3
Exchange movements	(9)	(1)	(73)	31	(82)	30
Exceptional items	-	(30)	-	-	-	(30)
Profit / (loss) before tax	2,952	2,200	(799)	139	2,153	2,339
Income tax	(138)	(295)	192	(36)	54	(331)
Profit / (loss) for the period	£2,814	£1,905	£(607)	£103	£2,207	£2,008

Non-current assets
Property, plant and equipment	9	21	1	3	10	24
Investments	43,818	43,482	4,180	5,210	47,998	48,692
Loans and receivables	6,515	5,272	944	1,057	7,459	6,329
	50,342	48,775	5,125	6,270	55,467	55,045
Current assets
Trade and other receivables	1,103	1,275	384	482	1,487	1,757
Cash and cash equivalents	3,256	448	-	-	3,256	448
Deferred tax assets	-	-	174	-	174	-
	4,359	1,723	558	482	4,917	2,205
Total assets	54,701	50,498	5,683	6,752	60,384	57,250
Non-current liabilities
Loans and other payables	(100)	(1,250)	-	-	(100)	(1,250)
Carried interest provision	(293)	(328)	-	-	(293)	(328)
Deferred tax liabilities	(7,535)	(6,985)	-	(29)	(7,535)	(7,014)
	(7,928)	(8,563)	-	(29)	(7,928)	(8,592)
Current liabilities
Trade and other payables	(421)	(174)	-	-	(421)	(174)
Total liabilities	(8,349)	(8,737)	-	(29)	(8,349)	(8,766)
Net assets	£46,352	£41,761	£5,683	£6,723	£52,035	£48,484

Additions to property, plant and equipment	-	3	-	-	-	3
Depreciation of property, plant and equipment	4	11	-	1	4	12
Impairment of investments and loans	-	239	-	-	-	239

2.       SEGMENTAL REPORTING (continued)

	Geographic segment 1: UK & Channel Islands	Geographic segment 2: Non-UK & Channel Islands	Group
	Audited	Audited	Audited
	31st January	31st January	31st January
	2012	2012	2012
	£'000	£'000	£'000
Income net of losses on investment	6,044	303	6,347
Operating expenses	(1,307)	(510)	(1,817)
Segment operating profit / (loss)	4,737	(207)	4,530
Financial income	-	-	-
Financial expenses	(75)	(29)	(104)
Carried interest provision	32	-	32
Exchange movements	(8)	(43)	(51)
Exceptional items	(30)	-	(30)
Profit / (loss) before tax	4,656	(279)	4,377
Income tax	(805)	73	(732)
Profit / (loss) for the year	£3,851	£(206)	£3,645

Non-current assets
Property, plant and equipment	13	1	14
Investments	45,717	4,907	50,624
Loans and receivables	4,833	1,150	5,983
	50,563	6,058	56,621
Current assets
Trade and other receivables	1,404	689	2,093
Cash and cash equivalents	666	-	666
Deferred tax assets	-	50	50
	2,070	739	2,809
Total assets	52,633	6,797	59,430
Non-current liabilities
Loans and other payables	(1,250)	-	(1,250)
Carried interest provision	(299)	-	(299)
Deferred tax liabilities	(7,465)	-	(7,465)
	(9,014)	-	(9,014)
Current liabilities
Trade and other payables	(295)	-	(295)
Total liabilities	(9,309)	-	(9,309)
Net assets	£43,324	£6,797	£50,121

Additions to property, plant and equipment	4	-	4
Depreciation of property, plant and equipment	21	2	23
Impairment of investments and loans	239	100	339

3.       EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

		Unaudited		Unaudited		Audited
		31st July 2012		31st July 2011		31st January 2012
		£'000		£'000		£'000
Earnings
Earnings for the period		2,207		2,008		3,645
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity shareholders		2,207		2,008		3,645
Earnings per share - basic and diluted		7.5p		6.9p		12.4p
Number of shares		Number		Number		Number
Weighted average number of ordinary shares for the purposes of basic earnings per share		29,286,143		29,286,143		29,286,143
Number of dilutive shares under option		Nil		Nil		Nil
Weighted average number of ordinary shares for the purposes of dilutive earnings per share		29,286,143		29,286,143		29,286,143

4.       NON-CURRENT INVESTMENTS

Group Investments		Unaudited		Unaudited		Audited
		31st July 2012		31st July 2011		31st January 2012
		£'000		£'000		£'000
At valuation
At 1st February		50,624		47,143		47,143
Additions		3		735		735
Disposals		(4,846)		(1,825)		(1,846)
Movement in valuation / provisions		2,217		2,639		4,592
At period end		£47,998		£48,692		£50,624
At cost
At 1st February		18,264		19,375		19,375
Additions		3		735		735
Disposals		(1,097)		(1,825)		(1,846)
At period end		£17,170		£18,285		£18,264

The principal disposals relate to the following transactions in the period:

On 16th March 2012 the Group made a partial disposal of 4.02% of its total 34.02% equity interest in Besso Insurance Group Limited ("Besso") for consideration of £278,698. The partial disposal was made from an 11.29% equity interest in Besso originally acquired on 31st March 2011 by B. P. Marsh & Company Limited, a wholly owned subsidiary of the Company, which at the time increased the Group's overall holding from 22.73% to 34.02%. The 4.02% disposal represented the proportion of shares which were available for buy-back by Besso following the exercise of a Call Option agreement (entered into on 26th May 2011) for subsequent issue to management under a share incentive scheme. As a result of the Call Option being exercised, the Group's overall holding in Besso currently stands at 30%.

On 17th May 2012 the Group made a disposal of 2.75% of its total 18.94% equity interest in Hyperion Insurance Group Limited ("Hyperion"). 1,193,500 shares (from a total holding of 8,222,900 shares) were sold to an existing Hyperion shareholder and co-investor, Murofo Investments S.L., for a cash consideration of £4,535,330. Following a major acquisition by Hyperion on 3rd July 2012 which was part funded by the issue of new shares, as at the date of signing of this report the Group's overall holding in Hyperion stood at 13.84%. 

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

		% holding	Date	Aggregate	Post tax
		of share	information	capital and	profit/(loss)
	Name of company	capital	available to	reserves	for the year	Principal activity
				£	£
The Broucour Group  Limited		49.00	30.04.11	(738,840)	(88,008)	Business sales platform
	Besso Insurance Group Limited	30.00	31.12.11	7,037,589	(1,776,321)	Holding company for insurance intermediaries
	Hyperion Insurance    Group Limited	13.84	30.09.11	47,176,000	7,539,000	Insurance holding company
	LEBC Holdings Limited	21.95	30.09.11	220,503	(403,504)	Independent financial advisor company
	Portfolio Design Group   International Limited	20.00	31.12.11	6,881,966	(460,272)	Fund managers of traded endowment policies
	Morex Commercial Limited	20.00	31.12.11	402,668	(89,640)	Trading in secondary life policies
	Preferred Asset    Management Limited	20.00	30.09.11	228,907	98,790	Fund management company
	Close Horizons Limited	20.00	31.12.11	1,288,961	97,589	Investment holding company
	Paterson Squared, LLC	22.50	31.12.10	364,411	279,575	Independent reinsurance transaction consultants
	Summa Insurance Brokerage, S.L.	48.625	31.12.10	9,105,823	409,057	Consolidator of regional insurance brokers
	U.S. Risk (UK) Limited	28.43	31.12.11	2,697,273	(110,157)	Holding company for insurance intermediaries

In addition, as at 31st July 2012 the Group held 1.35% of the share capital of Randall & Quilter Investment Holdings Plc ("R&Q").  R&Q is an AIM listed company.  During the current period R&Q made a 'return of value' distribution of £32,731 to shareholders through the issue and subsequent cancellation of new shares.  The Group elected to receive this distribution as a 'capital' receipt rather than the dividend (income) alternative.  The Group has treated this distribution as disposal proceeds and reduced the cost base of this investment accordingly, resulting in a £1,199 realised gain on disposal of investment which is reflected in the Consolidated Statement of Comprehensive Income for the period. 

On 27th July 2012 the Company's wholly owned subsidiary B. P. Marsh & Company Limited entered into a Share Exchange Agreement with The Broucour Group Limited ("the Broucour Group") in respect of its 49% equity investment in Amberglobe Limited ("Amberglobe").  On this date the Broucour Group acquired the entire issued share capital of Amberglobe (£200,000 divided into £130,000 in ordinary shares and £70,000 in preference shares of £1 each, of which the Group, through its subsidiary undertaking, owned £98,000 divided into £28,000 in ordinary shares and £70,000 in preference shares).  The Broucour Group was incorporated in July 2012 as a holding company to facilitate the acquisition of the assets of Turner Butler Limited ("Turner Butler").  The Group assisted in this acquisition by providing the Broucour Group with a £600,000 loan facility to fund the acquisition cost and associated working capital requirements which was drawn down in full on 27th July 2012.  As a result of this transaction, the Group's original investment in Amberglobe is now held in the Broucour Group, with Amberglobe now a wholly owned subsidiary of the Broucour Group.

The aggregate capital and reserves and profit/(loss) for the year shown above are extracted from the relevant local GAAP accounts of the investee companies except for those of Hyperion Insurance Group Limited which are prepared under IFRS. 

5.       REALISED GAINS / (LOSSES) ON DISPOSAL OF INVESTMENTS

The realised gains on disposal of investments comprises of a gain of £1,199 in respect of a capital distribution made by R&Q in the period.  The amount included in realised losses on disposal of investments for the 6 months to 31st July 2011 was £19,839 and for the 12 months to 31st January 2012 was £20,740, both of which were in respect of a capital distribution made by R&Q.

In addition, during the period the Group also disposed of part of its investment in Hyperion Insurance Group Limited ("Hyperion") at its carrying value of £4,535,000.  The Group also disposed of shares held under an option agreement in Besso Insurance Group Limited ("Besso") at their carrying value of £279,000 (please refer to Note 4 for further details).  As a result of these disposals being made at carrying value, no material gain or loss was included in the Consolidated Statement of Comprehensive Income in the current period.

The above Hyperion and Besso disposals did, however, result in a release to Retained Earnings from the Fair Value Reserve of £3,748,321 (see Note 6).

6.       RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

		Share		Reverse
	Share	premium	Fair value	acquisition	Retained
	capital	account	reserve	reserve	earnings	Total
	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)
At 31st January 2012	2,929	9,370	24,656	393	12,773	50,121
Profit for the period	-	-	2,212	-	(5)	2,207
Transfers on sale of investments (Note 5)	-	-	(3,748)	-	3,748	-
Dividends paid	-	-	-	-	(293)	(293)
At 31st July 2012	£2,929	£9,370	£23,120	£393	£16,223	£52,035

7.       LOAN AND EQUITY COMMITMENTS

On 10th March 2008 the Group entered into an agreement to provide a loan facility of £630,000 to Amberglobe Limited, a subsidiary undertaking of The Broucour Group Limited, an investee company.  An additional loan facility of £65,000 was agreed on 30th November 2009 increasing the total facility to £695,000.  As at 31st July 2012 £685,000 of this facility had been drawn down.

On 22nd July 2010 the Group entered into an agreement to provide a loan facility of £1,950,000 to U.S. Risk (UK) Limited, an investee company.  As at 31st July 2012 none of this facility had been drawn down.

8.       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, £7,361,000 (interim 6 months to 31st July 2011: £7,014,000 & full year to 31st January 2012: £7,415,000) of tax on capital gains would become payable by the Group at the current corporation tax rate of 24%.  This amount is fully provided for in the financial statements.

In the year to 31st January 2012 the Group entered into a Sale and Purchase Agreement (dated 31st March 2011) with Union Hamilton Reinsurance Limited ("UHRL") to acquire a further 11.29% shareholding in Besso Insurance Group Limited ("Besso") for £735,000.  Under the terms of the agreement, if the Group decided to sell all or a proportion of the shares acquired on 31st March 2011 to another party, or where a trigger event was to occur (being the sale of Besso to a specified third party), within an 18 month period from 31st March 2011, the Group would become liable to pay UHRL the cash element of any additional consideration receivable for the shares in excess of the amount originally paid by the Group, capped at £300,000.  This contingent liability expired on 30th September 2012.

The Group has entered into long-term incentive arrangements with certain employees and directors.  Provided they remain in employment with the Group as at specified dates in the future, the Group has agreed to pay bonuses totalling £385,000 together with the Employers' National Insurance due thereon.  £250,000, £75,000, £30,000 and £30,000 are due to be paid on 1st October 2012, 1st October 2013, 15th May 2015 and 15th May 2016 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.  The conditions for the £250,000 due for payment on 1st October 2012 were met subsequent to the reporting period date and hence the amount has since been paid.

9.       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, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries. The carried interest provided for at the period end was £293,000 (interim 6 months to 31st July 2011: £328,000 & full year to 31st January 2012: £299,000).

No amounts were paid under this arrangement during the period (2011: £Nil).

10.     EXCEPTIONAL ITEMS

There were no exceptional items included within the Consolidated Statement of Comprehensive Income in the period.  In the 6 months to 31st July 2011 and 12 months to 31st January 2012 a one-off compensation payment amounting to £30,000 was made to a director who left the Group during that period.

11.     LOANS AND OTHER PAYABLES

During the period, the Group repaid £1,250,000 of a loan facility totalling £4,325,000, which certain directors agreed to provide to the Group during the year to 31st January 2011.  The loan facility is secured on the assets of the Company, accrues interest at a rate of UK Base Rate + 4% (subject to a minimum of 6.5%), and is repayable in full by 9th June 2013.  As at 31st July 2012 none of this facility remained drawn down (as at 31st July 2011: £1,250,000 and as at 31st January 2012: £1,250,000).

Interest on this loan facility of £42,958 (6 months to 31st July 2011: £47,064 and 12 months to 31st January 2012: £103,524) was charged to the Consolidated Statement of Comprehensive Income for the current period.

In addition, during the period the Group received an upfront payment of £300,000 in respect of a three year loan arrangement fee from Besso Insurance Group Limited ("Besso").  As at 31st July 2012 £100,000 of this fee was included in the Consolidated Statement of Financial Position under 'Non-current liabilities' as a long-term deferred income creditor. The remaining portion of the fee is included within the Consolidated Statement of Financial Position under 'Current liabilities' or has already been credited to the Consolidated Statement of Comprehensive Income as fees receivable.  The receipt of this upfront fee had no cash impact for the Group as it was funded through an increase to a loan facility provided to Besso in March 2012.

Analyst Briefing

An analyst presentation, hosted by Brian Marsh OBE, Chairman, Jonathan Newman, Finance Director, and fellow Directors Camilla Kenyon and Dan Topping will be held at 10:00 a.m., on 23^rd October 2012 at the Company's office: 2nd Floor, 36 Broadway, London, SW1H 0BH.

- Ends -

For further information:

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

Brian Marsh OBE / Camilla Kenyon                                                  [phone]

Nominated Adviser & Broker

Panmure Gordon

Paul Lumbis / Fred Walsh                                                              [phone]

Redleaf Polhill

Emma Kane / David Ison                                                                [phone]

Notes to Editors:

About B.P. Marsh & Partners Plc

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

Over the past 22 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 four 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 a Chartered Management Accountant and is the Group Director of Finance and has over 15 years' experience in the financial services industry. Jonathan advises investee companies through three non-executive board appointments and evaluates new investment opportunities.

Daniel Topping is a Member of the Chartered Institute of Securities and Investment (MCSI) and an Associate Member of the Institute of Chartered Secretaries and Administrators (ACIS) having joined the Company in 2007. Dan was appointed director in 2011 and currently holds four non-executive board appointments through which he advises investee companies and he also evaluates new investment opportunities.

Camilla Kenyon was appointed as Head of Investor Relations at B. P. Marsh in February 2009, having four years' prior experience with the Company. Camilla holds two non-executive appointments, is Chair of the New Business Committee and is a Member of the Investor Relations Society.

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