B.P. Marsh & Partners PLC Annual Report 2015

FY2015 Annual Report · B.P. Marsh & Partners PLC

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B. P. M A R S H & P A R T N E R S

P L C

2 0 1 5 A N N U A L R E P O R T

C O M P A N Y I N F O R M A T I O N

DIRECTORS
Brian Marsh OBE (Chairman)
Jonathan Newman (Group Finance Director)
Daniel Topping (Director)
Camilla Kenyon (Director)
Alice Foulk (Director)
Campbell Scoones (Non-executive Deputy Chairman)
Stephen Clarke (Non-executive)
Philip Mortlock (Non-executive)
Pankaj Lakhani (Non-executive)

COMPANY SECRETARY
Sinead O’Haire

COMPANY NUMBER
05674962

REGISTERED OFFICE
2nd Floor, 36 Broadway
London SW1H 0BH

AUDITORS
Rawlinson & Hunter Audit LLP
8th Floor, 6 New Street Square
London EC4A 3AQ

BROKER AND NOMINATED ADVISER
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF

REGISTRAR
Capita Asset Services
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU

C O N T E N T S

GROUP PROFILE

CHAIRMAN’S STATEMENT

EQUITY INVESTMENTS REVIEW

DIRECTORS’ REPORT, STRATEGIC REPORT AND

CONSOLIDATED FINANCIAL STATEMENTS

DIRECTORS

CORPORATE GOVERNANCE

REPORT OF THE REMUNERATION COMMITTEE

GROUP REPORT OF THE DIRECTORS

GROUP STRATEGIC REPORT

INDEPENDENT AUDITOR’S REPORT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED & COMPANY STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

COMPANY STATEMENT OF CASH FLOWS

CONSOLIDATED & COMPANY STATEMENTS OF CHANGES IN EQUITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

G R O U P

P R O F I L E

The B.P. Marsh Group (the “Group”) is a niche venture capital provider to early stage financial services businesses.
It will consider investing in start-ups, management buy-outs, management buy-ins, hive-offs and similar
opportunities. It is also able to provide follow-on funding for successful companies in its portfolio when required for
further growth.

The Group typically invests up to £3 million in financial service investment opportunities based in the United
Kingdom, but will also consider opportunities in Europe, North America, Australia and occasionally elsewhere. It
likes to invest in people businesses with good management.

The Group does not seek to impose exit pressures on its investee companies, but prefers to work with management
to develop a mutually acceptable exit route.

The Group has a considerable bank of experience in the financial services sector and seeks to use this experience to
add value to its investments. It is also able to provide consultancy and administrative services to its portfolio of
investments when required.

The Group’s aim is to be the capital provider of choice to the financial services intermediary sector.

IT IS NOT THE POWER OF MONEY THAT MAKES

AN INVESTMENT A SUCCESS; IT IS THE POWER OF

THE IDEAS BEHIND IT.

C H A I R M A N ’ S

S T A T E M E N T

B.P. Marsh & Partners Plc, the niche venture capital provider to early stage businesses, announces its audited Group
final results for the year to 31st January 2015.

The highlights of the results are:
• Increase in the Equity Value of the Portfolio of 15.5% over the year
• Net Asset Value of £63.0m (31st January 2014: £58.9m)
• Net Asset Value increase to 216p per share (31st January 2014: 202p)
• Total return to Shareholders in the year of 8.2% (2014: 6.9%)
• Two new investments made during the year, one in the UK and one in South Africa
• Consolidated profit after tax of £4.9m (31st January 2014: £3.8m)
• Average Net Asset Value annual compound growth rate of 11.3% since 1990
• Final Dividend of 2.75p per share declared
• Cash and treasury funds balance of £7.9m

I am pleased to present the audited Consolidated Financial Statements of B.P. Marsh & Partners Plc for the year
ended 31st January 2015.

At B.P. Marsh we spend a great deal of time working with our 13 partner companies on their businesses and the
challenges they face. These companies, in which we have substantial holdings, together employ around 4,500 people
and I would like, in this Statement, to express my appreciation to these personnel for all their work, without which
our own good results and progress would of course not have been possible.

In this year we have again achieved a steady growth in the Equity Value of the Portfolio, with an increase of 15.5%
since 31st January 2014, excluding realisation proceeds.

Our remaining £7.3m holding in Hyperion Insurance Group Limited is subject to a Call Option at that price until
realisation in July 2016. If this item is excluded from the calculation (as its value is capped) the Equity Value of our
Portfolio has increased by 19.5% over the year.

The Group has increased its Net Asset Value to £63.0m (216p per share), with an average annual compound Net
Asset Value growth rate of 11.3% after running costs, realisations, losses and distributions and having made an
appropriate allowance for deferred corporation tax since the Group’s establishment in 1990 (excluding £10.1m
raised on f lotation).

The Group is in a strong position, having adequate cash to make new investments, provide follow on funding for
existing investments and to reward our shareholders. As such the Board has recommended a final dividend of 2.75p
per share for the year ended 31st January 2015, subject to Shareholder approval at the Company's next Annual
General Meeting. It remains the aspiration of the Board to continue to pay this level of dividend for at least the
current financial year ending 31st January 2016.

We have made two new investments during the year, totalling £1.7m in equity financing and committed £0.3m in
loan funding, both of which fall within our heartland of insurance intermediaries.

We have continued to diversify the portfolio geographically, following the Group’s investments in Australia, and
have established Bastion Reinsurance Brokerage (PTY) Limited, a start-up Reinsurance Broker based in South
Africa specialising in the provision of reinsurance solutions over a number of complex issues.

Although B.P. Marsh is firmly established in London, we estimate that as much as 75% of our business originates
overseas. We are pleased about this as it is an aspect of the work undertaken by our partner companies which we
know well. Apart from our own direct investments in Spain, Australia and South Africa, we are much involved in
developing business alongside our investee companies in, to name just a few, Turkey, Brazil, and Dubai and we are
presently looking at further developments in several other countries.

S
N
O
I
L
L
I
M
£

G R O U P

V A L U A T I O N S

62.97

58.92

59.84

55.50

44.17

40.61

22.10

31st Jan 05

31st Jan 07*

31st Jan 10

31st Jan 13

31st Jan 14

31st July 14

31st Jan 15

YEAR ENDED

NET OF DEFERRED TAX

YEAR ENDED SIX MONTHS ENDED

*NB: The valuation at 31st January 2007 includes £10.1m net proceeds raised on AIM.

C H A I R M A N ’ S

S T A T E M E N T

BUSINESS UPDATE

FINANCIAL PERFORMANCE
The Net Asset Value of the Group increased by 6.9% over the year to £63.0m, or 216p per share (2014: £58.9m or
202p per share). The Group’s equity portfolio increased by 15.5% on a like-for-like basis with 2014, including a
£7.3m holding in Hyperion Insurance Group, which is capped. Excluding this the remaining portfolio increased by
19.5% over the year.

Consolidated profit after tax increased by 28.8% to £4.9m (2014: £3.8m) in the year. Consolidated pre-tax profit
was £5.9m (2014: £4.1m), of which £5.1m was derived from unrealised gains on revaluing the investment portfolio
in line with current market conditions, an increase of 30.8% on the previous year (2014: £3.9m). The Group’s
strategy is to cover expenses from the portfolio yield, and on an underlying basis (excluding portfolio movement)
this was achieved with a pre-tax profit of £0.8m for the year (2014: £0.2m).

The Group invested £1.7m in new equity investments and £1.4m for follow-on equity financing to its existing
portfolio during the year. In addition the Group provided net new loans for working capital to the portfolio of
£0.4m. Cash funds (including treasury funds) at 31st January 2015 were £7.9m.

Income from investments increased by 24% to £2.8m over the year (2014: £2.3m) as the Group continues to invest
in new and existing opportunities. Operating expenses, including costs of making new investments, were 9% higher
during the year at £2.2m (2014: £2.0m) in line with the increased portfolio.

The Group’s treasury funds increased by 4.7% over the year (net of fund management charges) which compared
favourably with the FTSE 100 increasing by 3.7% over the same period.

The Group continued to maintain a 2.75p per share dividend payment during the year, as announced previously
(2014: 2.75p per share). Total shareholder return for the year was therefore 8.2% (2014: 6.9%) including the
dividend payment and the Net Asset Value increase. The Group has delivered an annual compound growth rate of
11.3% in Net Asset Value after all costs, realisations, losses, distributions and deferred tax since 1990 (excluding the
£10.1m raised on f lotation).

INVESTMENT STRATEGY
The Group typically invests amounts of up to £3m and 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 7 years. The Group requires its investee companies to adopt certain minority shareholder
protections and appoint a director to its board. The Group’s successful track record is based on a number of factors
that includes a robust investment process, management’s considerable sector experience and a f lexible approach to
exit.

The Group’s well-respected contacts within the insurance intermediary sector ensure access to a wide variety of new
investment opportunities and enable discussions on these to be initiated at an early stage. The Group has seen a regular
flow of new business opportunities within its heartland of interest and is continuing discussions on a number of these.

The Group received 59 relevant new investment proposals during the year, of which 24% warranted continued
detailed investigation and 3% (2 new investments) were completed.

Of the proposals, 52% fell within the insurance sector, the area of the Group’s specialism. The opportunities have
ranged from start-ups to investments in established businesses.

Throughout the period M&A activity within the Lloyd’s Insurance Market itself has been very active, especially in
regard to Lloyd’s larger broking entities. Transactions involving the larger companies within the Insurance Market
tend to create opportunities for the Group either directly or via its investee companies.

At year end, the Group had £7.9m in cash and treasury funds, of which £6.8m is currently available for new
investment opportunities after commitments.

C H A I R M A N ’ S

S T A T E M E N T

NEW INVESTMENTS

Bastion Reinsurance Brokerage (PTY) Limited (“Bastion”)
In December 2014, the Group acquired a 35% Cumulative Preferred Ordinary shareholding in Bastion, a start-up
Reinsurance Broker based in South Africa, for a total cash consideration of £0.1m. In addition to the equity
investment, the Group provided Bastion with a loan facility of £0.34m, all of which has, since the year end, been
drawn down to support working capital requirements.

Bastion provides specialist reinsurance solutions to a number of insurance companies and managing general agents
in Africa. The Group undertook this investment as it was an opportunity to gain a foothold in the South African
Reinsurance Market, whilst also backing a management team with a strong track record.

Ian Snowball, the Chairman of Bastion, has worked for various insurance and reinsurance businesses both in the
South African and Lloyd’s of London markets and has a 30 year track record in the insurance industry with
considerable experience in the mid-market insurance sector.

Bastion’s CEO, Lance Brogden, also has wide-ranging experience in the South African reinsurance and financial
services sectors, having worked for a number of insurance related and multinational organisations over the past 20
years.

Nexus Underwriting Management Limited (“Nexus”)
On 14th August 2014 the Group subscribed for a 5% Preferred Ordinary shareholding in Nexus, one of the largest
independent Specialty Managing General Agents in the London market and 12th largest Managing General Agency
in the UK, for a total consideration of £1.55m. The funds have been used to assist the company in its growth
ambitions.

Founded in 2008 by Colin Thompson, its CEO, Nexus has grown rapidly in the six years since inception; from a
standing start it now writes over US$350m Gross Written Premium annually.

Nexus has two operating subsidiaries, Nexus Underwriting Limited, which underwrites Speciality Insurance
Products (Directors & Officers, Professional Indemnity, Financial Institutions and Accident & Health), and Nexus
CIFS Limited, which specifically covers Trade Credit Insurance. Nexus CIFS Limited has recently won the title of
Credit Insurer of the Year 2015 at the Institute of Credit Management Awards.

The Group considered that the opportunity to invest in a well-established and fast-growing business, with on-going
development potential and an experienced and ambitious management team, justified a smaller minority stake (at
5%) than is typical for the Company.

Bulwark Investment Holdings (PTY) Limited (“Bulwark”)
Following the year end, in April 2015 the Group, alongside its existing South African Partners, established a new
venture, Bulwark, of which the Company owns 35%. This South African based holding company, funded via a
£0.5m loan facility from the Company, establishes Managing General Agents in South Africa.

To date £0.15m of the loan facility has been drawn upon, and Bulwark has established two new Managing General
Agents, Preferred Liability Underwriting Managers (PTY) Limited (“Preferred”) and Mid-Market Risk
Acceptances (PTY) Limited (“MMRA”).

Preferred is a Managing General Agent which writes corporate and commercial liability business. Since it
commenced writing business, Preferred has exceeded budget and looks well placed to fulfil the Group’s
expectations. MMRA is a Managing General Agent which writes mid-market commercial property risk.
Performance of MMRA to date has been encouraging.

This investment, alongside our existing South African Partners, illustrates the Company’s view that the South
African insurance market offers substantial growth opportunities, given its continued and increasing exposure to the
London Insurance market.

C H A I R M A N ’ S

S T A T E M E N T

DISPOSALS

Portfolio Design Group International Limited
The Group disposed of its respective stakes, to its fellow shareholders, in Portfolio Design Group International
Limited, Morex Commercial Limited, Preferred Asset Management Limited and New Horizons Nominees Limited
(together the “PDGI Businesses”) on 1st May 2014 for a combined cash consideration of £1.3m.

The Group considered this to be an opportune moment to exit and in keeping with the Company’s strategy,
delivering an internal rate of return of 24.5% per annum, including all income received.

This divestment delivered cash to the Group which has enabled it to undertake new opportunities. It has also allowed
the PDGI Businesses to restructure their shareholder base accordingly and pursue new ventures as they see fit.

PORTFOLIO DEVELOPMENTS

UNITED KINGDOM

Besso Insurance Group Limited (“Besso”)
Following the year end, Besso announced a number of changes to its Board structures positioning Besso for its next
phase of growth and expansion.

Howard Green, Chairman of Besso Property, will become CEO of Besso Limited. Mr. Green joined Besso in 1985
and is one of the founding members and architects of the business. He has nearly 50 years’ experience in the
insurance industry working in the Lloyd’s market and specialising in property.

Roddy Caxton-Spencer (Chairman of Besso International), Robert Dowman (Head of Besso Global Casualty) and
Russell Nichols (Head of Besso Global Property), have been appointed to the Besso Insurance Group Board.

John Hudson (Managing Director of Besso Marine), has been appointed as a Director of Besso Limited.

Colin Marshall, a founding partner of the Group, has announced his retirement as a Director of Besso Insurance
Group and as CEO of Besso Limited.

Hyperion Insurance Group Limited (“Hyperion”)
Hyperion has announced its results for the year to 30th September 2014. Total revenue was up 19% to £199.0m,
whilst EBITDA (before non-recurring and acquisition costs and discontinued operations) increased by 20% to
£43.2m, being an EBITDA margin of 21.7%.

In April 2015 Hyperion completed a merger with R K Harrison Holdings Limited. Following this merger Hyperion
has become the world’s largest employee-owned insurance and reinsurance intermediary group. The Company
presently has a 1.61% shareholding in the combined group.

LEBC Holdings Limited (“LEBC”)
LEBC continues to perform well in the post Retail Distribution Review environment. Its trading subsidiary LEBC
Group Limited published its 30th September 2014 year-end results declaring a pre-tax profit of £1.10m for the year,
a 43% increase in profit over the year-ended 30th September 2013 (£0.77m).

The independent financial adviser firm, which has 14 branches across the United Kingdom, also increased turnover
by 8.8%, from £11.29m in 2013 to £12.28m in 2014. LEBC is continuing this excellent momentum into 2015. It
is envisaged that the increased f lexibility for pensions introduced in 2015 will lead to increased demand for
independent advice in future for retirement planning.

During the year, following the provision of loan funding to an Employment Benefit Trust, the Group assisted LEBC
in the establishment of a management incentive scheme. This scheme has further aligned the interests of the senior
management team with that of the Company positioning LEBC to build upon its current momentum and growth.

C H A I R M A N ’ S

S T A T E M E N T

Trireme Insurance Group Limited (“Trireme”)
On 18th August 2014 US Risk (UK) Limited changed its name to Trireme Insurance Group Limited. The
underlying businesses of Oxford Insurance Brokers Limited and James Hampden International Insurance Brokers
Limited have retained their names. This re-branding coincided with Trireme moving into new offices at 6 Bevis
Marks, enabling the Trireme businesses to operate from a single site.

On 29th May 2014, the Group subscribed to its pro-rata proportion of a £1.2m Rights Issue in Trireme. Total
consideration paid amounted to £0.35m for newly issued B Ordinary Shares with the Group maintaining its
shareholding. The Rights Issue was undertaken to provide financial support for the on-going development of the
business.

Walsingham Motor Insurance Limited (“Walsingham”)
In February 2015, the Group provided a further £0.3m of equity funding to Walsingham, and acquired an additional
10.5% in the business. This increases the Group’s stake in Walsingham to 40.5%. The additional funding provided
will be used for the on-going development of the business.

In April 2015 Walsingham established a new Fleet Facility with capacity from the New India Assurance Company
Limited. This new facility will allow Walsingham to enter its next stage of development and will provide a sound
building block for growth.

EUROPE

Summa Insurance Brokerage, S.L (“Summa”)
In December 2014, the Group acquired a further 28.625% equity stake in Summa, the Spanish insurance broker
consolidator, for a cash consideration of €1.25m, increasing the Group’s stake in Summa to 77.25%.

This was a commercially prudent opportunity to provide an exit for a non-strategically aligned third party
shareholder which will allow Summa’s management team to wholly focus on taking advantage of its strong position
within the Spanish Insurance Market. The Group believes that this further acquisition will be value accretive and is
in the best interests of Summa and the Company.

The Board of B.P. Marsh considers this majority stake as an exceptional holding. Our ongoing strategy remains to
acquire minority equity stakes in early stage financial services businesses and remains unaltered. In respect of this
exception, the Group has taken advantage of a new amendment to IFRS 10, which exempts an investment entity
from having to consolidate a subsidiary.

In 2014 the Spanish economy grew by 2.6% and in 2015 Spain is expected to be one of the fastest growing
economies within the Eurozone. The Board believes that Summa is well positioned in this stabilising market and
looks forward to working with Summa’s management team to bring about growth.

For the year ended 31st December 2014, Summa reported revenues of €5.57m, with an EBITDA of €1.20m.
Performance over 2015 is encouraging, and with the substantial restructuring undertaken by Summa throughout
2014, it is envisaged that Summa will build upon its now solid foundations.

AUSTRALIA

The Group’s two investments in Australia, Sterling Insurance Holdings (PTY) Limited and MB Prestige Holdings
(PTY) Limited, continue to perform in line with or above the Group’s expectations at the current time, and
continue to experience growth across their two areas of expertise.

This is notwithstanding the fact that competition remains strong in the Australian market with recent market
entrants looking to establish themselves whilst the larger players continue to focus on both driving operational
efficiencies and growth, against a backdrop of broadly stagnant rate increases.

C H A I R M A N ’ S

S T A T E M E N T

Nevertheless the Group’s investments in Australia benefit from it being a safe and secure domicile in which to
transact business with a transparent tax and legal system.

SHARE BUYBACKS
As part of the Group’s efforts to reduce the Share Price discount to Net Asset Value, during the financial year the
Group undertook a number of low volume daily share buybacks, taking advantage of the window of opportunity
when the Group’s Share Price represented a significant discount to Net Asset Value. Since 1st February 2014, the
Group has acquired 63,000 shares for a total cash consideration of £82,450 which has helped to underpin the share
price. Of the 63,000 shares, 59,040 are currently held in Treasury.

DIVIDEND
The Group is pleased to announce that the Board has recommended a final dividend of 2.75p per share for the year
ended 31st January 2015, subject to Shareholder approval at the Company’s next Annual General Meeting. If
approved the recommended dividend will be payable on 24th July 2015 to all the shareholders on the register of
members at the close of business on the record date of 26th June 2015.

It remains the Board’s aspiration to maintain at least this level of dividend for the current year ending 31st January
2016, subject to ongoing review and approval by the Board and the Shareholders.

The Management team remains positive about the Company’s ability to generate long term returns from the
existing investment portfolio, alongside an interesting pipeline of new investment opportunities.

BOARD COMPOSITION
In January 2015 the Board was pleased to announce the appointment of Campbell Scoones as Non-Executive
Deputy Chairman. Campbell was originally appointed as a Non-Executive Director of B.P. Marsh in April 2013.

The Board was also pleased to appoint Alice Foulk to the Board as an Executive Director in February 2015, in order
to ref lect her increased involvement and contribution.

On 6th November 2014, Natasha Dunbar resigned from the Group after a period of service of twenty years. The
Board expresses its thanks to her for all her efforts over the years.

Following the above, Pankaj Lakhani was asked to join the Board as a Non-Executive Director, as well as a member
of the Remuneration Committee and Valuation Committee with effect from 21st May 2015.

Pankaj Lakhani, aged 61, has over 40 years’ experience within the Global Insurance Sector, having worked at the
Marsh McLennan Group, Admiral Underwriting and Victor O. Schinnerer & Company Limited.

SUMMARY
Since our establishment over a quarter century ago and now approaching our first decade of listed status, we
have cash in hand to make new investments and reward shareholders. We have achieved annual compound
growth of 11.3% and our Net Asset Value per share has increased to 216p. The Group looks forward to the year
ahead with confidence and this is ref lected in our aspiration to maintain a dividend of at least 2.75p per share
in the current year.

Brian Marsh OBE
2nd June 2015

E Q U I T Y

I N V E S T M E N T S R E V I E W

As at 31st January 2015 the Group’s equity interests were as follows:

Bastion Reinsurance Brokerage (PTY) Limited
(www.bastionre.co.za)
In December 2014 the Group invested in Bastion Reinsurance Brokerage (PTY) Limited (“Bastion”), a start-up
Reinsurance Broker based in South Africa. Established in May 2013 by its CEO and Chairman, Bastion specialises
in the provision of reinsurance solutions over a number of complex issues, engaged by various insurance companies
and managing general agents.
Date of investment: December 2014
Equity stake: 35%
31st January 2015 valuation: £155,000

Besso Insurance Group Limited
(www.besso.co.uk)
In February 1995 the Group assisted a specialist team departing from insurance broker Jardine Lloyd Thompson
Group in establishing Besso Holdings Limited. The company specialises in insurance broking for the North
American wholesale market and changed its name to Besso Insurance Group Limited in June 2011.
Date of investment: February 1995
Equity stake: 37.94%
31st January 2015 valuation: £10,899,000

The Broucour Group Limited
(www.turnerbutler.co.uk)
(www.ownersellers.com)
In March 2008 the Group assisted in establishing a business sales platform that provides valuation and negotiation
services for the sale of SME businesses in the sub £3m sector. In July 2012 Broucour was formed as a new holding
company, and the Group financed the acquisition of Turner Butler.
Date of investment: March 2008
Equity stake: 49.0%
31st January 2015 valuation: £291,000

Hyperion Insurance Group Limited
(www.hyperiongrp.com)
The Group first invested in Hyperion in 1994. Hyperion owns, amongst other things, an insurance broker
specialising in directors’ and officers’ (“D&O”) and professional indemnity (“PI”) insurance. In 1998 Hyperion set
up an insurance managing general agency specialising in developing D&O and PI business in Europe. In July 2012
Hyperion acquired Windsor and in July 2013 the Group sold 80% of its holding to General Atlantic in July 2013,
with the remaining holding being valued at the agreed option price. In April 2015 Hyperion completed a merger
with R K Harrison Holdings Limited. Following this merger Hyperion has become the world’s largest employee-
owned insurance and reinsurance intermediary group and the Group’s shareholding is now, post year-end, 1.61%.
Date of investment: November 1994
Equity stake: 2.24%
31st January 2015 valuation: £7,310,000

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: 34.91%
31st January 2015 valuation: £6,983,000

E Q U I T Y

I N V E S T M E N T S R E V I E W

MB Prestige Holdings (PTY) Limited
(www.mbinsurance.com.au)
In December 2013 the Group invested in MB Prestige Holdings (PTY) Ltd, the parent company of MB Insurance
Group (PTY) a Managing General Agent, headquartered in Sydney, Australia. MB Group is recognised as a market
leader in respect of prestige motor vehicle insurance in all mainland states of Australia.
Date of investment: December 2013
Equity stake: 40.0%
31st January 2015 valuation: £1,288,000

Nexus Underwriting Management Limited
(www.nexusunderwriting.com)
In August 2014 the Group invested in Nexus Underwriting Management Limited (“Nexus”), the independent
specialty Managing General Agency, founded in 2008. Through its two operating subsidiaries, Nexus Underwriting
Limited and Nexus CIFS Limited, Nexus specialises in Directors & Officers, Professional Indemnity, Financial
Institutions, Accident & Health and Trade Credit Insurance.
Date of investment: August 2014
Equity stake: 5.0%
31st January 2015 valuation: £1,554,000

Randall & Quilter Investment Holdings Limited
(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 wholly acquired.
Date of investment: January 2010
Equity stake: 1.33%
31st January 2015 valuation: £1,243,000

Sterling Insurance (PTY) Limited
(www.sterlinginsurance.com.au)
In June 2013, in a joint venture enterprise alongside Besso (Neutral Bay Investments Limited), the Group invested
in Sterling Insurance (PTY) Limited, an Australian specialist underwriting agency offering a range of insurance
solutions within the Liability sector, specialising in niche markets including mining, construction and demolition.
Date of investment: June 2013
Equity stake: 19.70%
31st January 2015 valuation: £2,265,000

Summa Insurance Brokerage, S. L.
(www.grupo-summa.com)
In January 2005 the Group provided finance to a Madrid-based Spanish management team with the objective of
acquiring and consolidating regional insurance brokers in Spain. Through acquisition Summa is able to achieve
synergistic savings, economies of scale and greater collective bargaining thereby increasing overall value.
Date of investment: January 2005
Equity stake: 77.25%
31st January 2015 valuation: £4,326,000

E Q U I T Y

I N V E S T M E N T S R E V I E W

Trireme Insurance Group Limited
(www.oxfordinsurancebrokers.co.uk)
(www.jhinternational.co.uk)
In July 2010 the Group completed an investment in Trireme Insurance Group Limited (formerly known as US Risk
(UK) Ltd), the parent company of Oxford Insurance Brokers Ltd and James Hampden International Insurance
Brokers Ltd, London-based Lloyd’s specialist international reinsurance and insurance intermediaries. Trireme
Insurance Group Limited is also the parent company of Abraxas Insurance AG, a Swiss-based underwriting agency
specialising in Directors & Officers Liability Insurance, Professional Liability Insurance, Insurance for Financial
Institutions, Medical malpractice Insurance, Property Insurance and Event Insurance.
Date of investment: July 2010
Equity stake: 30.57%
31st January 2015 valuation: £2,033,000

Walsingham Motor Insurance Limited
(www.walsinghamunderwriting.com)
In December 2013 the Group invested in Walsingham Motor Insurance Limited, a new niche UK Motor Managing
General Agency. Walsingham was established in August 2012 and commenced trading in July 2013 having secured
primary capacity from Calpe. Post year-end the Group acquired a further 10.5% equity, taking the current
shareholding to 40.5%.
Date of investment: December 2013
Equity stake: 30.0%
31st January 2015 valuation: £300,000

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

Investments made after the year end:

Bulwark Investment Holdings (PTY) Limited
In April 2015 the Group, alongside its existing South African Partners, established a new venture, Bulwark
Investment Holdings (PTY) Limited (“Bulwark”), a South African based holding company which establishes
Managing General Agents in South Africa. To date Bulwark has established two new Managing General Agents:
Preferred Liability Underwriting Managers (PTY) Limited and Mid-Market Risk Acceptances (PTY) Limited.
Date of investment: April 2015
Equity stake: 35%
31st January 2015 valuation: N/A

B.P. MARSH & PARTNERS PLC

(COMPANY NO: 05674962)

DIRECTORS’ REPORT, STRATEGIC REPORT & CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST JANUARY 2015

References throughout the Reports and Consolidated Financial Statements
to the “Company” or “B.P. Marsh” refer to B.P. Marsh & Partners Plc,
and references to the “Group” refer to the consolidated group, being
the Company and its subsidiary undertakings.

D I R E C T O R S

Brian Marsh OBE
Executive Chairman, aged 74 (R) (I) (V)
Brian started his career in insurance broking and underwriting in Lloyd’s and the London and overseas market over
55 years ago and was, from 1979 to 1990, chairman of Nelson Hurst & Marsh (Holdings) Ltd, before founding the
Group. Brian has over 30 years’ experience in building, buying and selling financial services businesses particularly
in the insurance sector. Brian is a majority shareholder in B.P. Marsh owning 58.6% of the Company, with a
beneficial interest (as joint owner) in a further 4.9% of the Company through his 100% holding in B.P. Marsh
Management Limited.

Jonathan Newman ACMA, CGMA, MCSI
Group Finance Director, aged 40 (I) (V)
Jonathan is a Chartered Management Accountant with over 18 years’ experience in the financial services industry.
He joined the Group in November 1999 and was appointed a director of B.P. Marsh in September 2001 and Group
Finance Director in December 2003. Jonathan is responsible for the Group’s finance function, evaluates new
investment opportunities and is also the Group’s nominee director on the boards of four investee companies.
Jonathan has a beneficial interest (as joint owner) in 355,283 ordinary shares in B.P. Marsh.

Daniel Topping MCSI, ACIS
Director, aged 31 (I) *
Daniel is a Member of the Chartered Institute of Securities and Investment (MCSI) and an Associate Member of the
Institute of Chartered Secretaries and Administrators (ACIS), having graduated from the University of Durham. He
joined B.P. Marsh in February 2007 having started his career at WiltonGroup. In 2011, having spent a period of time
as Investment Assistant to the Chairman he was appointed as a director of B.P. Marsh and currently has seven nominee
appointments and evaluates new investment opportunities. Daniel has both a beneficial interest (as joint owner) in
355,283 ordinary shares in B.P. Marsh and also directly owns 802 ordinary shares in the Company.

Camilla Kenyon
Director, aged 42 (I)
Millie was appointed as Head of Investor Relations at B.P. Marsh in February 2009, having 4 years of prior experience
with the Company. She is Head of the New Business Department and chairs the New Business Committee. Millie has
a background in media and public relations, is a qualified journalist (National Council for the Training of Journalists)
and holds a Certificate in Investor Relations. Millie currently has two nominee appointments. Millie has a beneficial
interest (as joint owner) in 241,592 ordinary shares in B.P. Marsh.

Alice Foulk BA (Hons)
Director, aged 28 (appointment date 16th February 2015) *
Alice joined B.P. Marsh in September 2011 having started her career at a leading Life Assurance company. In 2014
she took over as Executive Assistant to the Chairman, running the Chairman’s Office and in December 2014 was
appointed interim Head of New Business. Alice has a beneficial interest (as joint owner) in 127,901 ordinary shares
in B.P. Marsh.

Stephen Clarke FCA
(Non-executive), aged 77 (R) (A)
A Chartered Accountant, Stephen gained many years’ experience with Charterhouse Development Capital in the
structuring of venture capital projects in all fields including financial services, and in guiding and monitoring their
progress. He joined the Group in 1993 and has over 40 years’ experience of the financial services sector. Stephen
continues to give specialist advice to B.P. Marsh on the structuring of entry and exit deals.

D I R E C T O R S
( C O N T I N U E D )

Philip Mortlock MA, FCA
Non-executive, aged 77 (R) (A) (V)
A Chartered Accountant with over 40 years’ insurance experience, Philip entered the Lloyd’s insurance world in
1965 and, after some years with Fenchurch Group, joined Nelson Hurst & Marsh group as Finance Director and
Company Secretary until 1990. He joined the Group in 1990 and has a great deal of experience of the special nature
of broking and underwriting finances. Philip continues to give a broad range of advice to B.P. Marsh and served as
the Group’s nominee director on the board of Portfolio Design Group International Limited until the Group’s
disposal of this investment in May 2014 (please refer to Note 12 on page 48).

Campbell Scoones
Non-executive Deputy Chairman, aged 68 (R)
Campbell joined B.P. Marsh in April 2013 and has over 45 years’ experience in the Lloyds and overseas insurance
broking and underwriting markets. Having started his career in 1966, Campbell has worked for a number of Lloyd’s
insurance broking and underwriting firms during this time, including, inter alia, Nelson Hurst & Marsh Group,
Admiral Underwriting, Marsh & McLennan Companies and Encon Underwriting. Campbell currently has one
nominee appointment and in January 2015 Campbell was appointed the Group’s Non-Executive Deputy
Chairman. Campbell owns 46,000 ordinary shares in B.P. Marsh.

Pankaj Lakhani FCCA
Non-executive, aged 61 (appointment date 21st May 2015) *
Pankaj joined B.P. Marsh in May 2015 and has over 40 years’ experience within the Global Insurance Sector, having
worked at the Marsh McLennan Group, Admiral Underwriting and Victor O. Schinnerer. Upon joining the Group
Pankaj was appointed a member of the Remuneration Committee and the Valuation Committee. Pankaj owns
18,800 ordinary shares in B.P. Marsh.

* On 16th February 2015 Alice Foulk was appointed to the Investment Committee and on the 21st May 2015 Daniel
Topping was appointed to the Valuation Committee and Pankaj Lakhani to the Valuation Committee and
Remuneration Committee. However, they did not formally serve on these committees during the year.

KEY

( R ) Member of the Remuneration Committee during the year

( I ) Member of the Investment Committee during the year

( A ) Member of the Audit Committee during the year

( V ) Member of the Valuation Committee during the year

C O R P O R A T E G O V E R N A N C E

The board of B.P. Marsh (“the Board”) is responsible for the Group’s corporate governance policies and recognises the
importance of high standards of integrity, and consistently seeks to apply the principles set out in the revised UK
Corporate Governance Code (the “Code”) by the Financial Reporting Council to the extent that they are appropriate
for, and applicable to, a company of B.P. Marsh’s size quoted on the Alternative Investment Market (“AIM”).

DIRECTORS
Details of the appointment and resignation dates of directors are shown in the Group Report of the Directors. All
directors are subject to re-election within a three-year period.

All the directors have access to the advice and services of the Company Secretary and may, in furtherance of their
duties, take independent legal and financial advice at the Company’s expense. They also have access to the minutes
of the Board, in which any concerns expressed by them regarding matters pertaining to the Group are recorded.

A formal review of the performance and effectiveness of each director, including the non-executive directors, takes
place annually and is assessed on an on-going basis by the other members of the Board and Committees of the Board.

The Group recognises that its non-executive directors are not “independent”, as recommended by the Code,
however it feels that, given the size and nature of the Group, the benefit derived from the collective relevant
experience of its non-executive directors justifies their position on the Board.

BOARD MEETINGS
The Board meets at least quarterly and at such other times as required, and receives regular reports on a wide range
of key issues including investment performance, investment opportunities, disposals and corporate strategy. All
major decisions affecting the Group are taken at Board level and all the directors are free to bring any matter to the
attention of the Board at any time.

COMMITTEES OF THE BOARD
The Board has established four standing committees, the Audit Committee, the Remuneration Committee, the
Investment Committee and the Valuation Committee. As the Board deals with all matters relating to recruitment
and appointment, the Board has decided not to establish a Nominations Committee at the present time.

Audit Committee
The Audit Committee is comprised of two of the non-executive directors of the Company and is chaired by Philip
Mortlock. The external auditors, together with the Group Finance Director and other financial staff are invited to
attend these meetings.

In accordance with its terms of reference, one of the principal functions of this committee is to determine the
appropriateness of accounting policies to be used in the Group’s annual financial statements. In addition the
Committee is responsible for assessing the Group’s audit arrangements and the Group’s system of internal controls,
and to review the half-yearly and annual results before publication.

Remuneration Committee
During the year the Remuneration Committee was comprised of the three non-executive directors of the Company
and Brian Marsh and was chaired by Philip Mortlock. In accordance with its terms of reference the Committee
determines the level and make-up of remuneration (including bonuses and awards) of the executive directors and
members of staff.

The Report of the Remuneration Committee to the shareholders on how directors are remunerated, together with
details of individual directors’ remuneration packages, is to be found on pages 18 to 20.

Investment Committee
The Investment Committee is comprised of all the executive directors of the Company and meets whenever
significant investment matters arise which are not dealt with in the normal course of Board business.

C O R P O R A T E G O V E R N A N C E
( C O N T I N U E D )

Valuation Committee
During the year the Valuation Committee was comprised of Philip Mortlock, Brian Marsh and Jonathan Newman
and, in accordance with its terms of reference, is responsible for preparing investment valuations and reviewing the
suitability of the Company’s investee company valuation policy.

RELATIONS WITH SHAREHOLDERS
The Board attaches great importance to maintaining good relationships with all of its shareholders. The executive
directors meet with representatives of institutional investors and analysts to discuss their views and ensure that the
corporate objectives and strategies of the Group are well understood. The Company reports formally to the
shareholders twice a year, when its half-yearly and full-year results are announced, when reports are sent to
shareholders and published on the Company’s website (www.bpmarsh.co.uk). The Company also produces
quarterly trading updates, in order to ensure a consistent f low of information throughout the year.

The Company will advise shareholders attending the Annual General Meeting (“AGM”) of the number of proxy
votes lodged for and against each resolution. Members of the Board will be in attendance at the AGM and will be
available to meet shareholders informally after the meeting.

INTERNAL CONTROLS AND RISK MANAGEMENT
The Board is responsible for ensuring the Group has effective internal controls in place throughout the year, as well
as procedures necessary for reviewing the Group’s system of internal controls and assessing the nature and extent of
the risks facing the Group.

The Board believes that its Annual Report and these consolidated financial statements play an important part in
presenting all shareholders with an assessment of the Group’s position and prospects. The Chairman’s Statement
included within the Annual Report contains a detailed consideration of the Group’s position and prospects.

A statement of the directors’ responsibilities in respect of the consolidated financial statements is set out on page 21.

By order of the Board

S.C. O’Haire
Company Secretary
1st June 2015

R E P O R T O F T H E R E M U N E R A T I O N C O M M I T T E E

The Remuneration Committee of the Board (the “Committee”) during the year comprised three non-executive
directors of the Company, Philip Mortlock, Stephen Clarke and Campbell Scoones, as well as the Chairman, Brian
Marsh. The Committee is responsible for setting the remuneration of the executive directors and other members of staff.

REMUNERATION POLICY
The Committee reviews remuneration levels annually and seeks to ensure that they are set at a level which is in line
with comparable companies in the industry, are capable of attracting, retaining and motivating directors of
appropriate calibre, are consistent with the performance of the Company and at the same time are aligned with the
best interests of the shareholders.

The Committee’s terms of reference provide that for as long as the Chairman of the Company is executive, he
should attend as a member and be invited to express his views on remuneration levels, but should not be present
when his own salary is decided or when decisions are taken on performance targets for incentive arrangements in
which he participates.

The Board has delegated the review and setting of non-executive director remuneration to a sub-committee of the
Board consisting of Brian Marsh, Jonathan Newman and Daniel Topping.

The Committee receives advice from external remuneration advisers where appropriate.

DIRECTORS’ SERVICE AGREEMENTS
The executive directors entered into service agreements with the Company on the following dates:

DIRECTOR

B.P. Marsh
J.S. Newman
D.J. Topping
C.S. Kenyon
A.H.D. Foulk*

DATE OF
SERVICE AGREEMENT

30th January 2006
30th January 2006
1st March 2011
1st March 2011
16th February 2015

TERM

Continuous
Continuous
Continuous
Continuous
Continuous

NOTICE
PERIOD

6 months
6 months
6 months
6 months
6 months

The non-executive directors do not have service agreements, but their letters of appointment provide that their
tenure of office is for an initial period of 12 months and shall continue until either terminated by the non-executive
director or the Company, on giving to the other, 3 months prior written notice.

DIRECTOR

P.J. Mortlock
S.S. Clarke
C.R. Scoones
P.B. Lakhani*

DATE OF
OFFICE TENURE

30th January 2006
30th January 2006
19th April 2013
21st May 2015

INITIAL
PERIOD

12 months
12 months
12 months
12 months

NOTICE
PERIOD

3 months
3 months
3 months
3 months

* On 16th February 2015 A.H.D. Foulk was appointed an executive director of the Company and on 21st May 2015

P.B. Lakhani was appointed a non-executive director of the Company.

AUDITED INFORMATION

Joint Share Ownership Plan (“JSOP”)
On 6th November 2014, following the resignation of J.K.N. Dunbar, B.P. Marsh Management Limited (“BPMM”),
a company wholly owned by Mr B.P. Marsh, the Executive Chairman and majority shareholder of the Company,
acquired 1,421,130 ordinary shares in the Company from the Tasha Dunbar Life Interest Trust (a trust set up on
behalf of J.K.N. Dunbar) for 138 pence per share.

R E P O R T O F T H E R E M U N E R A T I O N C O M M I T T E E
( C O N T I N U E D )

On the same date as the acquisition of these shares, in order to instigate a non-dilutive share incentive scheme, BPMM
granted beneficial joint interests in 1,421,130 ordinary shares for no consideration to respective individual directors and
senior employees of the Company to be held together with BPMM upon and subject to the terms of joint share
ownership agreements (“JSOAs”) respectively entered into between each employee, the Company and BPMM.

Of the 1,421,130 ordinary shares in respect of which joint interests have been granted, the following directors of the
Company have each acquired, jointly with BPMM, and upon and subject to the terms of a JSOA, a beneficial
interest (as joint owner) in the number of shares respectively shown opposite the name of each such director:

D I R E C T O R

N U M B E R O F
J O I N T LY- OW N E D S H A R E S

% O F T OTA L
J O I N T LY- OW N E D S H A R E S

P R E- E X I ST I NG O R D I NA RY
S H A R E H O L D I NG

J.S. Newman
D.J. Topping
C.S. Kenyon
A.H.D. Foulk

Total

355,283
355,283
241,592
127,901

1,080,059

25%
25%
17%
9%

76%

-
802
-
-

802

The form of JSOA used on this occasion was approved by the Remuneration Committee on 6th November 2014
and provides for the acquisition by the employee of a beneficial interest as joint owner (with BPMM) of ordinary
shares in the Company. This acquisition will provide, inter alia, that if jointly-owned shares become vested and are
sold, the proceeds of sale will be divided between the joint owners so that BPMM receives at least 140 pence per
jointly-owned share (“IMV”) plus an amount representing interest of 3.5% per cent per annum on the IMV and the
employee is entitled to the balance (if any). Jointly-owned shares will normally vest if the employee remains
employed with the B.P. Marsh group of companies for a minimum period of three years.

No jointly-owned shares were sold or forfeited during the year. The number of jointly-owned shares expected to
vest has therefore not been adjusted. In accordance with IFRS 2 (Share-based Payment) the fair value of the expected
cost of the award (measured at the date of grant) has been spread over the three year vesting period.

Further details are given in Note 27 to the financial statements.

The directors’ interests in other shares of the Company are detailed in the Group Report of the Directors.

Aggregate Directors’ Remuneration

2015
(£)

2014
(£)

Emoluments
Fees
Pension contributions

796,195
23,250
40,500

790,532
33,573
35,300

R E P O R T O F T H E R E M U N E R A T I O N C O M M I T T E E
( C O N T I N U E D )

Aggregate Directors’ Emoluments

SALARIES
AND FEES

BENEFITS

ANNUAL
BONUSES

OTHER
BONUSES

†

TERMINATION
PAYMENTS

(£)

2015 EMOLUMENTS
EXCLUDING
PENSION
CONTRIBUTIONS
(£)

B.P. Marsh
J.S. Newman
D.J. Topping
C.S. Kenyon
J.K.N. Dunbar**
P.J. Mortlock
S.S. Clarke
C.R. Scoones

110,000
152,000
120,000
73,776
84,333
40,250
35,000
41,000

2,434
4,357
4,632
4,750
8,491
-
-
-

-
45,000
45,000
14,000
-
-
-
-

-
3,371
3,079
1,900
-
-
-
-

-
-
-
-
26,072
-
-
-

112,434
204,728
172,711
94,426
118,896
40,250
35,000
41,000

† Relate to bonuses awarded to the directors participating in the JSOP in order to cover the Income Tax and
National Insurance liabilities arising from the initial grant of the joint beneficial interest in the shares (settled by the
Company on behalf of those directors).

In addition to the above, and as outlined in Note 18 on page 53 of these financial statements, on 2nd May 2014 the
Group paid S.S. Clarke £197,033 in settlement of his carried interest entitlement in respect of the sale of the Group’s
equity investments in Portfolio Design Group International Limited, Morex Commercial Limited, Preferred Asset
Management Limited and New Horizons Nominees Limited (together the “PDGI businesses”).

Directors’ Pensions
The executive directors received the following pension contributions during the year:

B.P. Marsh
J.S. Newman
D.J. Topping
C.S. Kenyon
J.K.N. Dunbar**

2015
(£)

-
15,300
6,100
8,100
11,000

** J.K.N. Dunbar resigned as an executive director of the Company on 6th November 2014.

This report has been approved by the Remuneration Committee and the Board as a whole and has been signed on
behalf of the Chairman of the Remuneration Committee, Philip Mortlock, on 1st June 2015.

By order of the Board
S.C. O’Haire
Company Secretary

G R O U P R E P O R T O F

T H E D I R E C T O R S

DIRECTORS
B.P. Marsh OBE (Chairman)
J.S. Newman ACMA, CGMA, MCSI
D.J. Topping MCSI, ACIS
C.S. Kenyon
A.H.D. Foulk BA (Hons) (appointed 16th February 2015)
J.K.N. Dunbar BBA (resigned 6th November 2014)
S.S. Clarke FCA (non-executive)
P.J. Mortlock MA, FCA (non-executive)
C.R. Scoones (n on-executive Deputy Chairman)
P.B. Lakhani FCCA (non-executive) (appointed 21st May 2015)

The directors submit their report and the audited financial statements of the Company and the Group for the year
ended 31st January 2015.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.

Company law requires the directors to prepare Group and Company financial statements for each financial year.
Under that law, the directors have elected to prepare the Group and Company financial statements in accordance
with International Financial Reporting Standards (IFRS) as adopted by the EU. Under company law the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and the Group’s profit or loss for that period. The directors are also required to
prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investments Market.

In preparing financial statements the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRS as adopted by the EU subject to any material

departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group

and the Company will continue in business.

The directors confirm that they have complied with the above requirements in preparing the financial statements.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
Company and enable them to ensure the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the directors.
The directors’ responsibility also extends to the on-going integrity of the financial statements contained therein.

DISCLOSURE OF INFORMATION TO THE AUDITORS
Each of the persons who are directors at the time when the Group Report of the Directors is approved has
confirmed that:
• so far as that director is aware, there is no relevant audit information of which the Company's auditors are

unaware; and

G R O U P R E P O R T O F

T H E D I R E C T O R S

( C O N T I N U E D )

• that director has taken all steps that ought to have been taken as a director in order to be aware of any information
needed by the Company and Group’s auditors in connection with preparing their report and to establish that the
auditors are aware of that information.

This information is given and should be interpreted in accordance with the provisions of Section 418 of the
Companies Act 2006.

PRINCIPAL ACTIVITY
The principal activity of the Group during the year was the provision of consultancy services to, as well as making
and trading investments in, financial services businesses.

COUNTRY OF INCORPORATION AND REGISTRATION
B.P. Marsh & Partners Plc was incorporated and is registered in England and Wales.

RESULTS OF THE BUSINESS
The results for the year are set out on page 30. The directors consider the current state of affairs of the Group to be satisfactory.

DIVIDENDS
A dividend of £803,825 (2.75p per share) was paid on 25th July 2014 (2014: £365,375). The directors have
recommended a final dividend of £803,825 (2.75p per share) which will be paid, subject to Shareholder approval,
on 24th July 2015 to Shareholders registered at the close of business on 26th June 2015.

SUBSTANTIAL INTERESTS
As at 22nd May 2015 the directors have been made aware that the following shareholders held disclosable interests of
3% or more of the issued share capital of the Company:

BENEFICIAL OWNER

NO. OF ORDINARY SHARES
OF 10P EACH HELD

% OF ISSUED
SHARE CAPITAL

Mr B.P. Marsh
B.P. Marsh Management Limited *
James Sharp & Co
IS Partners Investment Solutions
The Stephen Crowther Trust
Henderson Global Investors

17,084,271
1,421,130
1,252,099
1,247,500
963,614
912,000

58.6%
4.9%
4.3%
4.3%
3.3%
3.1%

* Jointly-owned beneficial interest with six employees of the Company, of whom four are directors.

DIRECTORS
The names of the directors who served at any time during the year are stated at the head of this report. The directors’
interests in the shares of the Company were:

31ST JANUARY 2015
ORDINARY SHARES OF
10P EACH

31ST JANUARY 2014
ORDINARY SHARES OF
10P EACH

Mr B.P. Marsh1
The Tasha Dunbar Life Interest Trust2
Mr J.S. Newman3
Mr D.J. Topping4
Ms C.S. Kenyon5
Mr C.R. Scoones

18,505,401
-
355,283
356,085
241,592
46,000

17,304,271
1,428,614
-
802
-
35,800

G R O U P R E P O R T O F

T H E D I R E C T O R S

( C O N T I N U E D )

DIRECTORS (CONTINUED)
1 Total interest includes 1,421,130 ordinary shares held (under joint ownership with six employees of the Company, of whom four
are directors) by B.P. Marsh Management Limited (“BPMM”), a company wholly owned by Mr B.P. Marsh, and 171,000
ordinary shares held by the Marsh Christian Trust of which Mr B.P. Marsh is Trustee and Settlor.

2 The Tasha Dunbar Life Interest Trust held shares in trust for J.K.N. Dunbar who was a director of the Company until her
resignation on 6th November 2014. 1,421,130 ordinary shares were acquired from the Tasha Dunbar Life Interest Trust by
BPMM on the same date.

3 Shares co-owned with BPMM under a Joint Share Ownership Agreement between Mr J.S. Newman, BPMM and the

Company dated 6th November 2014.

4 Total interest includes 355,283 ordinary shares co-owned with BPMM under a Joint Share Ownership Agreement between Mr
D.J. Topping, BPMM and the Company dated 6th November 2014 and 802 ordinary shares directly owned by Mr D.J. Topping.
5 Shares co-owned with BPMM under a Joint Share Ownership Agreement between Ms C.S. Kenyon, BPMM and the

Company dated 6th November 2014.

Ms A.H.D. Foulk (appointed as a director of the Company on 16th February 2015) was granted an award of 127,901
ordinary shares in the Company under a Joint Share Ownership Agreement on 6th November 2014. However, as Ms
A.H.D. Foulk was not a director of the Company as at 31st January 2015 this interest has not been disclosed above.

SHARE CAPITAL
Information relating the Company’s ordinary share capital (including share repurchases and cancellation) is shown
in Note 21 to the financial statements.

EVENTS AFTER THE REPORTING DATE
On 20th February 2015 the Group acquired a further 10.5% stake in Walsingham Motor Insurance Limited
(“Walsingham”) for total consideration of £300,000. This increased the Group’s holding in Walsingham from 30%
as at 31st January 2015 to 40.5%.

In February and March 2015 the Group provided the remaining £130,000 of an agreed £341,831 loan facility
(£211,831 drawn down as at 31st January 2015) to Bastion Reinsurance Brokerage (PTY) Limited (“Bastion”).
£50,000 was provided on 9th February 2015, £42,500 on 18th February 2015 and £37,500 on 19th March 2015.

On 15th April 2015 the Group subscribed for a 35% preferred equity stake in Bulwark Investment Holdings (PTY)
Limited (“Bulwark”), based in South Africa, for a consideration of £1. On the same date the Group also provided
Bulwark with a loan facility of £500,000 in order to fund start-up Managing General Agencies (“MGAs”). £120,000
of this facility was drawn down immediately in order to fund two new MGAs, and a further £33,708 was drawn down
on 6th May 2015, leaving a remaining undrawn facility of £346,292 at the date of this report.

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
The Company has purchased insurance cover to cover directors’ and officers’ liability, as permitted by Section 233
of the Companies Act 2006.

AUDITORS
The auditors, Rawlinson & Hunter Audit LLP, will be proposed for appointment in accordance with relevant legislation.

By order of the Board
S.C. O’Haire
Company Secretary
1st June 2015

Registered Office:
2nd Floor, 36 Broadway
London, SW1H 0BH

G R O U P

S T R A T E G I C R E P O R T

BUSINESS REVIEW
During the year the major activities of the Group were as follows:

On 27th February 2014 the Group provided the remaining £200,000 of an agreed £1,200,000 loan facility to
Walsingham Motor Insurance Limited to fund the continued expansion of the business.

On 17th April 2014, the Group provided Besso Insurance Group Limited (“Besso”) with a short-term working
capital loan of £315,000. The loan is repayable over 12 months and repayments commenced on 31st May 2014. The
loan has a final repayment date of 30th April 2015 and has, since 31st January 2015, been repaid in full in accordance
with the terms of the loan.

On 1st May 2014 the Group sold, to its fellow shareholders, its respective 20% stakes in Portfolio Design Group
International Limited, Morex Commercial Limited, Preferred Asset Management Limited and New Horizons
Nominees Limited (together the “PDGI businesses”) for a combined total of £1,250,000 in cash. As outlined in
Note 18, Mr S.S. Clarke, a non-executive Director of the Company, was entitled to 20% of any gain on the sale of
the PDGI businesses after the deduction of expenses. Consequently, on 2nd May 2014 the Group paid Mr S.S. Clarke
£197,033 in respect of his entitlement due on the sale of the PDGI businesses as per the carried interest agreement
between the Group and Mr S.S. Clarke.

On 12th May 2014 the Group provided £68,000 of an agreed £747,000 loan facility to Besso in order to fund the
continued expansion of its business in Turkey. This draw down was in addition to the £265,000 already drawn down
from the facility as at 31st January 2014. Following a repayment of £63,000 received during the year in respect of
this loan, the balance as at 31st January 2015 was £270,000. Together with £2,750,000 of 10% loan stock and other
loans of £2,115,393, total loans drawn down by Besso as at 31st January 2015 amounted to £5,135,393, with a
remaining undrawn facility of £414,000 (see Note 24).

On 29th May 2014 the Group subscribed to its pro-rata proportion of a £1,200,000 Rights Issue in Trireme
Insurance Group Limited (“Trireme”, formerly known as US Risk (UK) Limited). Total consideration paid
amounted to £351,000 for 351,000 newly issued B Preferred Ordinary shares (£1 per share). In addition, on the same
date the Group agreed to provide Trireme with additional loan funding of £469,515 (in addition to the £1,800,000
of loans already drawn down as at 31st January 2014) which increased the total agreed loan funding to £2,269,515.
No cash was provided to Trireme in respect of the additional £469,515 loan funding as it was utilised throughout
the year to settle trade receivables balances owing to the Group. On 23rd September 2014 the Group provided a
further loan facility of £150,000 (increasing the total agreed loan facility to £2,419,515), of which £125,598 was
drawn down in cash on completion. As at 31st January 2015 total loans drawn down by Trireme amounted to
£2,395,113, with a remaining undrawn facility of £24,402 (see Note 24). Both the Rights Issue and respective
increases to the loan facility were made for working capital purposes.

On 30th October 2014, following the departure of a 5% minority shareholder and director of Trireme, the Group
acquired its pro-rata proportion for a cash consideration of £63,105. As at 31st January 2015 the Group’s equity
holding in Trireme was 29.27% (effective economic holding of 30.57%).

On 14th August 2014 the Group acquired a 5% equity stake in Nexus Underwriting Management Limited
(“Nexus”) for a total consideration of £1,554,000. Nexus is one of the largest independent speciality Managing
General Agencies in the London Market which underwrites Speciality Insurance Products (Directors’ & Officers,
Professional Indemnity, Financial Institutions and Accident & Health).

G R O U P

S T R A T E G I C R E P O R T

( C O N T I N U E D )

BUSINESS REVIEW (CONTINUED)
On 5th December 2014 the Group acquired a further 28.625% equity stake in Summa Insurance Brokerage, S.L
(“Summa”) for a cash consideration of €1,248,177 (£997,884). This holding was acquired from a non-strategically
aligned third party shareholder and will allow Summa to wholly focus on taking advantage of its strong position within
the Spanish insurance market. The acquisition increased the Group’s equity stake in Summa from 48.625% as at 31st
January 2014 to 77.25% as at 31st January 2015, however this is considered to be an exceptional holding and the Group’s
ongoing strategy remains to acquire minority equity stakes in early stage financial services business and remains
unaltered. In respect of this exception, the Group has taken advantage of a new amendment to International Financial
Reporting Standard 10: Consolidated Financial Statements (“IFRS 10”), which exempts an investment entity from
having to consolidate a subsidiary. On the same date the Group also agreed to acquire the exiting shareholder’s
outstanding loan (including accrued interest) to Summa of €251,824 (£201,326). Together with an existing loan of
€2,951,240, total loans drawn down by Summa as at 31st January 2015 amounted to €3,203,064 (£2,406,690).

On 11th December 2014 the Group acquired a 35% equity stake in Bastion Reinsurance Brokerage (PTY) Limited
(“Bastion”), a start-up Reinsurance Broker based in South Africa, for a total cash consideration of £100,000. In
addition to the equity investment, the Group agreed to provide Bastion with loan funding of £211,831 on
completion and, subject to certain conditions, additional loan funding of up to £130,000. As at 31st January 2015
total loans drawn down by Bastion amounted to £211,831, with a remaining undrawn facility of £130,000.

Financial Performance
At 31st January 2015, the net asset value of the Group was £63.0m, or 216p per share (2014: £58.9m, or 202p per
share) including a provision for deferred tax. This equates to an increase in net asset value of 6.9% (2014: 6.3%) for
the year.

The Group continued to maintain a £0.8m (or 2.75p per share) dividend payment during the year, as announced
previously (2014: £0.8m or 2.75p per share). Total shareholder return for the year was therefore 8.2% (2014: 6.9%)
including the dividend payment and the net asset value increase.

The Group’s investment portfolio movement during the year was as follows:

31ST JANUARY
2014 VALUATION

ACQUISITIONS
AT COST

DISPOSAL
PROCEEDS

IMPAIRMENT
PROVISIONS

ADJUSTED 31ST
JANUARY 2014
VALUATION

31ST JANUARY
2015 VALUATION

£31.7m

£3.1m

£(1.3)m

£nil

£33.5m

£38.7m

Including a £7.3m holding in Hyperion Insurance Group Limited (“Hyperion”) which is capped, this equates to an
increase in the portfolio valuation of 15.5% (2014: increase of 14%). Excluding the holding in Hyperion, the
remaining portfolio increased by 19.5% over the year.

The net asset value of £63.0m at 31st January 2015 represented a total increase in net asset value of £50.4m since the
Group was originally formed in 1990 having adjusted for the £10.1m net proceeds raised on AIM and the original
capital investment of £2.5m. The directors note that the Group has delivered an annual compound growth rate of
11.3% in Group net asset value after running costs, realisations, losses, distributions and deferred tax since 1990.

The consolidated profit on ordinary activities after taxation increased by 28.8% to £4.9m (2014: profit of £3.8m).
The consolidated profit on ordinary activities before taxation was £5.9m (2014: profit of £4.1m), of which £5.1m
was derived from unrealised gains on revaluing the equity investment portfolio in line with current market
conditions, an increase of 30.8% on the previous year (2014: net unrealised gains of £3.9m). The Group’s strategy
is to cover expenses from the portfolio yield, and on an underlying basis (excluding portfolio movement) this was
achieved with a pre-tax profit of £0.8m for the year (2014: £0.2m).

G R O U P

S T R A T E G I C R E P O R T

( C O N T I N U E D )

BUSINESS REVIEW (CONTINUED)

Financial Performance (continued)
Income from investments increased by 24% to £2.8m over the year (2014: £2.3m) as the Group continues to invest
in new and existing opportunities. Operating expenses, including costs of making new investments, were 9% higher
during the year at £2.2m (2014: £2.0m) in line with the increased portfolio.

The Group’s treasury funds increased by 4.7% over the year (net of fund management charges) which compared
favourably with the FTSE 100 increasing by 3.7% over the same period.

Future Prospects
During the year under review, several new investments were made and the Group continued to assist and support its
existing investments through follow-on funding to enable continued growth. A number of prospective investments
were considered and the Group continues to receive a strong pipeline of opportunities and continues to evaluate them
for investment potential.

Financial Data and Key Performance Indicators
The table below summarises the Group’s financial results and key performance indicators.

YEAR TO/AS AT
31ST JANUARY 2015

YEAR TO/AS AT
31ST JANUARY 2014

Net asset value
Net asset value per share
Equity portfolio increase
Equity portfolio increase excluding Hyperion
Dividend per share
Total shareholder return (including dividends)
Total shareholder return on opening shareholders’ funds
Annual operating cash profit/(loss)
Cash investment for the year – Equity
Cash investment for the year – Loans
Realisations (net of costs)
Profit on realisations
Loans repaid by investee companies in the year

£ 63.0m
216p
15.5%
19.5%
2.75p
£ 4.9m
8.2%
£ 0.2m
£ 3.1m
£ 1.6m
£ 1.0m
£ 0.8m
£ 1.2m

£ 58.9m
202p
14.0%
13.5%
1.25p
£ 3.8m
6.9%
£ 0.7m
£ 4.3m
£ 13.8m
£ 29.0m
£ 20.6m
£ 3.0m

FINANCIAL RISK MANAGEMENT
The Group’s operations expose it to a variety of financial risks. The Group manages the risk to limit the adverse
effects on the financial performance of the Group by monitoring those risks and acting accordingly. As at 31st January
2015 the Group was debt free (31st January 2014: debt free).

The monitoring of the financial risk management is the responsibility of the Board. The policies of the Board of
directors are implemented by the Group’s finance department under specific guidelines.

Price risk
The Group is exposed to private equity securities price risk. The Group manages the risk by ensuring that a director
is appointed to the board of each investee company. In this capacity, the appointed director can advise the Group’s
Board of the investee companies’ activities and prompt action can be taken to protect the value of the investment.
Management reports are required to be prepared by investee companies for the review of the appointed director and
by the Group Board.

Credit risk
The Group provides consulting services to its investee companies which are investigated before an investment is
made and are continually monitored. As such the directors believe that the credit risk is adequately managed.

G R O U P

S T R A T E G I C R E P O R T

( C O N T I N U E D )

FINANCIAL RISK MANAGEMENT (CONTINUED)

Liquidity risk
The directors assess and review the Group’s liquidity position and funding requirements on a regular basis and this
is an agenda item for its Board meetings. They consider that the Group has sufficient liquidity to manage current
commitments.

Interest rate cash f low risk
At 31st January 2015, the Group had no interest bearing liabilities but had interest bearing assets. Interest bearing
assets are loans made available to investee companies to aid their expansion, and are normally subject to a minimum
interest rate to protect the Group from a period of low interest rates.

Currency risk
Although the Group's investments are predominantly within the UK it also makes investments and derives income
outside the UK. As such some of the Group’s income and assets are subject to movement in foreign currencies
which will affect the Consolidated Statement of Comprehensive Income in accordance with the Group's accounting
policy. The Board monitors the movements and manages the risk accordingly.

POLICY ON PAYMENT OF SUPPLIERS
The Group’s policy on the payment of suppliers is to settle transactions based upon the supplier’s agreed terms of
trade. Average supplier days were 42 (2014: 28) during the year.

GOING CONCERN
The directors continue to adopt the going concern basis in preparing the financial statements. This is because the
directors, after making enquiries and following a review of the Group’s budget for 2016 and 2017, including cash
f lows and borrowing facilities, consider that the Group has adequate resources to continue its operation for the
foreseeable future.

By order of the Board
S.C. O’Haire
Company Secretary
1st June 2015

I N D E P E N D E N T
M E M B E R S O F

A U D I T O R ’ S R E P O R T

B . P . M A R S H & P A R T N E R S

T O T H E
P L C

We have audited the Group and Company financial statements of B.P. Marsh & Partners Plc for the year ended 31st
January 2015 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and
Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows, the
Consolidated and Company Statements of Changes in Equity and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards
(“IFRSs”) as adopted by the EU and, as regards the Company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities set out in the Group Report of the Directors,
the directors are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and to express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the Group and Company’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the Directors’ Report, Strategic Report and Consolidated
Financial Statements to identify material inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing that audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.

Opinion on financial statements
In our 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 2015 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.

Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
• the part of the Report of the Remuneration Committee to be audited has been properly prepared in accordance

with the Companies Act 2006; and

• the information given in the Group Report of the Directors and the Group Strategic Report for the financial year

for which the financial statements are prepared is consistent with the financial statements.

I N D E P E N D E N T
M E M B E R S O F

A U D I T O R ’ S R E P O R T

B . P . M A R S H & P A R T N E R S

T O T H E
P L C

( C O N T I N U E D )

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the Company’s financial statements and the part of the Report of the Remuneration Committee to be audited

are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Christopher Bliss (Senior Statutory Auditor)
For and on behalf of

RAWLINSON & HUNTER AUDIT LLP
Statutory Auditor
Chartered Accountants
Eighth Floor
6 New Street Square
New Fetter Lane
London
EC4A 3AQ

1st June 2015

C O N S O L I D A T E D S T A T E M E N T O F

C O M P R E H E N S I V E

I N C O M E

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

NOTES

2015

2014

(£’000)

Gains on investments
Realised gains on disposal of equity investments
(net of costs)
1,14
Unrealised gains on equity investment revaluation 12
Carried interest movement
2,18

Income
Dividends
Income from loans and receivables
Fees receivable

Operating Income

Operating expenses

Operating Profit

Financial income
Financial expenses
Exchange movements

1,28

2,4

2,3

2,8

Profit on ordinary activities
before share based provision

Share based payment provision

22,27

Profit on ordinary activities
before taxation

Income tax expense

Profit on ordinary activities
after taxation attributable
to equity holders

Earnings per share – basic and diluted (pence)

-
5,109
-

432
1,789
575

450
(51)
(244)

5,109

2,796

7,905

(2,160)

5,745

155

5,900

(1)

5,899

(964)

4,935

16.9p

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

12
3,744
97

368
1,402
486

138
(78)
(108)

3,853

2,256

6,109

(1,987)

4,122

(48)

4,074

(241)

3,833

13.1p

The notes on pages 34 to 63 form part of these financial statements.

C O N S O L I D A T E D & C O M P A N Y

S T A T E M E N T S O F

F I N A N C I A L

P O S I T I O N

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

(Company Number: 05674962)

NOT E S

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

G RO U P

C O M PA N Y

Assets

Non-current assets
Property, plant and equipment
Investments – equity portfolio
Investments – treasury portfolio
Loans and receivables

Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets

Total assets

Liabilities

Non-current liabilities
Carried interest provision
Deferred tax liabilities
Total non-current liabilities

Current liabilities
Trade and other payables
Corporation tax provision
Total current liabilities

Total liabilities

Net Assets

Capital and reserves - equity

Called up share capital
Share premium account
Fair value reserve
Reverse acquisition reserve
Capital redemption reserve
Capital contribution reserve
Retained earnings

Shareholders’ Funds - equity

18
38,647
6,319
14,717
59,701

5,908
1,531
7,439

18
31,710
9,289
17,248
58,265

2,685
5,502
8,187

-
52,815
-
10,155
62,970

-
1
1

-
48,767
-
10,155
58,922

-
1
1

67,140

66,452

62,971

58,923

-
(3,661)
(3,661)

(446)
(62)
(508)

(197)
(2,736)
(2,933)

(558)
(4,038)
(4,596)

(4,169)

(7,529)

-
-
-

62,971

58,923

62,971

58,923

2,923
9,370
13,992
393
6
1
36,286

2,923
9,370
9,743
393
6
-
36,488

2,923
9,370
50,671
-
6
1
-

2,923
9,370
46,623
-
6
-
1

62,971

58,923

62,971

58,923

The Financial Statements were approved by the Board of Directors and authorised for issue on 1st June 2015 and
signed on its behalf by:

The notes on pages 34 to 63 form part of these financial statements.

B.P. Marsh & J.S. Newman

C O N S O L I D A T E D S T A T E M E N T

O F

C A S H F L O W S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

NOTES

2015
(£’000)

2014
(£’000)

Cash from operating activities
Income from loans to investees
Dividends
Fees received from investment activity
Operating expenses
(Increase) / decrease in receivables
Decrease in payables
Depreciation

Net cash from operating activities

Net cash (used by) / from investing activities
Purchase of property, plant and equipment
Purchase of equity investments
Purchase of treasury investments
Net proceeds from sale of equity investments
Corporation tax paid on equity investment disposal
Net advances of loans to investee companies
Net proceeds from sale of treasury investments

Net cash (used by) / from investing activities

Net cash used by financing activities
Financial income1
Financial expenses2
Dividends paid
Payments made to repurchase company shares

Net cash used by financing activities

Change in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Exchange movement3

Cash and cash equivalents at end of period

12,14

21,22

1,789
432
575
(2,160)
(302)
(111)
7

230

(7)
(3,066)
(2,763)
1,041
(4,216)
(424)
6,088

(3,347)

44
-
(804)
(83)

(843)

(3,960)
5,502
(11)

1,531

1,402
368
486
(1,987)
456
(26)
6

705

(17)
(4,272)
(12,000)
29,029
(1,400)
(10,736)
2,777

3,381

60
(66)
(365)
-

(371)

3,715
1,787
-

5,502

1 The financial income as noted in the Consolidated Statement of Comprehensive Income is £450k (2014: £138k). The financial
income in the Consolidated Statement of Cash Flows excludes realised income (which was reinvested) and unrealised income of
£406k (2014: £78k) arising from the Group’s treasury investments as this is a non-cash movement.

2 The financial expenses as noted in the Consolidated Statement of Comprehensive Income are £51k (2014: £78k). The financial
expenses in the Consolidated Statement of Cash Flows excludes treasury management costs of £51k (2014: £12k) as this is a
non-cash movement.

3 The exchange movement as noted in the Consolidated Statement of Comprehensive Income is a loss of £(244)k (2014: loss of
£(108)k).The exchange movement in the Consolidated Statement of Cash Flows excludes an exchange loss of £(233)k (2014:
loss of £(108)k) relating to the revaluation of loans denominated in Euros and Australian Dollars as this is a non-cash movement.

The notes on pages 34 to 63 form part of these financial statements.

C O M P A N Y

S T A T E M E N T O F
Y E A R E N D E D 3 1ST

F O R T H E

J A N U A R Y

2 0 1 5

C A S H F L O W S

No Company Statement of Cash Flows has been prepared as there has been no cash f low movement in the
Company during the current and previous period, other than dividends received from B.P. Marsh & Company
Limited (“BPMCL”), a subsidiary company, which were settled via an intercompany adjustment. The ordinary
dividend payment to the Company’s members during the year was paid directly by BPMCL and ref lected in the
Company through an intercompany adjustment. Accordingly the Company’s “cash and cash equivalents” balance
as at 31st January 2015 is £1k (2014: £1k).

C O N S O L I D A T E D & C O M P A N Y

S T A T E M E N T S O F

C H A N G E S

I N E Q U I T Y

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

G RO U P

C O M PA N Y

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

Opening total equity
Profit for the year
Dividends paid
Repurchase of company shares

58,923
4,935
(804)
(83)

55,455
3,833
(365)
-

58,923
4,935
(804)
(83)

55,455
3,833
(365)
-

Total Equity

62,971

58,923

62,971

58,923

Refer to Note 22 for detailed analysis of the changes in the components of equity.

The notes on pages 34 to 63 form part of these financial statements.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

1. ACCOUNTING POLICIES

Basis of preparation of financial statements
These consolidated 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 are presented in sterling, the functional currency of the Group, rounded
to the nearest thousand pounds (£’000) except where otherwise indicated.

The preparation of financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. In the process of applying the Group’s accounting policies, management has made the
following judgments, which have the most significant effect on the amounts recognised in the financial
statements:

Assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10: Consolidated Financial Statements
(“IFRS 10”) are required to account for their investments in controlled entities, as well as investments in
associates at fair value through profit or loss. Subsidiaries that provide investment related services or engage in
permitted investment related activities with investees that relate to the parent investment entity’s investment
activities continue to be consolidated in the Group results. The criteria which define an investment entity are
currently as follows:
a)

an entity that obtains funds from one or more investors for the purpose of providing those investors with
investment services;
an entity that commits to its investors that its business purpose is to invest funds solely for returns from
capital appreciation, investment income or both; and
an entity that measures and evaluates the performance of substantially all of its investments on a fair value
basis.

The Group’s annual and interim consolidated financial statements clearly state its objective of investing directly
into portfolio investments and providing investment management services to investors for the purpose of
generating returns in the form of investment income and capital appreciation. The Group has always reported
its investment in portfolio investments at fair value. It also produces reports for investors of the funds it manages
and its internal management report on a fair value basis. The exit strategy for all investments held by the Group
is assessed, initially, at the time of the first investment and this is documented in the investment paper submitted
to the Board for approval.

The Board has also concluded that the Company meets the additional characteristics of an investment entity, in
that it has more than one investment; the investments are predominantly in the form of equities and similar
securities; it has more than one investor and its investors are not related parties. The Board has concluded that
B.P. Marsh & Partners Plc and its two subsidiaries, B.P. Marsh & Company Limited and Marsh Insurance
Holdings Limited, which provide investment related services on behalf of B.P. Marsh & Partners Plc, all meet
the definition of an investment entity. These conclusions will be reassessed on an annual basis for changes to
any of these criteria or characteristics.

Application and significant judgments
When it is established that a parent company is an investment entity, its subsidiaries are measured at fair value
through profit or loss. However if an investment entity has subsidiaries that provide services that relate to the
investment entity’s investment activities, exception to the Amendment of IFRS 10 is not applicable as in this
case, the parent investment entity still consolidates the results of its subsidiaries. Therefore the results of B.P.
Marsh & Company Limited and Marsh Insurance Holdings Limited continued to be consolidated into its
Group financial statements for the year.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

1. ACCOUNTING POLICIES (CONTINUED)

Basis of preparation of financial statements (continued)

Application and significant judgments (continued)
The most significant estimates relate to the fair valuation of the equity investment portfolio. The valuation
methodology for the investment portfolio is detailed below. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.

New standards effective during the year
As noted above, the Group has adopted IFRS 10 Amendment (Consolidated Financial Statements) and
accounted for its investment in Summa Insurance Brokerage, S.L. when it became a subsidiary during the year
at fair value through profit or loss. None of the other new standards, interpretations or amendments, which are
effective for the first time in these consolidated financial statements, has had a material impact on these
consolidated financial statements.

Basis of consolidation

(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group
is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
a)

power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
the ability to use its power over the investee to affect its returns.

b)
c)

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
a)
b)

rights arising from other contractual arrangements; and
the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the elements of control.

B.P. Marsh & Partners Plc (“the Company”), an investment entity, has two subsidiary investment entities, B.P.
Marsh & Company Limited and Marsh Insurance Holdings Limited, that provide services that relate to the
Company’s investment activities. The results of these two subsidiaries are consolidated into the Group consolidated
financial statements. Summa Insurance Brokerage, S.L. (“Summa”) became a subsidiary of B.P. Marsh & Company
Limited following a further acquisition of a 28.625% equity stake in December 2014. The Group has taken
advantage of the Amendment to IFRS 10 not to consolidate the results of Summa. Instead the investments in
Summa are valued at fair value through profit or loss.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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1. ACCOUNTING POLICIES (CONTINUED)

Basis of consolidation (continued)

(ii) Associates
Associates are those entities in which the Group has significant inf luence, but not control, over the financial
and operating policies. Investments that are held as part of the Group’s investment portfolio are carried in the
statement of financial position at fair value even though the Group may have significant inf luence over those
companies.

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 ref lecting 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 inf luence, but not control, over the financial and
operating policies. Investments that are held as part of the Group’s investment portfolio are carried in the
Consolidated Statement of Financial Position at fair value even though the Group may have significant inf luence
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: Financial Instruments (“IAS 39”), with changes in fair value recognised in the profit or loss in the
period of the change. The Group has no interests in associates through which it carries on its business.

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 £4,934,864, prior to a dividend distribution
of £803,825 (2014: profit of £3,833,449 prior to a dividend distribution of £365,375).

Employee services settled in equity instruments
The Group issued cash settled share-based awards to certain employees. A fair value for the cash settled share
awards is measured at the date of grant. The Group measured the fair value using the Black-Scholes method
which was considered to be the most appropriate valuation technique to value the awards.

The fair value of the 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 ref lect actual or estimated levels of vesting with the corresponding entry to capital
contribution.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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J A N U A R Y

2 0 1 5

1. ACCOUNTING POLICIES (CONTINUED)

Investments – equity portfolio
All equity portfolio 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 equity portfolio investments. In valuing equity portfolio investments, the
Board applies guidelines issued by the International Private Equity and Venture Capital Valuation (“IPEVCV”)
Committee. The following valuation methodologies have been used in reaching the fair value of equity
portfolio 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 ref lect the
estimated extent of impairment;
by reference to underlying funds under management;
by applying appropriate multiples to the earnings and revenues of the investee company; or
by reference to expected future cash f low from the investment where a realisation or f lotation is imminent.

b)
c)
d)

Both realised and unrealised gains and losses arising from changes in fair value are taken to the Consolidated
Statement of Comprehensive Income for the year. In the Consolidated Statement of Financial Position the
unrealised gains and losses arising from changes in fair value are shown within a “fair value reserve” separate
from retained earnings. Transaction costs on acquisition or disposal of equity portfolio investments are
expensed in the Consolidated Statement of Comprehensive Income.

Income from equity portfolio investments
Income from equity portfolio investments comprises:
a)

gross interest from loans, which is taken to the Consolidated Statement of Comprehensive Income on an
accruals basis;
dividends from equity investments are recognised in the Consolidated Statement of Comprehensive
Income when the shareholders rights to receive payment have been established; and
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.

Investments – treasury portfolio
All treasury portfolio 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 market
value as determined from the valuation reports provided by the fund investment manager.

Both realised and unrealised gains and losses arising from changes in fair market value are taken to the
Consolidated Statement of Comprehensive Income for the year. In the Consolidated Statement of Financial
Position the unrealised gains and losses arising from changes in fair value are shown within the retained earnings
reserve as these investments are deemed as being easily convertible into cash. Costs associated with the
management of these investments are expensed in the Consolidated Statement of Comprehensive Income.

Income from treasury portfolio investments
Income from treasury portfolio investments comprises of dividends receivable which are either directly
reinvested into the funds or received as cash.

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

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1. ACCOUNTING POLICIES (CONTINUED)

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

Furniture & equipment - 5 years
Leasehold fixtures and fittings - over the life of the lease

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

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

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

Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable
is based on the estimated taxable profit for the year. Taxable profit differs from net profit as reported in the
Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the date of the Consolidated Statement of Financial Position.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and of liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and it is accounted for using the liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each date of the Consolidated Statement of Financial
Position and reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income,
except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt
with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.

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J A N U A R Y

2 0 1 5

1. ACCOUNTING POLICIES (CONTINUED)

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 Consolidated 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 Consolidated Statement of Financial Position when the Group
becomes party to the contractual provisions of the instrument. De-recognition occurs when rights to cash f lows
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 which are classified as non-current assets. They are stated at their cost less impairment losses.

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 f lows
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 Consolidated 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 Consolidated 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
Consolidated 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 Consolidated Statement of Financial Position.

International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of these consolidated financial statements there were no IFRS or International
Financial Reporting Standards Interpretations Committee (“IFRS IC”) interpretations or amendments issued
but not yet effective that would be expected to have a material impact on the Group.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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J A N U A R Y

2 0 1 5

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 from equity portfolio investments as
described in further detail in Note 1 under ‘Income from equity portfolio investments’ and also from treasury
portfolio investments as described in Note 1 under ‘Income from treasury portfolio investments’.

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

GEOGRAPHIC SEGMENT 1:
UK & CHANNEL ISLANDS

GEOGRAPHIC SEGMENT 2:
NON UK & CHANNEL ISLANDS

GROUP

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

6,056
Operating income
(1,670)
Operating expenses
Segment operating profit / (loss) 4,386

Financial income
Financial expenses
Exchange movements
Share based payment provision

Profit / (loss) before tax
Income tax expense
Profit / (loss) for the year

348
(39)
(6)
(1)

4,688
(722)
3,966

5,949
(1,679)
4,270

117
(66)
-
-

4,321
(293)
4,028

1,849
(490)
1,359

102
(12)
(238)
-

1,211
(242)
969

160
(308)
(148)

21
(12)
(108)
-

(247)
52
(195)

7,905
(2,160)
5,745

450
(51)
(244)
(1)

5,899
(964)
4,935

6,109
(1,987)
4,122

138
(78)
(108)
-

4,074
(241)
3,833

Included within the operating income reported above are the following amounts requiring separate disclosure
owing to the fact that they are derived from a single investee company and the total revenues attributable to that
investee company are 10% or more of the total realised income generated by the Group during the period:

TOTAL INCOME ATTRIBUTABLE
TO THE INVESTEE COMPANY

% OF TOTAL REALISED
OPERATING INCOME

REPORTABLE

GEOGRAPHIC SEGMENT

2015
(£’000)

2014
(£’000)

2015

2014

2015

2014

Besso Insurance Group Limited
849
Hyperion Insurance Group Limited 509
Trireme Insurance Group Limited 391

876
552
292

30
18
14

39
24
13

1
1
1&2

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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2. SEGMENTAL REPORTING (CONTINUED)

GEOGRAPHIC SEGMENT 1:
UK & CHANNEL ISLANDS

GEOGRAPHIC SEGMENT 2:
NON UK & CHANNEL ISLANDS

GROUP

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’ 000)

Non-current assets
Property, plant and equipment
Investments – equity portfolio
Investments – treasury portfolio
Loans and receivables

Current assets
Trade and other receivables
Cash and cash equivalents
Deferred tax assets

14
30,613
6,319
11,466
48,412

5,588
1,531
-
7,119

15
25,989
9,289
14,074
49,367

2,460
5,502
-
7,962

4
8,034
-
3,251
11,289

320
-
-
320

3
5,721
-
3,174
8,898

225
-
40
265

18
38,647
6,319
14,717
59,701

5,908
1,531
-
7,439

18
31,710
9,289
17,248
58,265

2,685
5,502
40
8,227

Total assets

55,531

57,329

11,609

9,163

67,140

66,492

Non-current liabilities
Carried interest provision
Deferred tax liabilities

Current liabilities
Trade and other payables
Corporation tax provision
Total liabilities

-
(3,406)
(3,406)

(446)
(62)
(3,914)

(197)
(2,776)
(2,973)

(558)
(4,038)
(7,569)

-
(255)
(255)

-
-
(255)

-
-
-

-
(3,661)
(3,661)

(446)
(62)
(4,169)

(197)
(2,776)
(2,973)

(558)
(4,038)
(7,569)

Net assets

51,617

49,760

11,354

9,163

62,971

58,923

Additions to property, plant
and equipment

Depreciation of property, plant
and equipment

Impairment of investments and
loans

Cash f low arising from:

Operating activities
Investing activities
Financing activities
Change in cash and
cash equivalents

73
(1,836)
(843)

684
7,400
(371)

157
(1,511)
-

21
(4,019)
-

230
(3,347)
(843)

705
3,381
(371)

(2,606)

7,713

(1,354)

(3,998)

(3,960)

3,715

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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Y E A R E N D E D 3 1ST

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2 0 1 5

3. FINANCIAL EXPENSES

Other interest (Note 17)
Investment management costs (Note 13)

4. FINANCIAL INCOME

Bank interest
Income from treasury portfolio investments – dividend and similar
income (Note 13)
Income from treasury portfolio investments – net unrealised gains on
revaluation (Note 13)

2015
(£’000)

2014
(£’000)

-
51
51

66
12
78

2015
(£’000)

2014
(£’000)

208

198
450

64
138

5. STAFF COSTS

The average number of employees, including all directors (executive and non-executive), employed by the
Group during the year was 17 (2014: 16). All remuneration was paid by B.P. Marsh & Company Limited.

The related staff costs were:

Wages and salaries
Social security costs
Pension costs

2015
(£’000)

2014
(£’000)

1,220
154
63
1,437

1,125
141
58
1,324

In addition, during the year Joint Share Ownership Agreements were entered into between certain directors
and employees, the Company and B.P. Marsh Management Limited, a company wholly owned by the
Executive Chairman and majority shareholder, Mr. B.P. Marsh. Refer to the Report of the Remuneration
Committee on page 18, 19 and Note 27 for further details.

6. DIRECTORS’ EMOLUMENTS

The aggregate emoluments of the directors were:

Management services – remuneration
Fees
Pension contributions – remuneration

2015
(£’000)

2014
(£’000)

796
23
41
860

790
34
35
859

In addition to the above, and as outlined in Note 18, Mr S.S. Clarke had an entitlement to a gain based on a carried
interest. On 2nd May 2014 £197,033 was paid to Mr S.S. Clarke in settlement of this carried interest entitlement.

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6. DIRECTORS’ EMOLUMENTS (CONTINUED)

Of the 1,421,130 shares in respect of which joint interests were granted during the year, 1,080,059 shares were
issued to directors (952,158 shares to directors serving during the year and 127,901 to an employee who was
appointed a director subsequent to the year end). Refer to the Report of the Remuneration Committee on
pages 18, 19 and Note 27 for further details.

Highest paid director
Emoluments
Pension contribution

2015
(£’000)

2014
(£’000)

205
15
220

202
14
216

The highest paid director also has a joint interest in 355,283 shares pursuant to a Joint Share Ownership
Agreement entered into during the year. Refer to the Report of the Remuneration Committee on pages 18,
19 and Note 27 for further details.

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

During the period, 4 directors (2014: 4) accrued benefits under the defined contribution pension scheme.

7. DIVIDENDS

Ordinary dividends
Dividend paid:

2015
(£’000)

2014
(£’000)

2.75 pence each on 29,230,000 Ordinary shares
(2014: 1.25 pence each on 29,230,000 Ordinary shares)

804
804

365
365

8. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

The profit for the period is arrived at after charging / (crediting):

Depreciation of owned tangible fixed assets
Auditors remuneration:

Audit fees for the Company
Other services:

Audit of subsidiaries’ accounts
Taxation
Other advisory
Exchange loss / (gain)
Operating lease rentals of land and buildings

2015
(£’000)

2014
(£’000)

12
9
24
244
84

10
10
19
108
84

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INCOME TAX EXPENSE

2015
(£’000)

2014
(£’000)

Current tax:
Current tax on profits for the year
Adjustments in respect of prior years

Total current tax

Deferred tax (Note 19):
Origination and reversal of temporary differences
Re-measurement upon change in tax rate
Adjustment in respect of previous periods

Total deferred tax

Income tax expense

The tax assessed for the year is lower (2014: lower) than the standard
rate of corporation tax in the UK. The differences are explained below:

Profit before tax

Profit on ordinary activities at the standard rate of corporation
tax in the UK of 21.33% (2014: 23.17%)
Tax effects of:
Expenses not deductible for tax purposes
Prior year current tax overprovision
Re-measurement of deferred tax upon change in tax rate
Tax payable on realised gains on disposal of investments
Capital gains on disposal of investments
Other adjustments
Other effects:
Management expenses utilised
Non-taxable income (dividends received)

Tax charge for the year

62
(23)

1,032
(130)
23

925

964

5,899

1,258

22
(23)
(130)
-
-
(71)

-
(92)

964

There are no factors which may affect future tax charges except as set out in Note 19.

5,438
-

5,438

(4,464)
(689)
(44)

(5,197)

241

4,074

944

71
-
(689)
(5,438)
5,817
3

(382)
(85)

241

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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10. EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE

EQUITY SHAREHOLDERS

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

Earnings per share – basic and diluted

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

2015
(£’000)

2014
(£’000)

4,935

16.9p

3,833

13.1p

N U M B E R

29,218,815

29,230,000

Number of dilutive shares under option

Nil

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

29,218,815

29,230,000

During the year the Company paid a total of £82,450 in order to repurchase 63,000 ordinary shares at an
average price of 131 pence per share (during the period August 2014 to January 2015). 3,960 ordinary shares
were immediately cancelled upon purchases and the remaining 59,040 ordinary shares are being held by the
Company in Treasury. The repurchase and subsequent cancellations of 3,960 ordinary shares resulted in a
reduction in the number of ordinary shares in issue from 29,230,000 to 29,226,040.

Distributable reserves have been reduced by £82,054 as a result and the amount of £396, being the nominal
value of the cancelled 3,960 ordinary shares, has been transferred to the Capital Redemption Reserve.

The Treasury shares do not have voting or dividend rights and have therefore been excluded for the purposes
of calculating earnings per share.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

11. PROPERTY, PLANT AND EQUIPMENT

Group

Cost
At 1st February 2013
Additions
Disposals
At 31st January 2014

At 1st February 2014
Additions
Disposals
At 31st January 2015

Depreciation
At 1st February 2013
Eliminated on disposal
Charge for the year
At 31st January 2014

At 1st February 2014
Eliminated on disposal
Charge for the year
At 31st January 2015

Net book value
At 31st January 2015
At 31st January 2014
At 31st January 2013

FURNITURE &
EQUIPMENT
(£’000)

LEASEHOLD FIXTURES
& FITTINGS
(£’000)

TOTAL

(£’000)

51
-
-
51

-
-
-

109
17
(5)
121

121
7
(12)
116

102
(5)
6
103

103
(12)
7
98

18
18
7

58
17
(5)
70

70
7
(12)
65

51
(5)
6
52

52
(12)
7
47

18
18
7

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

12. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO

Group

At valuation
At 1st February 2013
Additions
Disposals
Provisions
Unrealised gains in this period
At 31st January 2014

At 1st February 2014
Additions
Disposals
Provisions
Unrealised gains in this period
At 31st January 2015

At cost
At 1st February 2013
Additions
Disposals
Provisions
At 31st January 2014

At 1st February 2014
Additions
Disposals
Provisions
At 31st January 2015

SHARES IN INVESTEE COMPANIES
TOTAL (£’000)

52,711
4,272
(29,017)
-
3,744
31,710

31,710
3,066
(1,238)
-
5,109
38,647

17,969
4,272
(3,788)
-
18,453

18,453
3,066
(703)
-
20,816

The principal additions relate to the following transactions in the year:

On 29th May 2014 the Group subscribed to its pro-rata proportion of a £1,200,000 Rights Issue in Trireme
Insurance Group Limited (“Trireme”) (formerly known as U.S. Risk (UK) Limited *). Total consideration paid
amounted to £351,000 for 351,000 newly issued B Preferred Ordinary shares (£1 per share). In addition, on 30th
October 2014, following the departure of a 5% minority shareholder and director of Trireme, the Group
acquired its pro-rata proportion of the exiting director’s 5% shareholding for a cash consideration of £63,105.
As at 31st January 2015 the Group’s holding in Trireme was 29.27% (effective economic holding of 30.57%).

On 14th August 2014 the Group acquired a 5% equity stake in Nexus Underwriting Management Limited for
a total consideration of £1,554,000.

On 5th December 2014 the Group acquired a further 28.625% equity stake in Summa Insurance Brokerage, S.L
(“Summa”) for a cash consideration of €1,248,177 (£997,884). The acquisition increased the Group’s equity
stake in Summa from 48.625% as at 31st January 2014 to 77.25% as at 31st January 2015.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

12. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO (CONTINUED)

Group (continued)
The principal disposal in the year relates to the following transaction:

On 1st May 2014 the Group sold, to its fellow shareholders, its respective 20% stakes in Portfolio Design Group
International Limited, Morex Commercial Limited, Preferred Asset Management Limited and New Horizons
Nominees Limited (together the “PDGI businesses”) for £1,250,000 in cash. As outlined in Note 18, S.S.
Clarke, a non-executive Director of the Company, is entitled to 20% of any gain on the sale of the PDGI
businesses after the deduction of expenses. Consequently, on 2nd May 2014 the Group paid S.S. Clarke £197,033
in respect of his entitlement due on the sale of the PDGI businesses as per the carried interest agreement between
the Group and S.S. Clarke.

The unquoted investee companies, which are registered in England except Summa Insurance Brokerage S.L.
(Spain), MB Prestige Holdings (PTY) Limited (Australia) and Bastion Reinsurance Brokerage (PTY) Limited
(South Africa) are as follows:

NAME OF COMPANY

% HOLDING
OF SHARE
CAPITAL

DATE
INFORMATION
AVAILABLE TO

AGGREGATE
CAPITAL AND
RESERVES (£)

POST TAX
PROFIT/(LOSS)
FOR THE YEAR (£)

PRINCIPAL
ACTIVITY

The Broucour Group Limited 49.00

30.04.14

(710,622)

(70,687)

Business transfer agents

37.94

31.12.13

6,323,328

32,099

Insurance intermediary

2.24

30.09.14

51,694,000

4,515,000

LEBC Holdings Limited

34.91

30.09.14

212,460

761,891

40.00

31.12.14

953,172

201,360

49.90

31.03.14

4,036,862

138,243

5.00

31.12.13

2,245,979

1,362,825

77.25

31.12.13

9,146,570

110,021

30.57

31.12.14

448,452

(2,030,999)

30.00

30.09.13

(378,118)

(379,118)

Insurance holding
company

Independent financial
advisor company

Specialist Australian
Motor Managing
General Agency

Investment holding
company

Specialist Managing
General Agency

Consolidator of regional
insurance brokers

Holding company for
insurance intermediaries

Specialist UK Motor
Managing General
Agency

Besso Insurance Group
Limited

Hyperion Insurance
Group Limited

MB Prestige Holdings
(PTY) Limited

Neutral Bay Investments
Limited

Nexus Underwriting
Management Limited

Summa Insurance
Brokerage, S.L.

Trireme Insurance
Group Limited*

Walsingham Motor
Insurance Limited

Bastion Reinsurance
Brokerage (PTY) Limited

35.00

31.12.14

30,042

(49,281)

Reinsurance broker

* On 18th August 2014 U.S. Risk (UK) Limited formally changed its name to Trireme Insurance Group Limited.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

12. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO (CONTINUED)

Group (continued)
In addition, as at 31st January 2015 the Group held 1.33% of the share capital of Randall & Quilter Investment
Holdings Limited (“R&Q”). R&Q is an AIM listed company.

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

Company

At valuation
At 1st February 2013
Additions
Unrealised gains in this period
At 31st January 2014

At 1st February 2014
Additions
Unrealised gains in this period
At 31st January 2015

At cost
At 1st February 2013
Additions
At 31st January 2014

At 1st February 2014
Additions
At 31st January 2015

SHARES IN GROUP
UNDERTAKINGS
(£’000)

45,299
-
3,468
48,767

48,767
-
4,048
52,815

2,143
-
2,143

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

12. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO (CONTINUED)

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 IFRS accounts of B.P. Marsh & Company Limited and Marsh Insurance
Holdings Limited and the UK GAAP accounts for the other companies, are as follows:

NAME OF COMPANY

%
HOLDING
OF SHARE
CAPITAL

AGGREGATE
CAPITAL AND
RESERVES AT
31ST JANUARY
2015 (£)

PROFIT/(LOSS) FOR
THE YEAR TO
31ST JANUARY
2015 (£)

PRINCIPAL
ACTIVITY

B.P. Marsh & Company Limited

100

52,814,876

4,934,366

Marsh Insurance
Holdings Limited

B.P. Marsh Asset
Management Limited

B.P. Marsh & Co. Trustee
Company Limited

Marsh Development
Capital Limited

100

Consulting services
and investment
holding company

Investment
holding company

12,687,090

1,685,609

23,485

630

Consulting services

1,000

Dormant

13. NON-CURRENT INVESTMENTS – TREASURY PORTFOLIO

Group

At valuation
Market value at 1st February
Additions at cost
Disposals
Change in value in the year (Note 3 & Note 4)
Market value at 31st January

Investment fund split:
GAM London Limited
Rothschild New Court Fund
Banque Heritage SA
Total

2015
(£’000)

2014
(£’000)

9,289
2,763
(6,088)
355
6,319

4,538
-
1,781
6,319

-
12,000
(2,777)
66
9,289

5,544
732
3,013
9,289

The treasury portfolio comprises of investment funds managed and valued by the Group's investment managers,
GAM London Limited, Rothschild Wealth Management (UK) Limited and Banque Heritage SA. All
investments in securities are included at year end market value.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

13. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO (CONTINUED)

The initial investment into the funds was made following the partial realisation of the Group’s investment in
Hyperion Insurance Group Limited in the year to 31st January 2014.

The purpose of the funds is to hold (and grow) the Group’s surplus cash until such time that suitable investment
opportunities arise.

The funds are risk bearing and therefore their value not only can increase, but also has the potential to fall below
the amount initially invested by the Group. However, the performance of each fund is monitored on a regular
basis and the appropriate action is taken if there is a prolonged period of poor performance.

Investment management costs of £51,480 (2014: £12,549) were charged to the Consolidated Statement of
Comprehensive Income for the current year (Note 3).

14. REALISED GAINS ON DISPOSAL OF EQUITY INVESTMENTS

The amount included in realised gains on disposal of equity investments for the current year is £Nil. During
the year the Group disposed of its investments in Portfolio Design Group International Limited, Morex
Commercial Limited, Preferred Asset Management Limited and New Horizons Nominees Limited (together
the “PDGI businesses”) at their combined carrying value of £1,238,000 for a consideration of £1,250,000. This
resulted in a gross realised gain on disposal of £12,000, reduced by disposal costs totalling £12,000, to give a net
realised gain of £Nil.

The above disposal of the PDGI businesses also resulted in a net release to Retained Earnings from the Fair
Value Reserve of £332,173, comprising of a £534,967 release of fair value which has been reduced by estimated
tax payable on disposal of £5,761 and £197,033 of carried interest paid (See Note 12 & Note 18). In the year to
31st January 1999 an intra-group transfer had already recognised a £450,000 release of fair value in relation to
this investment.

In the current year to 31st January 2015 the tax payable on the prior year partial disposal of the Group’s investment
in Hyperion Insurance Group Limited (“Hyperion”) was re-evaluated following finalisation of the Group’s
corporation tax returns, resulting in a reduction of £22,538. This reduction subsequently resulted in a further net
release to Retained Earnings from the Fair Value Reserve of the same amount (see Note 9 and Note 19).

As a result of the above disposal of the PDGI businesses and the re-evaluation of the tax payable on the
Hyperion disposal in the prior year, the aggregate net release to Retained Earnings from the Fair Value Reserve
in the current year amounted to £354,711.

The amount included in realised gains on disposal of equity investments in the year to 31st January 2014 was a
net gain of £11,604 which was in respect of the Group’s disposal of 80% of its investment in Hyperion at its
carrying value of £29,017,000 for a consideration of £29,242,304 in July 2013. This resulted in a gross realised
gain on disposal of £225,304, reduced by disposal costs totalling £213,700, to give a net realised gain of £11,604.

In the year to 31st January 2014 the above Hyperion disposal also resulted in a net release to Retained Earnings
from the Fair Value Reserve of £19,791,304, comprising of a £25,228,770 release of fair value which was
reduced by tax payable on disposal of £5,437,466. The tax payable on disposal was subsequently re-evaluated
and reduced in the current year as noted above.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

15. LOANS AND RECEIVABLES – NON-CURRENT

G RO U P

C O M PA N Y

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

Loans to investee companies (Note 28)
Amounts due from subsidiary undertakings

14,717
-
14,717

17,248
-
17,248

-
10,155
10,155

See Note 28 for terms of the loans.

16. TRADE AND OTHER RECEIVABLES – CURRENT

Trade receivables
Less provision for impairment of receivables

Loans to investee companies (Note 28)
Corporation tax repayable
Other receivables
Prepayments and accrued income

G RO U P

C O M PA N Y

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

533
-
533
4,822
201
24
328

217
-
217
2,101
-
13
354

5,908

2,685

-
-
-
-
-
-
-

Included within trade receivables is £501,493 (2014: £183,391) 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.

During the year there were no provisions made for doubtful debts (2014: None).

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 £532,877 (2014: £216,382)
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.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

16. TRADE AND OTHER RECEIVABLES – CURRENT (CONTINUED)

Ageing of past due but not impaired:

0 – 30 days*
31 – 60 days
61 – 90 days
More than 90 days

G RO U P

C O M PA N Y

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

173
122
5
233

50
56
51
60

533

217

-
-
-
-

* Included within the 0 – 30 days trade receivables balances shown above are £150,277 of invoices issued on
31st January 2015 (2014: £33,691 invoices issued on 31st January 2014). Whilst these invoices fall within this
ageing category, they were not past due as at the year end date.

There were no provisions made against loans to investee companies in both the current or prior year. The total
provision against loans relating to existing Non-Current Investments as at 31st January 2015 stands at £685,000
(2014: £685,000).

See Note 28 for terms of the loans and Note 26 for further credit risk information.

17. LOANS AND OTHER PAYABLES

Except as set out in Note 19 and Note 20, the Group had no outstanding loans or other non-current liabilities
as at 31st January 2015.

In the year to 31st January 2014, the Group drew down in full its £4,325,000 loan facility, which certain
directors, and companies controlled by the directors, or other related parties, agreed to provide to the Group
during the year to 31st January 2011. The loan facility was secured on the assets of the Company and accrued
interest at a rate of UK Base Rate + 4% (subject to a minimum of 6.5%). Following the partial sale of the
Group’s investment in Hyperion Insurance Group Limited in July 2013, the Group repaid the outstanding loan
in full, at which time the facility expired. Interest on this loan facility of £65,608 was charged to the
Consolidated Statement of Comprehensive Income in the year to 31st January 2014 (Note 3).

18. CARRIED INTEREST PROVISION

At the year end there were no director’s interests in any contracts with any Group investments (carried interest
provided for as at 31st January 2014: £197,033).

The carried interest provided in the Consolidated Statement of Financial Position as at 31st January 2014
represented 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 the Group’s equity investments in Portfolio Design Group International Limited,
Morex Commercial Limited, Preferred Asset Management Limited and New Horizons Nominees Limited
(together the “PDGI businesses”).

As outlined in Note 12, on 1st May 2014 the Group sold its entire investment in the PDGI businesses and on
2nd May 2014 the Group paid S.S. Clarke £197,033 in settlement of his carried interest entitlement in respect of
this sale. No amounts were paid under this arrangement in the year to 31st January 2014.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

19. DEFERRED TAX LIABILITIES – NON-CURRENT

At 1st February 2013
Tax movement relating to investment revaluation and
disposal of revalued investments for the year (Note 9)
Re-measurement upon change in tax rate (Note 9)
Adjustment in respect of previous periods (Note 9)

At 31st January 2014

At 1st February 2014
Tax movement relating to investment revaluation and
disposal of revalued investments for the year (Note 9)
Re-measurement upon change in tax rate (Note 9)
Adjustment in respect of previous periods (Note 9)

At 31st January 2015

G RO U P
(£’000)

C O M PA N Y
(£’000)

7,933

(4,464)
(689)
(44)

2,736

1,032
(130)
23

3,661

-
-
-

The directors estimate that, if the Group were to dispose of all its investments at the amount stated in the
Consolidated Statement of Financial Position, £3,661,000 (2014: £2,736,000) of tax on capital gains would
become payable by the Group at a corporation tax rate of 20% (2014: 21%).

As at 31st January 2015 the corporation tax rate was 21%. A reduced rate of 20% came into effect on 1st April
2015 and this rate has been used in the calculation of the current year deferred tax provision as no investments
were sold in the period since the year end and 1st April 2015.

In the current year to 31st January 2015, following the disposal of the Group’s equity investments in Portfolio
Design Group International Limited, Morex Commercial Limited, Preferred Asset Management Limited and
New Horizons Nominees Limited (together the “PDGI businesses”) and the realisation of the gains arising
from this disposal in the year, £6,000 of deferred tax previously provided in respect of these investments (and
included within the £2,736,000 of deferred tax provided as at 31st January 2014) was released to corporation tax
payable in the Statement of Financial Position (Note 20).

In addition to this, following the current year re-evaluation of the tax payable on the partial disposal of the
Group’s investment in Hyperion Insurance Group Limited (“Hyperion”) in the year to 31st January 2014
(which resulted from the finalisation of the Group’s corporation tax returns for that year and a subsequent
reduction to the actual corporation tax payable on the disposal of £23,000), £23,000 of the £5,438,000 of
deferred tax previously released in the year to 31st January 2014 has been included in the current year as an
adjustment in respect of the previous period.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

20. CURRENT LIABILITIES

Trade and other payables
Trade payables
Other taxation & social security costs
Accruals and deferred income

Corporation tax (Note 9)

G RO U P

C O M PA N Y

2015
(£’000)

2014
(£’000)

2015
(£’000)

2014
(£’000)

95
38
313

446

508

65
52
441

558

4,038

4,596

-
-
-

The corporation tax provision of £61,779 as at 31st January 2015 relates to the estimated tax payable on the
disposal of the Group’s investment the PDGI businesses (See Note 12 for further details) of £5,761 and
estimated tax payable on the Group’s underlying profit for the current year of £56,018.

The corporation tax provision as at 31st January 2014 related to the tax payable on the partial realisation of the
Group’s investment in Hyperion Insurance Group Limited in July 2013.

21. CALLED UP SHARE CAPITAL

Allotted, called up and fully paid
29,226,040 Ordinary shares of 10p each (2014: 29,230,000)

2015
(£’000)

2014
(£’000)

2,923

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

22. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

Group

SHARE
CAPITAL

(£’000)

SHARE
PREMIUM
ACCOUNT
(£’000)

FAIR VALUE
RESERVE

(£’000)

REVERSE

RETAINED
ACQUISITION REDEMPTION CONTRIBUTION EARNINGS

CAPITAL

TOTAL

RESERVE
(£’000)

(£’000)

At 1st February 2013

2,923

9,370

26,348

393

Profit for the year

Transfers on sale of
investments (Note 14)

Dividends paid (Note 7)

3,186

(19,791)

At 31st January 2014

2,923

9,370

9,743

At 1st February 2014

2,923

9,370

9,743

Profit for the year

Transfers on sale of
investments (Note 14)

Dividends paid (Note 7)

Share repurchase (Note 21)

Share based payments
(Note 27)

4,604

(355)

393

At 31st January 2015

2,923

9,370

13,992

393

16,415

55,455

647

3,833

19,791

(365)

36,488

58,923

36,488

58,923

331

4,935

355

(804)

(83)

(1)

36,286

62,971

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F O R T H E

Y E A R E N D E D 3 1ST

J A N U A R Y

2 0 1 5

22. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS (CONTINUED)

Company

SHARE
CAPITAL

(£’000)

SHARE
PREMIUM
ACCOUNT
(£’000)

FAIR VALUE
RESERVE

(£’000)

At 1st February 2013

2,923

9,370

43,155

Profit for the year

Dividends paid (Note 7)

3,468

At 31st January 2014

2,923

9,370

46,623

At 1st February 2014

2,923

9,370

46,623

Profit for the year

Dividends paid (Note 7)

Share repurchase (Note 21)

Share based payments
(Note 27)

4,048

At 31st January 2015

2,923

9,370

50,671

CAPITAL

RETAINED
CAPITAL
REDEMPTION CONTRIBUTION EARNINGS
RESERVE
(£’000)

RESERVE
(£’000)

(£’000)

TOTAL

(£’000)

55,455

365

3,833

(365)

58,923

887

4,935

(804)

(83)

(1)

62,971

23. OPERATING LEASE COMMITMENTS

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

Earlier than one year
Between two and five years

24. LOAN AND EQUITY COMMITMENTS

2015
LAND AND

BUILDINGS
(£’000)

2014
LAND AND

BUILDINGS
(£’000)

84
76

84
160

On 22nd July 2010 (as varied on 8th August 2012) the Group entered into an agreement to provide a loan facility
of £1,950,000 to Trireme Insurance Group Limited (“Trireme”) (formerly known as U.S. Risk (UK) Limited),
an investee company. As at 31st January 2014 Trireme had drawn down £1,800,000 of its previously agreed
£1,950,000 loan facility. On 29th May 2014 the Group agreed to provide additional loan funding of £469,515
which increased the total agreed loan funding to £2,269,515. In addition, on 23rd September 2014, the Group
agreed to provide a further loan facility of £150,000 which increased the total agreed loan facility to £2,419,515.
As at 31st January 2015 £2,395,113 of this facility had been drawn down, leaving a remaining undrawn facility
of £24,402.

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24. LOAN AND EQUITY COMMITMENTS (CONTINUED)

On 1st May 2013 the Group entered into an agreement to provide a loan facility of £747,000 to Besso Insurance
Group Limited, an investee company. As at 31st January 2015 £333,000 of this facility had been drawn down.
Following repayments made during the year on this facility amounting to £63,000 and together with
£2,750,000 of 14% loan stock and other loans of £2,115,393, total loans drawn down as at 31st January 2015
amounted to £5,135,393, with a remaining undrawn facility of £414,000.

On 11th December 2014 the Group entered into an agreement to provide a loan facility of £341,831 to Bastion
Reinsurance Brokerage (PTY) Limited, an investee company. As at 31st January 2015 £211,831 of this facility
had been drawn down, leaving a remaining undrawn facility of £130,000.

25. CONTINGENT LIABILITIES

The Group has entered into a long-term incentive arrangement with an employee. Provided they remain in
employment with the Group as at specified dates in the future, the Group has agreed to pay bonuses totalling
£60,000 together with the Employers’ National Insurance due thereon. £30,000 is due to be paid on 15th May
2015 and £30,000 on 15th May 2016. No amount has been included in these financial statements as the
performance conditions relating to these incentives had not been met at the year end. The conditions for the
£30,000 due for payment on 15th May 2015 were met subsequent to the year end and hence the amount has
since been paid.

26. 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, other debtors and creditors and loans. 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 f low 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 £1,531,000 (2014: £5,502,000), which are part of the financing arrangements
of the Group. The cash balances comprise bank current accounts and deposits placed at investment rates of
interest, which ranged up to 2.0% p.a. in the period (2014: deposit rates of interest ranged up to 2.0% p.a.).
During the period maturity periods ranged between immediate access and 1 year (2014: maturity periods
ranged between immediate access and 1 year).

Currency hedging
During the period, the Group did not engage in any form of currency hedging transaction (2014: None).

Financial liabilities
The Company had no borrowings as at 31st January 2015 (2014: £Nil). Please refer to Note 17 for further details.

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26. FINANCIAL INSTRUMENTS (CONTINUED)

Fair values
The Group has adopted the amendment to IFRS 7 for financial instruments which are measured at fair value
at the reporting 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 31st January 2015:

Assets
Equity portfolio investments designated as
“fair value through profit or loss” assets

Treasury portfolio investments

L E V E L 1
(£’000)

L E V E L 2
(£’000)

L E V E L 3
(£’000)

T OTA L
(£’000)

1,243

6,319

7,562

37,404

38,647

6,319

37,404

44,966

The Group’s assets and liabilities that are measured at fair value at 31st January 2014 are presented in the
following table:

Assets
Equity portfolio investments designated as
“fair value through profit or loss” assets

Treasury portfolio investments

L E V E L 1
(£’000)

L E V E L 2
(£’000)

L E V E L 3
(£’000)

T OTA L
(£’000)

1,708

9,289

10,997

30,002

31,710

9,289

30,002

40,999

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27. SHARE BASED PAYMENT ARRANGEMENTS

During the year, B.P. Marsh & Partners Plc entered into joint share ownership agreements (“the Agreements”)
with certain employees and directors. The details of the arrangements are described in the following table:

Nature of the arrangement

Share appreciation rights (joint beneficial ownership)

Date of grant

6th November 2014

Number of instruments granted

Exercise price (pence)

Share price (market value) at grant (pence)

Hurdle rate

Vesting period (years)

Vesting conditions

1,421,130

140.00

138.00

3.5% p.a. (simple)

3 years

There are no performance conditions other than the recipient
remaining an employee throughout the vesting period. The awards
vest after 3 years or earlier resulting from either:
a)

a change of control resulting from a person, other than a
member of the Company, obtaining control of the Company
either (i) as a result of a making a Takeover Offer; (ii) pursuant
to a Scheme of Arrangement; or (iii) in consequence of a
Compulsory Acquisition); or
a person becoming bound or entitled to acquire shares in the
Company pursuant to sections 974 to 991 of the Companies
Act 2006; or
a winding up.

If the employee is a bad leaver the co-owner of the jointly-owned
share can buy out the employee’s interest for 1p.

Expected volatility

Risk free rate

20%

Expected dividends expressed as a dividend yield 2%

Settlement

Cash settled on sale of shares

% expected to vest (based upon leavers)

85%

Number expected to vest

Valuation model

Black-Scholes value (pence)

Deduction for carry charge (pence)

Fair value per granted instrument (pence)

Charge for year ended 31st January 2015

1,207,960

Black-Scholes

15.00

14.50

0.50

£504

On 6th November 2014 1,421,130 10p Ordinary shares in the Company were transferred into joint beneficial
ownership for six employees, four of whom are directors) under the terms of joint share ownership agreements.
No consideration was paid by the employees for their interests in the jointly-owned shares.

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27. SHARE BASED PAYMENT ARRANGEMENTS (CONTINUED)

Under the terms of the Agreements, the employees and directors enjoy the growth in value of the shares above
a threshold price of £1.40 per share plus an annual carrying charge of 3.5% per annum (simple interest) to the
market value at the date of grant (£1.38 per share).

The employees and directors received an interest in jointly owned shares and a Joint Share Ownership Plan
(“JSOP”) is not an option, however the convention for JSOPs is to treat them as if they were options. The value
of the employee’s interest for accounting purposes is calculated using option pricing theory (Black-Scholes
Mathematics).

The risk free rates are based on the yield on UK Government Gilts of a term consistent with the assumed
option life.

No jointly-owned shares were sold or forfeited during the year. The number of jointly-owned shares expected
to vest has therefore not been adjusted. In accordance with IFRS 2: Share-based Payment, the fair value of the
expected cost of the award (measured at the date of grant) has been spread over the three year vesting period.

28. RELATED PARTY DISCLOSURES

The following loans owed by the associated companies (including their subsidiaries and other related entities)
of the Company and its subsidiaries were outstanding at the year end:

The Broucour Group Limited
Bastion Reinsurance Brokerage (PTY) Limited
Besso Insurance Group Limited
Hyperion Insurance Group Limited
LEBC Holdings Limited
Trireme Insurance Group Limited*
Walsingham Motor Insurance Limited

Summa Insurance Brokerage, S.L.

MB Prestige Holdings (PTY) Limited

2015
(£)

1,097,500
211,831
5,135,393
6,037,361
1,005,000
2,395,113
1,200,000

(€)

3,203,064

(AUD)

1,417,334

2014
(£)

1,135,000
-
5,882,575
6,037,361
1,005,000
1,800,000
1,000,000

(€)

2,951,240

(AUD)

1,417,334

* On 18th August 2014 U.S. Risk (UK) Limited formally changed its name to Trireme Insurance Group Limited.

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.

Mr B.P. Marsh, the Chairman and majority shareholder of the Company is also the Chairman and majority
shareholder of Brian Marsh Enterprises Limited. In addition Ms J.K.N. Dunbar (a director and shareholder of
the Company until 6th November 2014) was also a director and minority shareholder of Brian Marsh
Enterprises Limited until 1st December 2014 and 6th November 2014 respectively. Ms C.S. Kenyon (a director
of the Company) is also a director of Brian Marsh Enterprises Limited.

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28. RELATED PARTY DISCLOSURES (CONTINUED)

Income receivable, consisting of consultancy fees, interest on loans and dividends recognised in the
Consolidated Statement of Comprehensive Income in respect of the associated companies (including their
subsidiaries and other related entities) of the Company and its subsidiaries for the year were as follows:

The Broucour Group Limited
Bastion Reinsurance Brokerage (PTY) Limited
Besso Insurance Group Limited
Hyperion Insurance Group Limited
LEBC Holdings Limited
MB Prestige Holdings (PTY) Limited
Neutral Bay Investments Limited
Nexus Underwriting Management Limited
Portfolio Design Group International Limited
Summa Insurance Brokerage, S.L.
Trireme Insurance Group Limited *
Walsingham Motor Insurance Limited

2015
(£)

45,885
10,016
848,694
509,037
230,975
100,629
111,257
50,520
3,000
258,114
390,640
119,998

2014
(£)

53,490
-
875,550
551,521
128,467
7,586
94,456
-
34,000
94,022
292,110
17,753

In addition, the Group made management charges of £32,000 (2014: £34,000) to the Marsh Christian Trust, a
grant making charitable Trust of which Mr B.P. Marsh, the Executive Chairman and majority shareholder of
the Company, is also the Trustee and Settlor.

The Group also made management charges of £5,100 (2014: £8,000) to Brian Marsh Enterprises Limited.

On 12th February 2014 Mr B.P. Marsh gifted 220,000 ordinary shares in the Company to the Marsh Christian
Trust for nil consideration. These shares were immediately sold by the Marsh Christian Trust in order to
further its charitable objectives.

On 6th June 2014 Mr B.P. Marsh gifted 171,000 ordinary shares in the Company to the Marsh Christian Trust
for nil consideration.

As outlined in Note 12 and Note 18, on 2nd May 2014, following the sale of the Group’s investments in
Portfolio Design Group International Limited, Morex Commercial Limited, Preferred Asset Management
Limited and New Horizons Nominees Limited (together the “PDGI businesses”) the Group paid Mr S.S.
Clarke £197,033 in settlement of his carried interest entitlement in respect of this sale. The carried interest
provided for at the year end was £nil (2014: £197,033).

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

Of the total dividend payments made during the year of £803,825, £509,905 was paid to the directors or parties
related to them (2014: total dividend payments of £365,375, of which £234,625 was paid to the directors or
parties related to them).

* On 18th August 2014 U.S. Risk (UK) Limited formally changed its name to Trireme Insurance Group Limited.

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29. EVENTS AFTER THE REPORTING DATE

On 20th February 2015 the Group acquired a further 10.5% stake in Walsingham Motor Insurance Limited
(“Walsingham”) for total consideration of £300,000. This increased the Group’s holding in Walsingham from
30% as at 31st January 2015 to 40.5%.

On 15th April 2015 the Group subscribed for a 35% preferred equity stake in Bulwark Investment Holdings
(PTY) Limited (“Bulwark”), based in South Africa, for consideration of £1. On the same date the Group also
provided Bulwark with a loan facility of £500,000 in order to fund start-up Managing General Agencies
(“MGAs”). £120,000 of this facility was drawn down immediately in order to fund two new MGAs, and a
further £33,708 was drawn down on 6th May 2015, leaving a remaining undrawn facility of £346,292 at the
date of this report.

30. ULTIMATE CONTROLLING PARTY

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

N O T E S

WE ARE IN THE BUSINESS OF PLANTING

THINGS, NOT SHOOTING AT THEM -

WE ARE FARMERS NOT HUNTERS

B.P. MARSH & PARTNERS PLC
2nd Floor, 36 Broadway
London SW1H 0BH
Tel: +44 (0)207 233 3112
Fax: +44 (0)207 222 0294
www.bpmarsh.co.uk

DESIGNED AND PRO DUCED BY KURT Z LIMIT ED

PHOTO G RAPHY BY RO DNEY SMIT H