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B.P. Marsh &Partners (BPM)

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Wednesday 01 June, 2011

B.P. Marsh &Partners

Final Results

RNS Number : 6139H
B.P. Marsh & Partners PLC
01 June 2011
 



Date:                     1st June 2011

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

Embargoed until:    0700hrs

 

 

 

B. P. Marsh & Partners Plc

Final Results

 

B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early stage financial services businesses, announces its audited Group final results for the year to 31st January 2011.

 

The highlights of the results are:

 

¡  Net asset value up 5.2% to £46.5m (2010: £44.2m), or 159p per share (2010: 151p)

¡  Profit before tax £3.0m (£0.1m 2010)

¡  Annual compound growth rate of 10.3% achieved

¡  £0.9m of cash currently available for further investments, excluding any realisations

 

 

Chairman's Statement

 

I am pleased to present the audited Consolidated Accounts of B. P. Marsh & Partners Plc for the year ended 31st January 2011.

 

Over the past year the portfolio has witnessed a number of areas of strong performance, and has also experienced individual challenges. The year to 30th September 2010 saw revenue growth at Hyperion of 26% while EBITDA grew by 41% and continued strong growth in both revenue and EBITDA is predicted to continue for 2011. LEBC, too, saw significant revenue growth, with an increase of 25% achieved for the year to 30th September 2010 and further growth is forecast for 2011.

 

However, some of our other investments have found the economic climate more challenging, particularly the smaller investments. Larger investments face similar issues, albeit usually on a different scale. For example, the recent deterioration of the Spanish economy has been well documented, but in the face of this our Spanish Insurance broking investee company, Summa, did well to achieve 90% of its budgeted profit for 2010. 

 

The Group believes that it has weathered the recent collapse of the financial markets with a steady and robust performance and we look forward to building upon this in the current year and beyond.

 

Given that the Group has drawn down on part of its loan facility, no dividends will be paid from the year to 31st January 2011. As successful realisations are made and loan funds are repaid, the Board hopes to be able to reconsider this position in future years.

 

Financial Performance

 

At 31st January 2011, the net asset value of the Group was £46.5m (2010: £44.2m), after making allowance for deferred corporation tax, an increase of 5.2% (+5.9% excl. dividend). This equates to a net asset value of 159p per ordinary share as at 31st January 2011 (2010: 151p).

 

The Group has therefore achieved an annual compound growth rate of 10.3% after running costs, realisations, losses and distributions and having made an appropriate allowance for deferred corporation tax, since the Group's establishment in 1990.

 

Reflecting investment portfolio movement, including the unrealised increase on revaluation of the portfolio, the consolidated profit on ordinary activities after tax for the year was £2.6m (2010: profit of £0.3m). However, excluding portfolio movement the Group made a pre-tax profit of £0.15m (2010: profit of £0.18m). The Group aims each year to at least break even on an underlying basis, before taking into account any portfolio movement.

 

Deferred Tax

 

The Consolidated Accounts to 31st January 2011 do not reflect the Government's recently announced reduction in corporation tax from 27% to 26% with effect from 6th April 2011 as this was not substantially enacted by 31st January 2011. If this does become substantially enacted, it would reduce deferred tax liabilities by £0.25m based upon the portfolio valuation at 31st January 2011 and therefore increase overall net asset value by the same amount.

 

Shareholders

 

On this, the Group's 21st anniversary year, I am pleased to report to Shareholders that my colleagues and I believe that our companies and our investments remain strongly positioned for the future. We are looking forward to the current year and beyond in the firm expectation of a further period of growth.

 

Shareholders should also be fully aware that the Board always has one eye on the weather and is constantly on the lookout for fresh growth and development opportunities, including the possibilities of acquisitions, mergers or disposals within the portfolio.

 

It is in the nature of things that no such opportunities ever come ready made, but on our Shareholders' behalf, we regularly and rigorously review every prospect that emerges.

 

As set out above, my fellow Directors and I are fully aware of the fact that we are responsible for securing and growing Shareholders' Net Asset Value and we have every intention of continuing to do so - whatever the weather.  We further recognise that the share price of B. P. Marsh has, in the past, failed to reflect the Group's underlying value.  Whilst this is not an unusual problem in investment companies, the Board remains determined to narrow the discount between the share price and NAV.

 

Summary of Developments in the Portfolio

 

During the financial year ended 31st January 2011, the Group made the following investment:

 

·        U.S. Risk (UK) Limited ("US Risk")

 

We completed an investment in US Risk, the parent company of Oxford Insurance Brokers, a London-based Lloyd's insurance and reinsurance broker, on 22nd July 2010. We acquired a 30% stake in US Risk for a cash consideration of £1.40m together with an agreement to provide additional funding of up to £1.95m, subject to conditions. The equity investment was funded from existing cash resources.

 

We saw this as an excellent investment opportunity, falling within the heartland of our skills and experiences, with a compelling business plan, good management and strong investment partners. The majority shareholder in US Risk is US Risk Inc, a Dallas-based insurance intermediary focusing on wholesale brokerage and speciality insurance products that is one of the largest in the US, with eleven domestic and international branches.

 

Both we and our partners in Dallas are very supportive of management's growth targets for Oxford Insurance Brokers and are working with them to achieve their ambitions. Our investment will be used to further diversify core areas of the business; Professional Indemnity, North American property and specialty lines, special risk and reinsurance and to develop new areas and territories.


Other notable developments within the portfolio during the year were as follows:

 

·        Hyperion Insurance Group Ltd ("Hyperion")

 

Hyperion, in which the Group has a 19.5% stake, continues to grow at an impressive rate, with revenue growth of 26% and EBITDA growth of 41% in the year to 30th September 2010. Hyperion has again been nominated in the IMAS Top 50 Brokers list as one of the fastest growing insurance broking companies in the UK.

 

During the course of 2010, Hyperion announced that it has agreed to acquire Singapore's Accette Insurance Group, subject to regulatory approval. The acquisition will give Hyperion a strong footing in Asia, with Accette trading from offices in Hong Kong, Indonesia, Malaysia, the Philippines, Thailand as well as Singapore, where Hyperion has recently secured a reinsurance licence. The acquisition continues Hyperion's penetration into the Asian market.

 

·        Besso Holdings Ltd ("Besso")

 

During the course of last year Besso developed an in-house underwriting agency, Gladstone Underwriting Agency Ltd. The focus of this agency is commercial liability insurance for small and middle-sized enterprises and this venture will further add to Besso's service offering and boost its position in this sector.

 

Besso has further expanded its international reach with the establishment of offices in Hong Kong and Turkey, as well as developing business relationships in Qatar. Besso's management believes that these developments will diversify Besso's income stream and enable them to look beyond their primary focus on North American wholesale business.

 

Post-Balance Sheet Events:

 

·       Besso Holdings Ltd ("Besso")

 

On 31st March 2011 the Group acquired a further 11% equity stake in Besso from Union Hamilton Reinsurance Limited ("Union Hamilton") for a cash consideration of £0.74m. Further consideration of up to £0.3m may be payable by the Group in the event that 50% or more of the voting shares in Besso are acquired within 18 months, at a higher price per share. This investment was made alongside two other parties, namely, Brian Marsh Enterprises Ltd and Mr Michael Wade, who acquired the remaining 26.3% stake from Union Hamilton for an aggregate consideration of £1.72m. These acquiring parties are also subject to the same anti-embarrassment provisions as described above.

 

As a result of this transaction, the Group's equity interest in Besso has increased from 22.7% to 34% and Brian Marsh Enterprises Limited and Mr Michael Wade hold 11.3% and 15% respectively.

 

In addition, the Group subscribed for £0.77m of loan stock, part of a refinancing of Union Hamilton's preference shareholding of £2.55m.

 

Directors' Loan

 

As previously announced, during the period the Group secured a loan facility of £4.32m from several of its Directors. The line of credit is intended to enable the Group to take advantage of further investment opportunities as and when they arise. The Directors are confident in the Group's future prospects and believe that their willingness to provide their own funds in this way demonstrates this confidence.

 

£1.25m of this loan was used to fund the Besso acquisition after the year end as set out above.

 

Business Strategy

 

The Group typically invests amounts of up to £2.5m and only takes minority equity positions, normally acquiring between 15% and 45% of an investee company's total equity. Based on our current portfolio, the average investment has been held for approximately six years. The Group requires its investee companies to adopt certain minority shareholder protections and appoints a director to its 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.

 

At the year-end, the Group had £0.5m in cash, plus a further £4.32m loan facility available, of which it had committed to provide a further £2.4m of loan funding for its existing investments.

 

After taking this into consideration, together with £1.5m relating to the Besso acquisition, the Group currently has approximately £0.9m of funds available for further investments, excluding any realisations.

 

Investment Opportunities

 

The Group realigned its approach to seeking new investment opportunities at the beginning of the year and moved to a more selective approach. By placing the emphasis on renewing and maintaining relationships with key corporate and individual contacts, we succeeded in increasing the number of enquiries directly applicable to our investment strategy by 25%.

 

The Group's investment goal remains unchanged; to take minority positions in profitable businesses with strong management teams and good growth potential. In the insurance industry, global M&A activity increased in 2010 and this looks set to continue in 2011, with recent announcements in the London market including the acquisition of Heath Lambert by AJ Gallagher and the agreement by Ryan Speciality Group to buy Jubilee Group Holdings. The influx of enquiries from the sector remains strong.

 

The forthcoming regulatory requirements of the Retail Distribution Review continue to cause movement and consolidation within the wealth management sector, resulting in a steady flow of enquiries.

 

The Directors consider that the Group remains unique in its investment sector. We continue to see a large number of investment opportunities with good management and business plans that fit with our tried and tested business strategy.

 

 

Brian Marsh OBE

1st June 2011

 

 

 

Investments

 

As at 31st January 2011 the Group's equity interests were as follows:

 

Amberglobe Limited

(www.amberglobe.co.uk)

In March 2008 the Group assisted in establishing Amberglobe, a business sales platform that provides valuation and negotiation services for the sale of SME businesses in the sub £3m sector.

Date of investment: March 2008

Equity stake: 49.0%

31st January 2011 valuation: £98,000

 

Besso Holdings Limited

(www.besso.co.uk)

In February 1995 the Group assisted a specialist team departing from insurance broker Jardine Lloyd Thompson Group in establishing Besso Holdings. The company specialises in insurance broking for the North American wholesale market.

Date of investment: February 1995

Equity stake: 22.73%

31st January 2011 valuation: £5,005,000

 

HQB Partners Limited

(www.hqbpartners.com )

In January 2005 the Group made an investment in HQB Partners, a company which provides strategic transaction advice, proxy solicitation services, voting analysis and investor relations services.

Date of investment: January 2005

Equity stake: 27.72%

31st January 2011 valuation: £0

 

Hyperion Insurance Group Limited

(www.hyperiongrp.com)

The Group first invested in Hyperion in 1994. The Hyperion owns, amongst other things, an insurance broker specialising in directors' and officers' ("D&O") and professional indemnity ("PI") insurance. A subsidiary of Hyperion became a registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing general agency specialising in developing D&O and PI business in Europe.

Date of investment: November 1994

Equity: 19.5%

31st January 2011 valuation: £29,368,000

 

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 January 2011 valuation: £3,277,000

 

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 January 2011 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 January 2011 valuation: £1,906,000

 

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: 1.23%

31st January 2011 valuation: £610,000

 

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 January 2011 valuation: £5,098,000

 

US Risk (UK) Limited

(www.oxfordinsurancebrokers.co.uk)

In July of this year 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.

Date of investment: July 2010

Equity stake: 30%

31st January 2011 valuation: £1,781,000

 

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 YEAR ENDED 31ST JANUARY 2011

 

 


Notes

2011

2010



£'000

£'000

£'000

£'000







GAINS / (LOSSES) ON INVESTMENTS

1





Realised gains on disposal of investments

1,17

350


99


Impairment of investments and loans

14

(446)


(652)


Unrealised gains on investment revaluation

12

2,971


23





2,875


(530)

INCOME






Dividends

1

599


328


Income from loans and receivables

1

599


474


Fees receivable

1

820


910





2,018


1,712

OPERATING INCOME

2


4,893


1,182







Operating expenses

2


(1,837)


(1,562)







OPERATING PROFIT/ (LOSS)



3,056


(380)







Financial income

2,4

2


25


Financial expenses

2,3

(28)


-


Carried interest provision

2,15

(7)


412


Exchange movements

2,8

(10)


-





(43)


437







PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

 

8


 

3,013


 

57







Taxation

9


(415)


230







PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS

 

 

19


 

 

£2,598


 

 

£287































Earnings per share - basic and diluted (pence)

 

10


 

8.9p


 

1.0p







 

 

The result for the year is wholly attributable to continuing activities.

 



CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

 

31ST JANUARY 2011

 



Group



Company










Notes

2011

2010


2011

2010



£'000

£'000


£'000

£'000

ASSETS














NON-CURRENT ASSETS














Property, plant and equipment

11

33

49


-

-

Investments

12

47,143

42,745


36,320

34,015

Loans and receivables

13

4,403

4,613


10,155

10,155



51,579

47,407


46,475

44,170

CURRENT ASSETS














Trade and other receivables

14

1,672

1,085


-

-

Cash and cash equivalents


515

2,972


1

1

TOTAL CURRENT ASSETS


2,187

4,057


1

1

TOTAL ASSETS


53,766

51,464


46,476

44,171








LIABILITIES














NON-CURRENT LIABILITIES







Carried interest provision

15

(331)

(324)


-

-

Deferred tax liabilities

16

(6,683)

(6,268)


-

-

TOTAL NON-CURRENT LIABILITIES


 

(7,014)

 

(6,592)


 

-

 

-








CURRENT LIABILITIES







Trade and other payables

17

(276)

(701)


-

-








TOTAL CURRENT LIABILITIES


(276)

(701)


-

-








TOTAL LIABILITIES


(7,290)

(7,293)


-

-

NET ASSETS


£46,476

£44,171


£46,476

£44,171















CAPITAL AND RESERVES - EQUITY














Called up share capital

18

2,929

2,929


2,929

2,929

Share premium account

19

9,370

9,370


9,370

9,370

Fair value reserve

19

20,883

18,057


34,176

31,871

Reverse acquisition reserve

19

393

393


-

-

Retained earnings

19

12,901

13,422


1

1

SHAREHOLDERS' FUNDS - EQUITY

 

19

 

£46,476

 

£44,171


 

£46,476

 

£44,171

 

 

The Financial Statements were approved by the Board of Directors and authorised for issue on 1st June 2011

and signed on its behalf by:

 

B.P. Marsh & J.S. Newman



CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 31ST JANUARY 2011

 

 


Notes


2011


2010




£'000


£'000







Cash from operating activities






Income from loans to investees



599


474

Dividends



599


328

Fees received from investment activity



820


910

Operating expenses



(1,837)


(1,562)

Decrease in receivables



4


38

(Decrease) / increase in payables



(93)


2

Depreciation

11


22


23

Net cash from operating activities



 

114


 

213







Net cash (used by) / from investing activities






Purchase of property, plant and equipment

11


(6)


-

Purchase of investments

12


(1,437)


(2,005)

Proceeds from investments



18


703

Net cash (used by) / from investing activities



 

(1,425)


 

(1,302)







Net cash (used by) / from financing activities






Net payments of loans to investee companies



(827)


(3,325)

Financial income

4


2


25

Financial expenses

3


(28)


-

Dividends paid

7


(293)


-

Net cash (used by) / from financing activities



 

(1,146)


 

(3,300)







Change in cash and cash equivalents



(2,457)


(4,389)

Cash and cash equivalents at beginning of the period



 

2,972


 

7,341

Exchange movement



-*


20*







 

Cash and cash equivalents at end of period



 

£515


 

£2,972







 

*The exchange movement as noted in the Consolidated Statement of Comprehensive Income is £10k (2010: £nil).  The exchange movement in the Consolidated Statement of Cash Flows excludes an exchange loss of £10k (2010: loss of £20k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement.

 

 

COMPANY STATEMENT OF CASH FLOWS

 

 

No Company Statement of Cash Flows has been prepared as there has been no cash flow movement in the Company during the current period other than dividends received from a subsidiary company which were then paid to the Company's members. There was no cash flow movement in the previous period. Accordingly the Company's "cash and cash equivalents" balance as at 31st January 2011 is £1k (2010: £1k).

 

 



CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31ST JANUARY 2010

 

 

 


Group

Company

FOR THE YEAR ENDED

2011

2010

2011

2010


£'000

£'000

£'000

£'000






Opening total equity

44,171

43,884

44,171

43,884

Total recognised income and expense for period

2,598

287

2,598

287

Dividends paid

(293)

-

(293)

-

TOTAL EQUITY

£46,476

£44,171

£46,476

£44,171

 

 

Refer to Note 19, for detailed analysis of the changes in the components of equity.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31ST JANUARY 2011

 

 

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.

 

IFRS 3 Business Combinations (revised) - The revised standard is required to be adopted for any acquisitions made in the year but had no impact on these financial statements.

 

IFRS 7 (revised) Financial Instruments Disclosure - The amendment requires enhanced disclosure of fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of hierarchy, further details which can be found in Note 23.

 

IAS 24 (revised) Related Party Disclosures - This revision is in response to concerns that the previous disclosure requirements and the definition of a related party were too complex and difficult to apply in practice, especially in environments where government control is pervasive. The Group has adopted the revised IAS 24 in these financial statements.

 

Basis of consolidation

 

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

 

Business Combinations

 

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

 

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.  The one exception to the use of the acquisition accounting method was in 2006 when B.P. Marsh & Partners Plc became the legal parent company of B.P. Marsh & Company Limited in a share for share exchange transaction.  This was accounted for as a reverse acquisition, such that no goodwill arose, and a merger reserve was created reflecting the difference between the book value of the shares issued by B.P. Marsh & Partners Plc as consideration for the acquisition of the share capital of B.P. Marsh & Company Limited.  This compliance with IFRS 3 also represented a departure from the Companies Act.

 

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 operatingpolicies. Investments that are held as part of the Group's investment portfolio are carried in the Statement of Financial Position at fair value even though the Group may have significant influence over those companies.  This treatment is permitted by IAS 28 Investment in Associates ("IAS 28"), which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the profit and loss in the period of the change. The Group has no interests in associates through which it carries on its business.

 

No Statement of Comprehensive Income is prepared for the Company, as permitted by Section 408 of the Companies Act 2006.  The Company made a profit for the year of £2,598,106 (2010: profit of £287,231), prior to a dividend distribution of £292,861(2010: £nil).

 

Employee services settled in equity instruments

 

Where the Group issues equity settled share-based awards to certain employees and advisors, a fair value for the equity settled share awards is measured at the date of grant.  The Group measures the fair value using the valuation technique most appropriate to value each class of award, either the Black-Scholes or a Trinomial valuation method.

 

The fair value of each award is recognised as an expense over the vesting period on a straight-line basis, after allowing for an estimate of the share awards that will eventually vest.  The level of vesting is reviewed annually and the charge is adjusted to reflect actual or estimated levels of vesting with the corresponding entry to equity.

 

Cancellation of the rights to the equity settled share-based awards by the employees is accounted for as if the relevant employees have left the Group with the related amounts recorded previously in reserves being transferred to retained earnings.

 

Investments

 

All investments are designated as "fair value through profit or loss" assets and are initially recognised at the fair value of the consideration.  They are measured at subsequent reporting dates at fair value.

 

The Board conducts the valuations of investments.  In valuing investments, the Board applies guidelines issued by the International Private Equity and Venture Capital Valuation ("IPEVCV").  The following valuation methodologies have been used in reaching the 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 Statement of Comprehensive Income for the year.  In the Statement of Financial Position the unrealised gains and losses arising from changes in fair value are shown within a "fair value reserve" separate from retained earnings.  Transaction costs on acquisition or disposal of investments are expensed in the Statement of Comprehensive Income.

 

          Income from investments

 

Income from investments comprises:

 

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

 

b)    dividends from equity investments are recognised in the Statement of Comprehensive Income when the shareholders rights to receive payment have been established; and

 

c)    advisory fees from management services provided to investee companies, which are recognised on an accruals basis in accordance with the substance of the relevant investment advisory agreement.

 

Carried interest provision

 

This represents the amount payable to a director in the event of a particular investment being sold and is calculated on the fair value of that investment at the reporting period.

 

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 at the foreign exchange rate ruling at the date of the transaction.

 

Exchange gains and losses are recognised in the 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 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 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 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 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.

 

Pension costs

 

The Group operates a defined contribution scheme for some of its employees.  The contributions payable to the scheme during the period are charged to the Statement of Comprehensive Income.

 

Operating leases

 

Rentals under operating leases are charged on a straight-line basis over the lease term.

 

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight- line basis over the period until the date the rent is expected to be adjusted to the prevailing market rate.

 

Financial assets and liabilities

 

Financial instruments are recognised in the Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument.  De-recognition occurs when rights to cash flows from a financial asset expire, or when a liability is extinguished.

 

Loans and receivables

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  They are included in current assets, except for maturities greater than 12 months after the reporting period.  These are classified as non-current assets. 

 

Loans and borrowings

 

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowings. After initial recognition, these are subsequently measured at amortised cost using the effective interest method, which is the rate that exactly discounts the estimated future cash flows through the expected life of the liabilities. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

 

Trade and other receivables

 

Trade and other receivables in the Statement of Financial Position are initially measured at original invoice amount and subsequently measured after deducting any provision for impairment.

 

Cash and cash equivalents

 

Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash and short-term deposits as defined above and other short-term highly liquid investments that are readily convertible into cash and are subject to insignificant risk of changes in value, net of bank overdrafts.

 

Trade and other payables

 

Trade and other payables are stated based on the amounts which are considered to be payable in respect of goods or services received up to the date of the Statement of Financial Position.

 

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 standard, which is effective for annual accounting periods beginning on or after the stated effective date. 

 

As part of the IASB's preparation to replace IAS 39 "Financial Instruments: Recognition and Measurements", in November 2009, the IASB issued the first phase of IFRS 9 "Financial Instruments", dealing with the classification and measurement of financial assets. In October 2010, the IASB updated IFRS 9 by incorporating the requirements for the accounting for financial liabilities. The new standard is effective for annual periods beginning on or after 1 January 2013 with transitional arrangements depending on the date of initial application. The Group has not yet decided the date of adoption of this standard and has not yet completed its evaluation of the effect of adoption. The new standard has not yet been adopted by the EU.

 

Other standards, amendments and interpretations have been issued but are not yet effective, and are not expected to have a material effect on the reported income or net assets of the Group.  These are not referred to above.

 

 

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 & Channel Islands and Non-UK & Channel Islands.

 

If material to the Group overall (where the segment revenues, reported profit or loss or combined assets exceed the quantitative thresholds prescribed by IFRS 8 Operating Segments ("IFRS 8")), the segment information is reported separately. 

 

The Group allocates revenues, expenses, assets and liabilities to the operating segment where directly attributable to that segment.  All indirect items are apportioned based on the percentage proportion of revenue that the operating segment contributes to the total Group revenue (excluding any unrealised gains and losses on the Group's non-current investments).

 

Each reportable segment derives its revenues from three main sources.  These are described in further detail in Note 1 under 'Income from investments'.

 

All reportable segments derive their revenues entirely from external clients and there are no inter-segment sales.

 

The transition from the provisions of IAS 14 Segment Reporting ("IAS 14") to IFRS 8, which became mandatory for accounting periods beginning on or after 1st January 2009, did not given rise to any specific changes in the way the Group reports on its operating segments.

 


Geographic segment 1:

UK & Channel Islands

Geographic segment 2:

Non-UK & Channel Islands

Group









2011

2010

2011

2010

2011

2010


£'000

£'000

£'000

£'000

£'000

£'000








Operating income / (loss)

5,524

574

(631)

608

4,893

1,182

Operating expenses

(1,353)

(1,270)

(484)

(292)

(1,837)

(1,562)

Segment operating profit / (loss)

4,171

(696)

(1,115)

316

3,056

(380)








Financial income

2

20

-

5

2

25

Financial expenses

(21)

-

(7)

-

(28)

-

Carried interest provision

(7)

412

-

-

(7)

412

Exchange movements

-

(5)

(10)

5

(10)

-








Profit before tax

4,145

(269)

(1,132)

326

(3,013)

57

Income tax

(732)

321

317

(91)

(415)

230

Profit for the year

£3,413

£52

£(815)

£235

£2,598

£287

 

 

 



 


Geographic segment 1:

UK & Channel Islands

Geographic segment 2:

Non-UK & Channel Islands

Group


2011

2010

2011

2010

2011

2010


£'000

£'000

£'000

£'000

£'000

£'000

Non-current assets







Property, plant and equipment

29

42

4

7

33

49

Investments

41,207

36,484

5,936

6,261

47,143

42,745

Loans and receivables

2,952

4,155

1,451

458

4,403

4,613


44,188

40,681

7,391

6,726

51,579

47,407

Current assets







Trade and other receivables

1,361

329

311

756

1,672

1,085

Cash and cash equivalents

515

2,972

-

-

515

2,972


1,876

3,301

311

756

2,187

4,057








Total assets

46,064

43,982

7,702

7,482

53,766

51,464

Non-current liabilities







Carried interest provision

(331)

(324)

-

-

(331)

(324)

Deferred tax liabilities

(7,009)

(6,187)

326

(81)

(6,683)

(6,268)


(7,340)

(6,511)

326

(81)

(7,014)

(6,592)

Current liabilities







Trade and other payables

(276)

(701)

-

-

(276)

(701)

Total liabilities

(7,616)

(7,212)

326

(81)

(7,290)

(7,293)








Net assets

£38,448

£36,770

£8,028

£7,401

£46,476

£44,171








 

Additions to property, plant and equipment

 

6

 

-

 

-

 

-

 

6

 

-








 

Depreciation of property, plant and

equipment

 

19

 

20

 

3

 

3

 

22

 

23








Impairment of investments and loans

446

652

-

-

446

652

 

 

 

3.       FINANCIAL EXPENSES

2011

2010


£'000

£'000




Other interest

£28

£-

 

 

 

4.       FINANCIAL INCOME

2011

2010


£'000

£'000




Bank interest

2

25

Other interest

-

-


£2

£25

 

 



5.       STAFF COSTS

 

          The average number of employees, including all directors (executive and non-executive), employed by the Group during the year was 16 (2010: 15). All remuneration was paid by B. P. Marsh & Company Limited.

 

 

The related staff costs were:

2011

2010


£'000

£'000




Wages and salaries

1,021

856

Social security costs

130

100

Pension costs

38

40


£1,189

£996

 

In addition staff were paid £60,000 (2010: £nil) out of the B. P. Marsh Employee Benefit Trust in the year (see Note 6 below). This cost is not reflected in the Statement of Comprehensive Income in the current year as it is funded through prior year contributions.

 

 

6.       DIRECTORS' EMOLUMENTS




2011

2010

The aggregate emoluments of the directors were:

£'000

£'000




Management services - remuneration

758

574

Fees

16

20

Pension contributions - remuneration

21

20


£ 795

£ 614

 

In addition to the above, Mr S. S. Clarke has an entitlement to a gain based on a carried interest, as outlined in Note 15.

 


2011

2010


£'000

£'000

Highest paid director



Emoluments

95

185

Long term incentive payments

200

-

Pension contribution

9

-


£ 304

£ 185

 

The highest paid director disclosure for the current year includes a payment of £60,000 out of the B. P. Marsh Employee Benefit Trust.  This cost is not reflected in the Statement of Comprehensive Income in the current year as it is funded through prior year contributions.

 

The Company contributes into its defined contribution pension scheme on behalf of certain employees and directors.  Contributions payable are charged to the Statement of Comprehensive Income in the period to which they relate.

 

During the period, 2 directors (2010: 2) accrued benefits under the defined contribution pension scheme.

 

 

 

7.       DIVIDENDS

2011

2010


£'000

£'000

Ordinary dividends






Final dividend paid on:






1 pence each on 29,286,143 Ordinary shares

293

-





£293

£ -




 

 

8.       PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

 

2011

 

2010


£'000

£'000

The profit for the period is arrived at after charging:






Depreciation of owned tangible fixed assets

22

23

Auditors remuneration :-



      Audit fees for the Company

23

20

      Other services:



-Audit of subsidiaries' accounts

11

10

-Taxation

8

6

-Other advisory

11

14

Exchange loss

10

-

Operating lease rentals of land and buildings

115

106

 

 

9.       TAXATION

2011

2010


£'000

£'000

The charge / (credit) for tax comprises:






UK corporation tax charge for the year

-

-

Deferred tax charge / (credit) for the year (Note 16)

415

(230)





£415

£(230)




Factors affecting the charge for the year

Profit on ordinary activities before tax

3,013

57




Tax at 28% on profit on ordinary activities (2010: 28%)

844

16

Effects of:



Expenses not deductible for tax purposes

13

17

Non taxable (income, impairments and unrealised gains)

(830)

(122)

Capital (gains) on disposal of investments

-

(28)

Other effects:



Management expenses unutilised

141

110

Provisions against investments not allowable for tax

-

99

Non-taxable income (dividends received)

(168)

(92)




Corporate tax charge for the year

£ -

£ -

 

There are no factors which may affect future tax charges.

 

 



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

 


2011

 

£'000

2010

 

£'000




Earnings



Earnings for the purpose of basic and diluted earnings per share being net profit  attributable to equity shareholders

 

 2,598

 

287




Earnings per share - basic and diluted

8.9p

1.0p




Number of shares

Number

Number

Weighted average number of ordinary shares for the purposes of basic earnings per share

 

29,286,143

 

29,286,143




Number of dilutive shares under option

Nil

Nil




Weighted average number of ordinary shares for the purposes of dilutive earnings per share

 

29,286,143

 

29,286,143

 

 

11.     PROPERTY, PLANT AND EQUIPMENT

 

Furniture & Equipment

£'000

Leasehold Fixtures & Fittings

£'000

 

 

Total

£'000

Group








Cost




At 1st February 2009

57

51

108

Additions

-

-

-

Disposals

-

-

-

At 31st January 2010

57

51

108





At 1st February 2010

57

51

108

Additions

6

-

6

Disposals

-

-

-

At 31st January 2011

63

51

114





Depreciation




At 1st February 2009

31

5

36

Eliminated on disposal

-

-

-

Charge for the year

7

16

23

At 31st January 2010

38

21

59





At 1st February 2010

38

21

59

Eliminated on disposal

-

-

-

Charge for the year

6

16

22

At 31st January 2011

44

37

81









Net book value




At 31st January 2011

£ 19

£ 14

£ 33

At 31st January 2010

£ 19

£ 30

£ 49

At 31st January 2009

£ 26

£ 46

£ 72

 

 

 

 

12.     NON-CURRENT INVESTMENTS






Group


Shares in investee companies



Total



£'000

At valuation






At 1st February 2009


41,673

Additions


2,005

Disposals


(604)

Provisions


(352)

Unrealised gains in this period


23

At 31st January 2010





At 1st February 2010


42,745

Additions


1,437

Disposals


(10)

Provisions


-

Unrealised gains in this period


2,971

At 31st January 2011


£47,143




At cost






At 1st February 2009


17,043

Additions


2,005

Disposals


(600)

Provisions


(500)

At 31st January 2010


£17,948




At 1st February 2010


17,948

Additions


1,437

Disposals


(10)

Provisions


-

At 31st January 2011


£19,375

 

 

The principal addition in the year relates to the acquisition on 22 July 2010 of 30% equity holding in US Risks (UK) limited for £1,396,417.

 

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

 


% holding

Date

Aggregate

Post tax



of share

information

capital and

profit/(loss)


Name of company

capital

available to

reserves

for the year

Principal activity




£

£


Amberglobe Limited

49.00

30.04.10

(650,932)

(288,358)

Business sales platform







Besso Holdings Limited

22.73

31.12.09

9,605,838

(91,777)

Investment holding






company







HQB Partners Limited

27.72

31.12.10

(42,855)

(164,777)

Investor relations consultants









 

 


% holding

Date

Aggregate

Post tax



of share

information

capital and

profit/(loss)


Name of company

capital

available to

reserves

for the year

Principal activity




£

£








Hyperion Insurance

   Group Limited

19.50

30.09.10

41,444,000

4,390,000

Insurance holding company







 

LEBC Holdings Limited

21.95

30.09.10

671,419

9,334

Independent financial advisor company







Portfolio Design Group  International Limited

20.00

31.12.09

7,827,121

(1,356,340)

Fund managers of traded endowment policies







Morex Commercial Ltd

20.00

31.12.09

367,254

28,824

Trading in secondary life policies







Preferred Asset

   Management Ltd

20.00

30.09.09

816,451

368,135

Fund management company







New Horizons Ltd

   (formerly Surrenda-Link

   Nominees Ltd)

20.00

31.12.08

1,595,863

66,732

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

31.12.09

10,292,415

104,242

Consolidator of regional insurance brokers

 







 

US Risks (UK) Limited

30.00

31.12.09

1,654,073

556,716

Holding company for insurance intermediaries

 

In addition, as a result of the disposal of the Group's interest in JMD Specialist Insurance Services Group Limited in the year to 31st January 2010, the Group acquired an investment of £698,750 in respect of 650,000 ordinary shares in Randall & Quilter Investment Holdings Plc ("R&Q"), which represents 1.16% of the share capital of R&Q. In June 2010 the Group acquired 40,000 additional ordinary shares in R&Q for £40,800, which increased the holding to 1.23% of the share capital of R&Q. R&Q is listed on the AIM Market.

 

In November 2007 the Group acquired a 20% equity holding in London Endowments Limited.  On 22nd December 2010 the Group disposed its holding for £9,538, which approximated its carrying value.

 

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 Group Limited which are prepared under IFRS with effect from its year ended 30 September 2010.

 

On 3rd September 2009 Trillium Partners Limited, an associated company, was placed into administration.   Full provision was made against this investment in the prior year. During the year a distribution of £17,990 was recovered from the liquidation proceeds. No further amounts are anticipated.

 

Under FRS 25 the HQB Partners Limited accounts have included the Group's 27.72% interest as a long-term creditor. As this is in reality an equity investment the aggregate capital and reserves shown have therefore been adjusted to include this as equity and the profit has been adjusted by the dividend paid out.



 

12.     NON-CURRENT INVESTMENTS (continued)


Shares in

Company

group


undertakings


£'000

At valuation




At 1st February 2009

33,728

Additions

-

Unrealised gains in this period

287

At 31st January 2010

 £34,015



At 1st February 2010

34,015

Additions

-

Unrealised gains in this period

2,305

At 31st January 2011

 £36,320



At cost




At 1st February 2009

2,143

Additions

-

At 31st January 2010

 £2,143



At 1st February 2010

2,143

Additions

-

At 31st January 2011

 £2,143



 

Company

 

Shares in group undertakings

All group undertakings are registered in England and Wales.  The details and results of group undertakings, which are extracted from the UK GAAP accounts of these companies, are as follows:

 



Aggregate

Profit/(loss)



%

capital and

for the



Holding

reserves at

year to



of share

31st January

31st January


Name of company

Capital

2011

2011

Principal activity



£

£







B.P. Marsh &

   Company Limited

100

43,003,408

13,378

Consulting services and investment holding company






Marsh Insurance

   Holdings Limited

100

11,035,001

35,847

Investment

holding company






B.P. Marsh & Co. Trustee

   Company Limited

100

1,000

-

Dormant






Marsh Development

   Capital Limited

100

1

-

Dormant



 

13.        LOANS AND RECEIVABLES - NON-CURRENT

Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000

Loans to investee companies (Note 24)

 

4,403

 

4,613


 

-

 

-

Amounts due from subsidiary undertakings

 

-

 

-


 

10,155

 

10,155








£    4,403

£    4,613


£    10,155

£    10,155

See Note 24 for terms of the loans.

 

 

14.        TRADE AND OTHER RECEIVABLES - CURRENT

Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000







Trade receivables

221

177


-

-

Less provision for impairment of receivables

 

(68)

 

(20)


 

-

 

-


153

157


-

-

Loans to investee companies (Note 24)

1,089

497


-

-

Other receivables

6

20


-

-

Prepayments and accrued income

424

411


-

-








£    1,672

£    1,085


£           -

£           -







Included within trade receivables is £153,057 (2010: £128,760) owed by the Group's participating interests.

 

Trade receivables are provided for based on estimated irrecoverable amounts from the fees and interest charged to investee companies, determined by the Group's management based on prior experience and their assessment of the current economic environment.

 

Movement in the allowance for doubtful debts:


Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000

       






Balance at 1st February

20

10


-

-

Increase in allowance recognised in the Statement of Comprehensive Income

 

 

48

 

 

10


 

 

-

 

 

-







Balance at 31st January

£    68

£    20


£    -

£    -







 

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. 

 

The Group's net trade receivable balance includes debtors with a carrying amount of £153,580 (2010: £154,493) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable.  The Group does not hold any collateral over these balances.

 



Ageing of past due but not impaired:


Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000







0 - 30 days

52

108


-

-

31 - 60 days

68

35


-

-

61 - 90 days

17

-


-

-

More than 90 days

16

11


-

-








£    153

£    154


£           -

£           -







£446,000 has been provided against loans to investee companies in the year.  The total provision against loans relating to Fixed Asset investments therefore stands at £446,000 (2010: £694,875).

 

See Note 24 for terms of the loans and Note 23 for further credit risk information.

 

 

15.      CARRIED INTEREST PROVISION

Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000







Carried interest provision

331

324


-

           -








£    331

£    324


£           -

£           -







 

This carried interest provision represents S. S. Clarke's entitlement to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries.

 

No amounts were paid under this contract during the year (2010: £nil).

 

 

16.    DEFERRED TAX LIABILITIES - NON- CURRENT



Group



Company



£'000



£'000







At 1st February 2009


6,498



-

Credited to Statement of Comprehensive Income


 

(230)



 

-







At 31st January 2010


£    6,268



£           -







At 1st February 2010


6,268



-

Charged to Statement of Comprehensive Income


 

415



 

-







At 31st January 2011


£    6,683



£           -







The directors estimate that, if the Group were to dispose of all its investments at the amount stated in the Statement of Financial Position, £6,683,000 (2010: £6,268,000) of tax on capital gains would become payable by the Group at a corporation tax rate of 27% (2010: 28%).

 

The government recently announced a reduction in the corporation tax rate from 27% to 26% with effect from 6 April 2011. As this was not substantially enacted at the year end, this rate of 26% has not been used in calculating the deferred tax liabilities arising from the unrealised gains on the revaluation of the Group's investments. This rate is expected to be used in next year's financial statements once substantially enacted.

 

If the lower rate of 26% had been used in these financial statements, the deferred tax liabilities would have been reduced from the current £6,683,000 to £6,436,000 resulting in an increase in net assets of £247,000.

 

17.    TRADE AND OTHER PAYABLES - CURRENT

Group


Company


2011

2010


2011

2010


£'000

£'000


£'000

£'000







Trade payables

37

47


    -

-

Other taxation & social security costs

17

73


-

-

Other loans

-

332


-

-

Accruals and deferred income

222

249


-

-








£    276

£    701


£           -

£           -

 

 

The other loan due within one year related to an unsecured, interest free loan repayable on the finalisation of the liquidation of Whitmar Holdings Limited ("Whitmar") (formerly Glenvaal Dewar Rand Limited). During the year it was confirmed on finalisation of the liquidation of Whitmar that no amount was payable to Whitmar, the amount having been settled by a dividend in specie in prior years. Accordingly, this amount together with the related exchange gain has been included in realised gains in the Consolidated Statement of Comprehensive Income.

 

 

18.     CALLED UP SHARE CAPITAL

2011

2010


£'000

£'000




Allotted, called up and fully paid



29,286,143 Ordinary shares of 10p each (2010: 29,286,143)

       2,929

       2,929





£  2,929

£  2,929

 

 

19.     RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

 

 

Group


Shares

Share


Reverse



 


Share

to be

premium

Fair value

acquisition

Retained


 


capital

issued

account

reserve

reserve

earnings

Total

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000









At 1st February 2009

 

2,929

 

-

 

9,370

 

17,396

 

393

 

13,796

 

43,884









Profit for

the year

 

-

 

-

 

-

 

665

 

-

 

(378)

 

287









Transfers on sale of investments

 

 

-

 

 

-

 

 

-

 

 

(4)

 

 

-

 

 

4

 

 

-









At 31st January 2010

 

£2,929

 

£   -

 

£9,370

 

£18,057

 

£   393

 

£13,422

 

£44,171

 

At 1st February 2010

 

2,929

 

-

 

9,370

 

18,057

 

393

 

13,422

 

44,171









Profit for

the year

 

-

 

-

 

-

 

2,826

 

-

 

(228)

 

2,598

















Dividends Paid

-

-

-

-

-

(293)

(293)









At 31st January 2011

 

£2,929

 

£   -

 

£9,370

 

£20,883

 

£   393

 

£12,901

 

£46,476









 

 

Company



Share





Share

Shares to

premium

Fair value

Retained



capital

be issued

account

reserve

earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000








At 1st February 2009

2,929

-

9,370

31,584

    1 

    43,884 








Profit for the year

-

-

-

287

-

287








At 31st January 2010

£2,929

£   -

£9,370

£31,871

£   1 

£44,171 

 

At 1st February 2010

2,929

-

9,370

31,871

    1 

    44,171 








Profit for the year

-

-

-

2,305

293

2,598








Dividends paid

-

-

-

-

(293)

(293)








At 31st January 2011

£2,929

£   -

£9,370

£34,176

£   1 

£46,476 








 

 

20.     OPERATING LEASE COMMITMENT

 

The Group and Company was committed to making the following future aggregate minimum lease payments under non‑cancellable operating leases:


2011

2010


Land and

Land and


buildings

buildings


£'000

£'000




Earlier than one year

£  119  

£   132

Between two and five years

£        -

£   121

 

 

21.      LOAN AND EQUITY COMMITMENTS

 

On 7th February 2005 the Group entered into an agreement to provide a loan facility of £140,000 to HQB Partners Limited, an investee company. As at 31st January 2011, this facility has been drawn down in full.

 

On 10th March 2008 the Group entered into an agreement to provide a loan facility of £630,000 to Amberglobe 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 January 2011 £670,000 of this facility had been drawn down.

 

On 1st April 2009 the Group entered into an agreement to provide a loan facility of £400,000 to LEBC Group Limited, an investee company.  As at 31st January 2011 no amounts had been drawn down.

 

On 2nd June 2009 the Group provided a £2,460,000 loan to Hyperion Insurance Group Limited ("Hyperion"), which was drawn down in full.  On the same date the Group entered into a further agreement with Hyperion to subscribe for €900,000 in loan notes to fund an acquisition, being part of a €4,500,000 loan note issue alongside other shareholders.  As at 31st January 2011, this facility has been drawn down in full.

 

On 22 July 2010 the Group entered into an agreement to provide a loan facility of £1,950,000 to US Risk (UK) Limited, an investee company.  As at 31st January 2011 none of this facility had been drawn down.

 

On 31 December 2010 the Group entered into an agreement to provide a further €650,000 (£556,936) loan to Summa Insurance Brokerage, S.L. for general working capital requirements.  This is in addition to the €2,000,000 loan facility previously agreed, of which €927,990 (£804,918) had been previously drawdown. As at 31st January 2011, a total of €1,577,990 (£1,350,556) had been drawn down to date.

 

 



22.      CONTINGENT LIABILITIES

 

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 £445,000 together with the Employers' National Insurance due thereon.  £20,000, £100,000, £250,000 and £75,000 are due to be paid on 6th April 2011, 1st October 2011, 1st October 2012 and 1 October 2013 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.

 

 

23.     FINANCIAL INSTRUMENTS

 

The Group's financial instruments comprise loans to participating interests, cash and liquid resources and various other items, such as trade debtors, trade creditors and other debtors and creditors.  These arise directly from the Group's operations.

 

The Group has not entered into any derivatives transactions.

 

It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.

 

The main risks arising from the Group's financial instruments are price risk, credit risk, liquidity risk, interest rate cash flow risk and currency risk.  The Board reviews and agrees policies for managing each of these risks and they are summarised in the Group Report of the Directors under "Financial Risk Management".

 

Interest Rate Profile

The Group has cash balances of £515,000 (2010: £2,972,000), which are part of the financing arrangements of the Company.  The cash balances comprise bank current accounts and deposits placed at investment rates of interest, which ranged between 0.1% p.a. and 0.3% p.a. in the period (2010: ranged between 0.2% p.a. and 1.4% p.a.).  Maturity periods ranged between immediate access and 1 month in both the current and prior years.

 

Currency hedging

During the period, the Group did not engage in any form of currency hedging transaction (2010: none).

 

Financial liabilities

The Company had no borrowings during the period (2010: none).

 

Fair values

The Group has adopted the amendment to IFRS 7 for financial instruments which are measured at fair value at the balance sheet date. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

 

· Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;

· Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, observed either directly as prices or indirectly from prices; and

· Level 3: Inputs for the asset or liability that are not based on observable market data.

 

The following table presents the Group's assets and liabilities that are measured at fair value at 31 January 2011:

 



Level 1

Level 2

Level 3

Total



£'000

£'000

£'000

£'000

Assets












Investments designated as "fair value through profit or loss" assets


610

-

46,533

47,143









£610

-

£46,533

£47,143

 

 



24.     RELATED PARTY DISCLOSURES

 

The following loans owed by the associated companies of the Company and its subsidiaries were outstanding at the year end:

 


2011

2010


£

£




Amberglobe Ltd

670,000

670,000

Besso Holdings Ltd

400,000

400,000

HQB Partners Ltd

140,000

80,000

Hyperion Insurance Group Ltd

3,277,142

3,004,959

Paterson Squared, LLC

100,000

150,000








Summa Insurance Brokerage S. L.

1,577,990

927,990

 

The loans are typically secured on the assets of the investee companies and an appropriate interest rate is charged based upon the risk profile of that company.

 

During the year, the Group agreed a loan facility with the directors, or other related parties, including Mr B.P. Marsh (£3,500,000), Ms J.K.N. Dunbar (£500,000), Mr P.J. Mortlock (£250,000) and Mrs M. Newman (£75,000) which is secured on the assets of the Company. The loan will accrue interest at a rate of 6.5% and is repayable in full by 9th June 2013. Interest is payable on a quarterly basis. This new facility bears a charge of 1% p.a. on any undrawn amount. As at 31st January 2011 none of this facility had been drawn down.

 

Income receivable, consisting of consultancy fees and interest on loans credited to the Statement of Comprehensive Income in respect of the associated companies of the Company and its subsidiaries for the year were as follows:

 


2011

2010


£

£




Amberglobe Ltd

58,963

68,873

Berkeley (Insurance) Holdings Ltd

-

6,053

Besso Holdings Ltd

184,676

184,174

HQB Partners Ltd

28,826

28,185

Hyperion Insurance Group Ltd

490,591

500,810

JMD Specialist Insurance Services Group Ltd

-

138,034

LEBC Group Ltd

80,177

44,161

Oakbridge Insurance Services, LLC

52,250

51,479

Paterson Squared, LLC

28,256

36,458

Portfolio Design Group International Ltd

36,000

36,000

Summa Insurance Brokerage S. L.

391,510

232,204

Trillium Partners Ltd

-

18,290

US Risks (UK) Limited

28,756

-

 

In addition, the Group made management charges of £39,000 (2010: £39,000) to Marsh Christian Trust. Mr B. P. Marsh, the Chairman and majority shareholder of the Company, is also the Trustee and Settlor of Marsh Christian Trust.

 

S. S. Clarke is entitled to a maximum of 20% of any gain, after deducting expenses and following the repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of the Company and its subsidiaries.  The carried interest provided for at the year end was £331,000 (2010: £324,000).

 

All the above transactions were conducted on an arms length basis.

 

 

25.     POST BALANCE SHEET EVENTS

 

On 18th February 2011 the Group provided a further £15,000 of an agreed £695,000 loan facility to Amberglobe Limited for general working capital requirements. A total of £685,000 has been drawn down to date.



On 31st March 2011 the Group's £1,775,000 preferred shares in Besso Holdings Limited were redeemed and the Group subscribed for £2,540,000 of 14% loan stock. In addition the Group acquired a further 11.3% shareholding in Besso Holdings Limited for £735,000 with a further consideration of £300,000 payable under certain events.

 

On 31st March 2011 the Group utilised £1,250,000 of the Directors Loan facility (see Note 17) to finance the Besso related transaction noted above.

 

On 1st April 2011 the Group provided a further £50,000 of an agreed £250,000 loan facility to Paterson Squared, LLC for general working capital requirements. Atotal of £150,000 has been drawn down to date.

 

On 6th April 2011 the Group paid a bonus of £20,000, together with Employers' National Insurance due thereon, to one of its employees (who is also a director of the Company) as part of the Group's long-term incentive arrangements.

 

 

26.     ULTIMATE CONTROLLING PARTY

 

The directors consider Mr B. P. Marsh to be the ultimate controlling party.

 

 

Notice

 

The financial information set out above does not constitute B.P. Marsh & Partners Plc's statutory accounts for the year to 31st January 2011 but is derived from those accounts. The statutory accounts for the year to 31st January 2011 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 of the state of the Group's and of the Company's affairs as at 31st January 2011 and of the Group's profit for the year then ended;

 

·      the Group's financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;

 

·      the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and

 

·      the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Approval

 

The financial statements were approved by the Board of Directors on 1st June 2011.

 

Analyst Briefing

 

An analyst briefing, hosted by Brian Marsh OBE, Chairman, Jonathan Newman, Finance Director and fellow Directors Millie Kenyon and Dan Topping, will be held at 10:00am on Wednesday 1st June 2011 at B.P. Marsh & Partners Plc, 2nd Floor, 36 Broadway, London SW1H 0BH.

 



For further information:

 

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

Brian Marsh OBE                                                        +44 (0)20 7233 3112

Camilla Kenyon

 

Arbuthnot Securities (Nominated Adviser)

Nick Tulloch / Rebecca Gordon                                 +44 (0)20 7012 2000

 

Redleaf Polhill (PR to BP Marsh)

Emma Kane                                                                +44 (0)20 7566 6731

 

 

- ends -

 

 

Notes to Editors:

 

About B.P. Marsh & Partners Plc

 

B.P. Marsh's current portfolio contains 10 companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk.

 

Over the past 20 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 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 the Group Director of Finance and has over 13 years' experience in the financial services industry. Jonathan advises investee companies through several non-executive board appointments and evaluates new investment opportunities.

 

Robert King is a Director and Group Company Secretary. He joined B.P. Marsh in May 2003 having started his career at PricewaterhouseCoopers. Since joining B.P. Marsh he has taken on responsibility for the Group's legal, compliance and secretarial functions and played a key role in the flotation of the Company.

 

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). Daniel joined the Company in February 2007 and currently holds three non-executive board appointments.

 

Camilla Kenyon was appointed as Head of Investor Relations at B. P. Marsh in February 2009, having four years of prior experience with the Company. Since then she has also been appointed as Head of the New Business Department, with responsibility for coordinating new investment opportunities and Chairing the New Business Committee.

 


This information is provided by RNS
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