24th Oct 2007 07:00
B.P. Marsh & Partners PLC24 October 2007 Date: 24th October 2007On behalf of: B.P. Marsh & Partners PlcEmbargoed 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 earlystage financial services businesses, announces its unaudited Group results forthe six months ended 31 July 2007. Chairman's Statement____________________ I am pleased to present the unaudited interim results for B P Marsh & PartnersPlc (the "Group") and its consolidated statements for the six months ended 31stJuly 2007. This is the first occasion that the results have been presented inaccordance with International Financial Reporting Standards and the comparativedata for the six months to 31st July 2006 and the year to 31st January 2007 havebeen restated. A reconciliation of the Balance Sheet and Income Statement hasbeen included in the notes to the accounts. Investments In the six months to 31st July 2007 the Group made the following investments: • The Group acquired a 25% shareholding in JMD Specialist Insurance Services Group Limited ("JMD") for £0.6 million and has agreed to provide a further £0.25 million in loans to further develop the business. JMD is an accelerated premium collection service based in the City of London and provides a unique approach to the acceleration of insurance cash flow as well as attractive balance sheet management; • The Group acquired a 22.5% shareholding in LEBC Holdings Limited ("LEBC") for an initial consideration of £1.8 million and a further payment of £0.2 million based on its subsidiary company's audited results to 31st May 2007. LEBC is an Independent Financial Adviser established in 2000 with 11 branches and 56 advisers around the UK and which provides services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas; • The Group participated in a further rights issue for Hyperion Insurance Group Limited to further develop the business, taking up its pro-rata share at £1.5 million and thereby retaining its 27.89% shareholding; • The Group lent Summa Insurance Brokerage S. L. an additional €1.6 million, part of an agreed €2 million loan facility, to fund further acquisitions of regional brokers in Spain. In addition, the Group has currently committed to provide a further £0.6 millionof funding either through debt or deferred equity for its existing investments.After taking this into consideration, the Group currently has circa £1.2 millionof cash available for further investments together with a £3 million loanfacility. Business Strategy The Group typically invests amounts of up to £2.5 million and only takesminority equity positions, normally acquiring between 15% and 45% of a targetcompany's total equity. The Group insists on its investee companies adoptingcertain minority shareholder protections and appointing one of its directors tothe relevant board. The Group's successful track record is based upon a numberof factors that include, amongst other things, a robust investment process, themanagement's considerable experience of the financial services sector, and aflexible approach towards exit-strategies. Financial Performance At 31st July 2007, the net asset value of the Group excluding deferred tax wasup 12.8% to £50.6 million, compared with £44.9 million at 31st July 2006.Including deferred tax this was up 11.7% to £42.9 million (2006: £38.4 million).Compared to 31st January 2007, the net asset value of the Group rose by 6.1%excluding deferred tax and 5.7% including deferred tax. The Directors arepleased with this result considering the recent market turmoil. This represented a total increase in net asset value before deferred tax of £38million (£30.3m after deferred tax) since the Group was originally formed in1990, having adjusted for the £10.1 million net proceeds raised on AIM and theoriginal capital investment of £2.5 million. The Directors are pleased that,since 1990, the Group has over 17.5 years achieved an annual compound growthrate of 16.8% after running costs, realisations, losses and distributions butexcluding deferred tax (15.3% including deferred tax). Based upon the above figures the Group's undiluted net asset value per share asat 31st July 2007 was 172.9 pence excluding deferred tax (146.6 pence includingdeferred tax). The Group's investment portfolio movement during the year was as below: July 2006 Acquisitions Disposals at Valuations Adjusted July 2007 valuation at cost cost released to July 2006 valuation P&L at cost valuation ____________________________________________________________________________ £35.8 £4.0 million £nil £nil £39.8 £45.3 million million million ____________________________________________________________________________ This equates to an uplift of 13.8% before deferred tax. However, this assumesall acquisitions were made on the first day of the year and therefore the actualrate of increase is greater. The consolidated profit on ordinary activities before share based provisions forthe six months to 31st July 2007 was £2.9 million (2006: £3.5 million).Adjusting for unrealised gains on investment revaluations and carried interestprovisions the consolidated profit on ordinary activities before share basedprovisions for the six months to 31st July 2007 was £268,000 (2006: £187,000). The Directors note that at the current corporation tax rate of 30% the estimateof deferred tax is £7.7 million. However, under government proposals to reducethe corporation tax rate to 28% from April 2008 this would, based upon figuresto 31st July 2007, reduce this contingent liability to £7.2 million. People In March 2007 we said farewell to Stephen Crowther, who had served as a Directorsince 1998 and with whom we maintain a mutually helpful relationship in hissubsequent capacity as a Director of one of our main investee companies. I thank the Directors and staff for their unstinting contributions to theprogress of the Group. Outlook The Group remains unique in its investment sector and we continue to see a largenumber of relatively small enterprises with excellent management and spiritedbusiness plans. These represent a challenge, which the BP Marsh team relishes. BP Marsh OBEChairman Analyst Briefing An analyst briefing given by Brian Marsh OBE, Executive Chairman, Francis deZulueta, Director of New Business Development and Jonathan Newman, FinanceDirector, will be held at 09:00 am on Wednesday 24 October 2007 at RedleafCommunications Ltd, 9-13 St Andrew Street, London EC4A 3AF. For further information: B.P. Marsh & Partners Plc www.bpmarsh.co.uk _________________ Brian Marsh OBE +44 (0)20 7730 2626 Nominated Adviser Nabarro Wells & Co. LimitedDavid Nabarro/Marc Cramsie +44(0) 20 7710 7400 Redleaf Communications (PR to BP Marsh)Emma Kane/Tom Newman +44 (0)20 7822 0200 Investments As at 31st July 2007 the Group's equity interests were as follows: Berkeley (Insurance) Holdings Limited(www.berkeleyinsurance.com) In July 2002 the Group invested in Berkeley (Insurance) Holdings, a company thatprovides its clients with independent advice on the most suitable choice ofinsurance broker in specialist as well as mainstream insurance areas.Date of investment: July 2002Equity stake: 19.9%31st July 2007 valuation: £40,000 Besso Holdings Limited(www.besso.co.uk) In February 1995 the Group assisted a specialist team departing from insurancebroker Jardine Lloyd Thompson Group in establishing Besso Holdings. The companyspecialises in insurance broking for the North American wholesale market.Date of investment: February 1995Equity stake: 23.55%31st July 2007 valuation: £10,174,000 HQB Partners Limited(www.hqbpartners.com ) In January 2005 the Group made an investment in HQB Partners, a company whichprovides strategic transaction advice, proxy solicitation services, votinganalysis and investor relations services.Date of investment: January 2005Equity stake: 27.72%31st July 2007 valuation: £350,000 Hyperion Insurance Group Limited(www.hyperiongrp.com) The Group first invested in Hyperion Insurance Group in 1994. The HyperionInsurance Group owns, amongst other things, an insurance broker specialising indirectors' and officers' ("D&O") and professional indemnity ("PI") insurance. Asubsidiary of Hyperion became a registered Lloyd's insurance broker. In 1998Hyperion set up an insurance managing general agency specialising in developingD&O and PI business in Europe.Date of investment: November 1994Equity: 27.89%31st July 2007 valuation: £16,549,000 JMD Specialist Insurance Services Group Limited(www.jmd-sis.com) In March 2007 the Group invested in JMD, a provider of leading-edge services tothe insurance industry. Their unique approach to measurable cash flow and profitenhancements adds value to Lloyd's syndicates, UK and international insurers andre-insurers.Date of investment: March 2007Equity stake: 25.0%31 July 2007 valuation: £600,000 LEBC Holdings Limited(www.lebc-group.com) In April 2007 the Group invested in LEBC, an Independent Financial Advisorycompany providing services to individuals, corporates and partnerships,principally in employee benefits, investment and life product areas.Date of investment: April 2007Equity stake: 22.5%31 July 2007 valuation: £2,140,000 Paterson Martin Limited(www.patersonmartin.com) Paterson Martin was founded by a group of professionals from the actuarial,capital markets and reinsurance advisory sectors in conjunction with the Group.The company uses sophisticated modeling techniques to assess risk, with a viewto providing counter-party risk transaction advice.Date of investment: April 2004Equity stake: 22.5%31st July 2007 valuation: £427,000 Portfolio Design Group International Limited(www.surrendalink.co.uk) In March 1994 the Group invested in the Portfolio Design Group, a company whichsells with-profits life endowment policies to large financial institutions. In2002 the company diversified into investment management.Date of investment: March 1994Equity stake: 20.0%31st July 2007 valuation: £6,306,000 Principal Investment Holdings Limited(www.principalinvestment.co.uk) In December 1999 the Group invested in Principal, a predominantly discretionaryfund manager with both retail and institutional clients.Date of investment: December 1999Equity stake: 18.57%31st July 2007 valuation: £7,371,000 Public Risk Management Limited(www.publicriskmanagement.co.uk) In September 2003 the Group assisted in establishing Public Risk Management, acompany which specialises in the development and provision of risk managementservices, including processes and procedures, to the public sector.Date of investment: September 2003Equity stake: 44.0%31st July 2007 valuation: £110,000 Summa Insurance Brokerage, S. L.(www.grupo-summa.com) In January 2005 the Group provided finance to a Spanish management team with theobjective of acquiring and consolidating regional insurance brokers in Spain.Date of investment: January 2005Equity stake: 35.0%31st July 2007 valuation: £1,238,000 Financial Statements CONSOLIDATED INCOME STATEMENTFOR THE PERIOD ENDED 31ST JULY 2007 Notes Unaudited Unaudited * Audited * 6 months to 6 months to Year to 31st 31st July 2007 31st July 2006 January 2007 ______________ ______________ ____________ £'000 £'000 £'000 £'000 £'000 £'000Gains on InvestmentsRealised Gains on disposal of Investments 91 115 115 Unrealised Gains on investment revaluation 3 2,591 3,451 6,369 ______ ______ ______ 2,682 3,566 6,484 IncomeDividends 491 419 825Income from Loans and receivables 355 215 453Fees receivable 406 374 749 ______ ______ ______ OPERATING INCOME 1,252 1,008 2,027 Operating expenses (1,139) (1,106) (2,260) _______ ______ _______ OPERATING PROFIT 2,795 3,468 6,251 Bank Interest receivable and similar income 91 167 347Interest payable and similar charges (15) (17) (33)Carried Interest Provision 6 50 (120) (253)Exchange Movements (11) 20 45 ______ ______ ______ 115 50 106 _______ ______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE SHARE BASED PROVISIONS 2,910 3,518 6,357 Share Based Provisions 7 (131) (94) (222) _______ ______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 2,779 3,424 6,135 Income Tax 5 (588) (957) (1,619) _______ ______ _______PROFIT ON ORDINARYACTIVITIES FOR THE PERIOD 2,191 2,467 4,516 _______ ______ _______ Earnings Per ShareBasic (pence) 0.07 0.08 0.15Diluted (pence) 0.07 0.07 0.13 * Restated for International Financial Reporting Standards, see note 2. CONSOLIDATED BALANCE SHEETAS AT 31ST JULY 2007 Unaudited Unaudited* Audited* Notes 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _______________ £'000 £'000 £'000 £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, 4 6 5fixtures and fittingsInvestments 3 45,305 35,764 38,834Loans and Receivables 4,134 - 3,091 _______ ______ _______ 49,443 35,770 41,930 CURRENT ASSETS Trade and Other receivables 1,271 3,692 1,056Cash and Cash equivalents 1,880 7,424 6,989 _______ ______ _______ 3,151 11,116 8,045 LIABILITIES NON-CURRENTLIABILITIESLoans and Other payables - - - Carried Interest Provision 6 (1,000) (917) (1,050)Deferred Tax Liabilities 5 (7,698) (6,448) (7,110) _______ ______ _______ (8,698) (7,365) (8,160) CURRENT LIABILITIES Trade and Other payables (969) (1,102) (1,209) _______ ______ _______ (969) (1,102) (1,209) _______ ______ _______ NET ASSETS 42,927 38,419 40,606 _______ ______ _______ EQUITY Called up share capital 2,929 2,928 2,929Share premium 9,370 9,361 9,370Shares to be issued 353 94 222Fair Value Reserve 20,216 16,093 18,215Reverse acquisition reserve 393 393 393Distributable Reserve 9,666 9,550 9,477 _______ ______ _______ TOTAL EQUITY 42,927 38,419 40,606 _______ ______ _______ * Restated for International Financial Reporting Standards, see note 2. CONSOLIDATED CASH FLOW STATEMENTFOR THE PERIOD ENDED 31ST JULY 2007 Unaudited Unaudited 31st July 2007 31st July 2006 ______________ ______________ £'000 £'000 Cash inflow/(outflow) from operating activities Interest received on loans to Investees 355 215Dividends Received 491 419Fees Received from investment activity 406 374Operating Expenses (1,138) (1,084)(Increase) / Decrease in Debtors (214) 270Increase / (Decrease) in Creditors (240) (631) ______ ______ Net Cash outflow from operating activities (340) (437) ______ ______ Net cash generated from / (used in) investing activity Purchase of Property, plant and equipment. - -Purchase of Investments (3,929) (3,815)Proceeds from Investments 91 387 ______ ______ Net cash out flow from investing activities (3,838) (3,428) ______ ______ Net cash generated from / (used in) financing activities Repayment of Long - term borrowings - (2,500)Proceeds from issue of shares - 11,019Placement costs - (874)(Payments) / Repayments of Loans to / (from) Investee Companies (995) 2,390Interest received 91 167Interest paid (15) (17) ______ ______ Net cash outflow of financing activities (919) 10,185 ______ ______ Change in Cash and cash equivalents (5,097) 6,320Cash and cash equivalent at beginning of the period 6,989 1,084FX Loss on Escrow accounts (12) 20 ______ ______ Cash and cash equivalents at end of period. 1,880 7,424 RECONCILIATION IN MOVEMENT IN EQUITYFOR THE PERIOD ENDED 31ST JULY 2007 6 months to 6 months to 12 months to 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _________________ £'000 £'000 £'000 Opening total Equity 40,605 25,712 25,712Total Recognised income and expense for period 2,191 2,467 4,516Dividends - - -Issue of Shares - 13,134 13,143Shares to be Issued 131 94 222Placement Costs - (845) (845)Acquisition of subsidiary undertaking - (2,143) (2,143) ______ ______ ______ Total Equity 42,927 38,419 40,605 ______ ______ ______ NOTES TO THE ACCOUNTSFOR THE PERIOD ENDED 31ST JULY 2007 1. ACCOUNTING POLICIES Basis of preparation of financial statements The next annual financial statements of B.P. Marsh and Partners Plc ("theGroup") will be prepared in accordance with International Financial ReportingStandards (IFRS) as adopted for use in the EC applied in accordance with theprovisions of the Companies Act 1985. Accordingly, the interim financial information in this report has been preparedusing accounting policies consistent with IFRS. IFRS is subject to amendment andinterpretation by the International Accounting Standards Board (IASB) and theInternational Financial Reporting Interpretation Committee (IFRIC) and there isan ongoing process for review and endorsement by the European Commission. Thefinancial information has been prepared on the basis of IFRS that the directorsexpect to be applicable as at 31st January 2008. The financial information has been prepared under the historic cost conventionas modified by the revaluation of fair value through the profit and lossinvestments. The principal accounting policies set out below have beenconsistently applied to all periods presented. The financial information contained in this interim statement has not beenaudited or reviewed by the Group's Auditors and does not constitute statutoryaccounts within the meaning of section 240 of the Companies Act 1985. They havebeen prepared using accounting policies applicable to the year ended 31 January2007 apart from IFRS. Those accounts, upon which the Group's Auditors issued anunqualified opinion, have been filed with the Registrar of Companies. IFRS Transition IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theinterim financial information has been prepared on the basis of the followingexemptions: Business combinations prior to 1st January 2006 have not been restated to complywith IFRS 3 'Business Combinations'. IFRS 2 'Share based payments' has been applied retrospectively to those optionsthat were issued after 7 November 2002 and had not vested by 1st January 2006. The disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS are given in note 2. Investments All investments are designated as "fair value through profit or loss" assets andare initially recognised at the fair value of the consideration. They aremeasured at subsequent reporting dates at fair value. The Board conducts the valuations of investments. In valuing investments theBoard applies guidelines issued by the British Venture Capital Association(BVCA). The following valuation methodologies have been used in reaching fairvalue of investments, some of which are in early stage companies: a) at cost, unless there has been a significant round of new equity finance in which case the investment is valued at the price paid by an independent third party. Where subsequent events or changes to circumstances indicate that an impairment may have occurred, the carrying value is reduced to reflect the estimated extent of impairment; b) by reference to underlying funds under management; c) by applying appropriate multiples to the earnings and revenues of the investee company; or d) by reference to expected future cashflow from the investment where a realisation or flotation is imminent. Both realised and unrealised gains and losses arising from changes in fair valueare taken to the income statement for the year, with transaction costs onacquisition or disposal of investment expensed. Taxation The tax expense represents the sum of the tax currently payable and any deferredtax. The tax currently payable is based on the estimated taxable profit for the year.Taxable profit differs from net profit as reported in the income statementbecause it excludes items of income or expense that are taxable or deductible inother 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 havebeen enacted or substantially enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and of liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and it is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporarydifferences and deferred tax assets are recognised to the extent that it isprobable that taxable profits will be available against which deductibletemporary differences can be utilized. Such assets and liabilities are notrecognised if the temporary differences arise from goodwill or from the initialrecognition (other than in a business combination) of other assets andliabilities in a transaction that affects neither the taxable profit nor theaccounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries, except where the Group is able tocontrol the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset realised. Deferred tax ischarged or credited to profit or loss, except when it relates to items chargedor credited directly to equity, in which case the deferred tax is also dealtwith in equity. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority andthe Group intends to settle its current assets and liabilities on a net basis. Bonus provision There is no contractual obligation on the company to pay bonuses to employeesand as such no provision has been made in the operating expenses within theincome statement for the period to 31st July 2007 (as per the interims to 31stJuly 2006). However, the income statement to 31st January 2007 does include suchprovision where discretionary awards were made for the year-end. 2. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) B.P. Marsh & Partners Plc reported under UK GAAP in its previously publishedfinancial statements for the year ended 31st January 2007. The analysis belowshows a reconciliation of net assets and profit as reported under UK GAAP as at31 January 2007 to the revised net assets and profits under IFRS as reported inthese financial statements. In addition, there is a reconciliation of net assetsunder UK GAAP to IFRS at the transition date for this company, being 1 February2006. There is also a reconciliation of net assets under UK GAAP to IFRS at thecomparative interim date, being 31 July 2006. Reconciliation of Equity Previous Effect of IFRSat 31st January 2007 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 5 - 5Investments 37,784 1,049 38,833Loans and Receivables 3,091 - 3,091 ______ _____ ______ 40,880 1,049 41,929 ______ _____ ______ CURRENT ASSETS Trade and Other receivables 1,056 - 1,056Cash and Cash equivalents 6,989 - 6,989 ______ _____ ______ 8,045 - 8,045 ______ _____ ______ LIABILITIES NON-CURRENT LIABILITIESLoans and Other payables - - -Carried Interest Provision - (1,050) (1,050)Deferred Tax Liabilities - (7,110) (7,110) ______ _____ ______ - (8,160) (8,160) ______ _____ ______ CURRENT LIABILITIES Trade and Other payables (1,209) - (1,209) ______ _____ ______ NET ASSETS 47,716 (7,111) 40,605 ====== ===== ====== EQUITY Called up share capital 2,929 - 2,929Share premium 9,370 - 9,370Shares to be issued 222 - 222Fair Value Reserve 25,324 (7,110) 18,214Reverse acquisition Reserve 393 - 393Distributable Reserve 9,478 (1) 9,477 _______ _______ ______ TOTAL EQUITY 47,716 (7,111) 40,605 ======= ======= ====== Reconciliation of Equity Previous Effect of IFRSat 31st July 2006 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 6 - 6Investments 34,847 917 35,764Loans and Receivables - - - ______ ______ ______ 34,853 917 35,770 ______ ______ ______ CURRENT ASSETS Trade and Other receivables 3,692 - 3,692Cash and Cash equivalents 7,424 - 7,424 ______ ______ ______ 11,116 - 11,116 ______ ______ ______ LIABILITIES NON-CURRENT LIABILITIESLoans and Other payables - - -Carried Interest Provision - (917) (917)Deferred Tax Liabilities - (6,448) (6,448) ______ ______ ______ - (7,365) (7,365) ______ ______ ______ CURRENT LIABILITIES Trade and Other payables (1,102) - (1,102) ______ ______ ______ NET ASSETS 44,867 (6,448) 38,419 ====== ====== ====== EQUITY Called up share capital 2,928 - 2,928Share premium 9,361 - 9,361Shares to be issued 94 - 94Fair Value Reserve 22,541 (6,448) 16,093Reverse acquisition Reserve 393 - 393Distributable Reserve 9,550 - 9,550 ______ ______ ______ TOTAL EQUITY 44,867 (6,448) 38,419 ====== ====== ====== Reconciliation of Equity Previous Effect of IFRSat 31st January 2006 GAAP Transition to IFRS £'000 £'000 £'000 ASSETS NON-CURRENT ASSETS Office equipment, fixtures and fittings 8 - 8Investments 27,700 797 28,497Loans and Receivables 3,231 - 3,231 ______ ______ ______ 30,939 797 31,736 ______ ______ ______ CURRENT ASSETS Trade and other receivables 3,413 - 3,413Cash and Cash equivalents 1,084 - 1,084 ______ ______ ______ 4,497 - 4,497 ______ ______ ______ LIABILITIES NON-CURRENT LIABILITIESLoans and Other payables (2,500) - (2,500)Carried Interest Provision - (797) (797)Deferred Tax Liabilities - (5,491) (5,491) ______ ______ ______ (2,500) (6,288) (8,788) ______ ______ ______ CURRENT LIABILITIES Trade and Other payables (1,733) - (1,733) NET ASSETS 31,203 (5,491) 25,712 EQUITY Called up share capital 2,520 - 2,520Share premium 17 - 17Shares to be issued - - -Fair Value Reserve 19,209 (5,491) 13,718Reverse acquisition Reserve - - -Distributable Reserve 9,457 - 9,457 ______ ______ ______ TOTAL EQUITY 31,203 (5,491) 25,712 ====== ====== ====== Reconciliation of net ProfitsAs at 31st January 2007 £'000 Profit under UK GAAP 20Unrealised Gains on Investments 6,369Stamp Duty expenses (1)Carried Interest Provision (253)Deferred Taxation (1,619) ______ Profit Under IFRS 4,516 ====== Reconciliation of net ProfitsAs at 31st July 2006 £'000 Profit under UK GAAP 92Unrealised Gains on Investments 3,452Carried Interest Provision (120)Deferred Taxation (957) ______ Profit Under IFRS 2,467 ====== 3. NON-CURRENT ASSET INVESTMENTS Group Investments 31st July 2007 31st July 2006 31st January 2007 ______________ ______________ _________________ £'000 £'000 £'000 At valuation At 1st February 38,834 28,497 28,497 Additions 3,930 3,815 3,968 Disposal (50) - - Movement in valuation 2,591 3,452 6,369 ______ ______ ______ At 31st January 45,305 35,764 38,834 ====== ====== ====== At cost At 1st February 12,460 8,491 8,491 Additions 3,930 3,815 3,969 Disposal (50) - - ______ ______ ______ At 31st January 16,340 12,306 12,460 ====== ====== ====== The investee companies, which are registered in England except Summa InsuranceBrokerage S.L. (Spain), Preferred Asset Management Ltd (Jersey) and New HorizonsLtd (Isle of Man), are as follows : % Holding Date Aggregate Post Tax Of share audited capital Profit/(loss) capital information and for the Principal Name of company Available to Reserves year activity _________ ___________ ________ _________ _________ £ £ Berkeley Insurance 19.90 31.10.06 80,000 24,000 Insurance (Holdings) Limited holding company Besso Holdings Limited 23.55 31.12.06 8,580,455 125,635 Investment holding company HQB Partners Limited 28.00 31.12.06 304,570 302,484 Investor relations consultants Hyperion Insurance 27.89 30.09.06 11,318,000 2,946,000 Insurance Group Limited holding company JMD Specialist Insurance 25.00 31.10.06 150,787 35,260 Insurance Services Ltd sector consultants LEBC Holdings Ltd 22.50 31.05.06 701,201 402,834 Independent Financial Advisory Company Paterson Martin Limited 22.50 31.12.06 504,113 110,016 Actuarial insurance/ reinsurance consultants Portfolio Design Group 20.00 31.12.06 5,228,504 1,672,080 Fund International Limited managers of traded endowment policies Morex Commercial Ltd 20.00 31.07.06 (493,864) 788,943 Trading in secondary life policies Preferred Asset 20.00 30.09.06 267,753 72,672 Fund Management Ltd management company New Horizons Ltd 20.00 31.12.04 654 Nil Investment (formerly Surrenda-Link holding Nominees Ltd) company Principal Investment 18.57 31.12.06 5,394,000 1,435,000 Fund Holdings Limited management company Public Risk Management 44.00 31.12.06 (277,057) 3,943 Public Limited sector risk consultants Summa Insurance 35.00 31.12.05 385,361 (126,648) Consolidator Brokerage, S.L. of regional insurance brokers Under FRS 25 the Paterson Martin Limited accounts have included the company's22.5% interest as a long-term creditor. As this is in reality an equityinvestment the aggregate capital and reserves shown have therefore been adjustedto include this as equity and therefore part of the total shareholders' funds. Under FRS 25 the HQB Consulting Limited accounts have included the company's 28%interest as a long-term creditor. As this is in reality an equity investment theaggregate capital and reserves shown have therefore been adjusted to includethis as equity and the profit has been adjusted by the dividend paid out. Under FRS 25 the Hyperion Insurance Group Limited accounts have included theirPreferred Ordinary Shares as a long-term creditor. As this is in reality equitythe aggregate capital and reserves shown have therefore been increased by£4,125,000 to include this as equity and the profit has been increased by£200,000, which relates to the dividend paid out. 4. LOAN COMMITMENTS On 31st January 2005 the Group entered into an agreement to provide a loanfacility of €1,500,000 to Summa Insurance Brokerage S.L, an associated companyand a company incorporated in Spain. On 29th January 2007 this was increased to€2,000,000. As at 31st January 2007 €400,000 of this facility had been drawndown with the remainder being drawn down on 19th February 2007. On 5th March 2007 the company entered into a loan agreement to provide a loanfacility of £250,000 to JMD Specialist Insurance Services Ltd an associatedcompany. At 31st July 2007 the loan facility had not been drawn down. On 15th April 2004 the Group entered into an agreement to provide a loanfacility of £300,000 to Paterson Martin Limited, an associated company. On 31stJuly 2007 £200,000 of this facility had been drawn down. This loan is repayableon 31st March 2008. On 7th February 2005 the Group entered into an agreement to provide a loanfacility of £140,000 to HQB Partners Limited, an associated company. As at 31stJuly 2007 £80,000 of this facility had been drawn down. 5. CONTINGENT LIABILITIES The Directors estimate that, if the Group were to dispose of all its investmentsat the amount stated in the Balance Sheet, £7.7m (2006: £6.4m) of tax on capitalgains would become payable by the Group at the current corporation tax rate of30%. No account has been made of the proposal to reduce this rate to 28% fromApril 2008. The Group has entered into long-term incentive arrangements with certainemployees. Provided the employees remain in employment with the Group as at 1stNovember 2010 the Group has agreed to pay bonuses totaling £250,000 plusEmployers' National Insurance. £50,000 of this is currently funded through anEmployee Benefit Trust. On 10th April 2007 the Group acquired a 22.5% shareholding in LEBC HoldingsLimited for an initial consideration of £1,783,250 with a potential furtherpayment of up to £182,250 based upon their subsidiary company's audited 31st May2007 accounts. 6. DIRECTOR'S INTEREST IN CONTRACTS S.S. Clarke is entitled to a maximum of 20% of any gain, after deductingexpenses and following the repayment of all loans, the redemption of allpreference shares, loan stock and equivalent finance provided by the Group, onthe sale of certain agreed investments of the Group and its subsidiaries. No amounts were paid under this contract during the year (2006: £nil). In the accounts to 31st January 2007 the valuations of these certain agreedinvestments of the Group and its subsidiaries were reduced by the respectiveentitlements to S.S. Clarke. However, under IFRS a provision has now beenincluded within the balance sheet with any period movements expensed through theincome statement and thus the investments are now shown gross. 7. SHARE BASED PAYMENT ARRANGEMENTS During the year ended 31 January 2007, B.P. Marsh & Partners Plc entered into ashare-based payment arrangement with certain employees and advisors. The detailsof the arrangements are described in the following table: Nature of the Share options Share options Share arrangement granted to granted to appreciation advisors advisors rights _____________ _____________ _____________ ________________ Date of grant 2 February 2006 9 February 2006 19 April 2006 Number or instruments granted 17,857 17,857 4,392,921 Exercise price (pence) 140.00 140.00 140.00 Share price at grant (pence) 150.50 150.50 150.50 Vesting period (years) 5 5 Units vest 10 days after results to 31/01/09 reported, i.e. approx 3 years Vesting conditions None None 50% vest if IRR over exercise price exceeds 5% and 100% vest if IRR exceeds 8% after 3 years. Between 5% and 8% it is pro-rata. Option Life (years) 5 5 3.34 Expected volatility 15% 15% 15% Risk free rate 4.2% 4.15% 4.52% Expected dividends expressed as a dividend yield 0% 0% 0% Settlement Shares Shares Shares % expected to vest (based upon leavers) 100% 100% 80% Number expected to vest 17,857 17,857 3,514,337 Fair value per granted instrument (pence) 41.90 41.20 23.50 Charge for period ending 31 July 2007 (£) - - £130,667 Valuation model Black-Scholes Black-Scholes Trinomial The Company admitted its shares for trading on AIM on 2nd February 2006 andconsequently, at the date of valuation of the options, little historical pricedata existed. As a consequence the volatilities of quoted companies that thedirectors considered to be the most comparable to the Group were used todetermine the Group's expected volatility over the life of the options. The risk free rates are based on the yield on UK Government Gilts of a termconsistent with the assumed option life. No options were exercised during the period. 878,583 share appreciation rightsrepresenting 20% of the available units originally granted were forfeited before31st January 2007. The expected number of units to vest has therefore beenadjusted accordingly with no further expectation of forfeiture over theremaining life of the option. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
B.p Marsh