B.P. Marsh & Partners PLC Annual Report 2016

FY2016 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 6 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)
Alice Foulk (Managing Director)
Jonathan Newman (Group Finance Director)
Daniel Topping (Chief Investment Officer)
Camilla Kenyon (Director)
Campbell Scoones (Non-executive Deputy Chairman)
Stephen Clarke (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 Registrars
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.

MAKING INVESTMENTS IS NOT LIKE SAVING AND NOT

LIKE SPENDING EITHER. IT IS LIKE CHOOSING A CANVAS

OR A THEME: WHERE TO TRY TO BE CREATIVE NEXT

S
N
O
I
L
L
I
M
£

G R O U P

V A L U A T I O N S

70.81

65.50

62.97

58.90

59.84

55.50

44.17

40.61

22.10

31 Jan 05

31 Jan 07*

31 Jan 10

31 Jan 13

31 Jan 14

31 July 14

31 Jan 15

31 July 15

31 Jan 16

YEAR ENDED

NET OF DEFERRED TAX

YEAR ENDED SIX MONTHS ENDED

*NB: The valuation at 31 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

B.P. Marsh & Partners PLC (“B.P. Marsh”, “Group” or “Company”), the niche venture capital provider to early stage
Financial Services businesses, announces its audited Group final results for the year to 31 January 2016.

The highlights of the results are:
• Increase in the Equity Value of the Portfolio of 23.8% over the year
• Net Asset Value of £70.8m (31 January 2015: £63.0m), a 12.4% increase, net of Dividend
• Net Asset Value increase to 243p per share (31 January 2015: 216p)
• Total return to Shareholders in the year of 13.7% (2015: 8.2%)
• Consolidated profit after tax of £8.7m (31 January 2015: £4.9m), a 76% increase
• Average Net Asset Value annual compound growth rate of 11.4% since 1990
• Final Dividend of 3.42p per share declared (31 January 2015: 2.75p), a 24.4% increase
• Cash and treasury funds balance of £5.3m, with additional cash of £7.3m expected in July
• New investment in South Africa
• Additional investment in Nexus
• Post year-end investment in Asia

“We have concluded a year in which our Company has developed considerable confidence. The portfolio businesses are
performing well as we support them in their development, we have interesting new investment opportunities in the
pipeline and a healthy supply of cash.” Brian Marsh OBE, Chairman

CHAIRMAN’S STATEMENT
I am pleased to present the audited Consolidated Financial Statements of B.P. Marsh & Partners Plc for the year ended
31 January 2016.

In February we celebrated the tenth anniversary of our Admission to AIM, which gave us pause to ref lect on our progress
over those ten years.

During the past decade the Group has endured the global financial crisis and emerged from those difficult times with a
renewed intent to grow our portfolio, to deliver positive returns to our shareholders and position the business for the years
to come.

I believe we have been making good progress and I am gratified, therefore, to report a strong set of results for the year to
31 January 2016.

At the current time, we have a portfolio of 13 investments. Amongst them are some very strong performers and some
interesting growth opportunities and this is demonstrated by the increase in value of the equity portfolio of 23.8% in the
year to January 2016. The inf low of interesting new proposals and opportunities to grow our portfolio businesses is
currently very strong and we have taken steps in recent months to dispose of some non-core holdings in order to redeploy
the capital more effectively. In addition, we expect to receive further cash from realisations of £7.3m in July, so we are
well-placed to act on these opportunities.

In the past three years we have expanded geographically and now hold investments across four continents, in Australia,
South Africa, Europe and Asia. Our overseas investing strategy is focused on those areas where we see opportunity for
businesses to grow in partnership with a London-based investor, coupled with a suitably developed regulatory and
compliance environment. We give careful thought, of course, to our resource and ability to properly manage overseas
investments, to ensure that we are able to devote sufficient time and energy to enabling them to grow, given that as much
as 75% of the underlying revenues of our portfolio companies emanate from overseas.

We have maintained our record in increasing NAV and the average annual compound growth rate since 1990 is 11.4%.
Our management team have, in the main, been with us throughout the decade and between them have developed
considerable experience in our industry.

Four years ago we began taking steps to reduce the discount to NAV by beginning to offer a dividend, by instituting
modest share buy-backs and by ensuring our story is heard more widely to attract new investors. It is pleasing to note that
we have rewarded our loyal shareholders with a total shareholder return of 13.7% in the year, in comparison with 8.2%
in the previous year.

Following discussions with the Board and our advisors and in recognition of the Company’s recent growth and

C H A I R M A N ’ S

S T A T E M E N T

development I have begun a programme of gifting shares to the Marsh Christian Trust, the grant-making charity, in order
that the Trust has these shares available for sale, which should increase liquidity in the Company’s shares.

BUSINESS UPDATE

SUMMARY OF DEVELOPMENTS IN THE PORTFOLIO
During the financial year ended 31 January 2016 and in the ensuing months to date, the following developments have
taken place within the Group and its portfolio:

NEW INVESTMENTS
The Group made two further investments in the South African group of businesses that it is building in partnership with
Bastion Reinsurance Brokerage (PTY) Ltd (“Bastion”).

Bulwark Investment Holdings (PTY) Ltd (“Bulwark”)
On 27 May 2015 the Group announced that it had subscribed for a 35% Cumulative Preferred Ordinary shareholding in
Bulwark.

The new venture is the holding company for various Managing General Agents (“MGAs”) in South Africa. It sits
alongside the Group’s existing South African partners within Bastion.

Funded via a £0.6m loan facility from the Company, Bulwark has drawn down upon £0.59m to support the establishment
of a number of MGAs, which we expect to gain traction within their respective specialist markets over the year ahead.

PLUM
On 1 July 2015 the Group announced that it had acquired a 20% shareholding in Property And Liability Underwriting
Managers (PTY) Ltd (“PLUM”), an MGA based in Johannesburg, South Africa.

The Group acquired this stake in PLUM from existing shareholders for an initial consideration of £0.3m. The total
consideration could increase to £0.6m subject to PLUM achieving EBITDA of ZAR 8,300,000 (c. £0.43m) over the first
year of the Group’s investment. This would be achievable if PLUM hits its budget over the same period:

Gross Written Premium income: ZAR 150,000,000 (c. £7.9m)
Commission income: ZAR 15,000,000 (c. £0.79m)

PLUM specialises in large corporate property insurance risks in South Africa. The underwriting team with PLUM has
over 40 years’ experience in the insurance sector in South Africa, with the lead underwriter having held senior positions
in the reinsurance and insurance sector there over a 20-year period.

PLUM is supported by both domestic South African insurance capacity and A-rated international reinsurance capacity.

PORTFOLIO DEVELOPMENTS

UNITED KINGDOM

Nexus Underwriting Management Limited (“Nexus”)
During the year the Group completed two further subscriptions in Nexus.

Nexus is one of the largest independent specialty MGAs in the London Market with a forecast Premium Income in excess
of £110m for 2016. It operates across the major insurance sectors, including Financial Lines, Trade Credit & Political Risk,
Accident & Health, Surety and Life and various other niche areas of insurance. The Group acquired an initial shareholding
in Nexus of 5% in August 2014, with the intention to increase its shareholding over time.

On 17 June 2015 the Group made a further investment in Nexus for a total consideration of £1,554,000, subscribing for
new Preferred Ordinary shares representing 5% of the enlarged share capital of Nexus, and taking its shareholding to 9.8%
for an aggregate consideration of £3,108,000. This financing was provided to enable Nexus to acquire EBA Insurance Ltd

C H A I R M A N ’ S

S T A T E M E N T

(“EBA”) in August 2015. EBA, founded in 1999, is an MGA with offices in the UK, France and Italy offering clients a
wide range of insurance products.

In December 2015 the Group subscribed for a further investment of 111,850 new Preferred Ordinary shares for a total
consideration of £1,470,000, with this further investment taking B.P. Marsh’s shareholding in Nexus to 13.7%, for an
aggregate consideration of £4,570,000.

This enabled Nexus to acquire Millstream Underwriting Ltd (“Millstream”) in December 2015. Millstream is a London
Market based MGA that specialises in the underwriting and management of travel, personal accident and sickness
insurance programs, primarily in the corporate sector and is the preferred travel insurance provider for Hiscox and
Wesleyan Assurance.

The Group’s strategy is to continue to increase its shareholding in Nexus over time to support its growth ambitions.

Besso Insurance Group Limited (“Besso”)
On 17 December 2015 Besso completed a refinancing deal with Clydesdale Bank to support its continued growth. Since
2011, when Besso reported revenue of £22m, it has grown to a 2016 forecast of £37m revenue and over £6m of underlying
EBITDA.

The additional funding will assist Besso in continuing its growth trajectory and building on its recent expansion into new
regions. In addition, a proportion of the funding was used to repay longstanding Loan Notes provided in 2011 by Besso
Management and Besso shareholders (including the Company) to buy out certain shareholders at the time, in particular
Wells Fargo.

Hyperion Insurance Group Limited (“Hyperion”)
In July 2016 the Group is expecting to realise its remaining 1.6% stake in Hyperion for £7.3m cash.

LEBC Holdings Limited (“LEBC”)
LEBC, the Independent Financial Advisory company, with 15 branches across the United Kingdom, reported year-end
results to 30 September 2015 that saw operating profit increase by 66% over the previous year to £1.8m. Turnover
increased in the period by 22% to £15m from £12.3m.

This growth was driven by a significant increase in activity resulting from the introduction of pension freedoms, as well
as auto-enrolment and defined benefit consultancy work and LEBC expects this momentum to be maintained during
2016.

LEBC is looking to develop a robo-advice proposition (combining technology with human involvement), which will
involve building a technology system to work alongside advisers. The first step in this process was announced in May 2016,
being a joint venture with Belfast-based advice firm Kerr Henderson, in which the two firms have developed software to
make it easier for advisers to use technology to complete fact-finding and report writing for clients.

EUROPE
For the year ended 31 December 2015 Summa Insurance Brokerage, S.L. (“Summa”) performed in line with expectation,
reporting revenue of €5.3m and EBITDA of €1.19m. During 2015 Summa successfully refinanced a number of its
banking arrangements with Spanish Banking Institutions, which resulted in Summa reducing its indebtedness to the
Group by €0.5m.

The Spanish economy’s GDP grew by 3.3% in 2015, with 2016’s growth forecast to be c. 2.8%, making Spain one of the
fastest-growing countries in the Eurozone, growing twice as fast as the Eurozone average in 2015.

In the first quarter of 2016 the Spanish economy grew by 0.8%, which was in keeping with the last quarter of 2015 and
above the expected 0.7% increase. Although current political uncertainty raises questions about the stability of the Spanish
economy’s recovery, the better than expected performance is more promising and is Spain’s eleventh consecutive period
of growth.

In regard to the Spanish Insurance sector, the first quarter of 2016 saw the Non-Life insurance sector grow by c. 4.4%
over that of the same period in 2015, with this growth mainly coming from Motor, Health and SME insurance.

C H A I R M A N ’ S

S T A T E M E N T

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.

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 rate reductions in the liability sector.

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.

SOUTH AFRICA

Bastion Reinsurance Brokerage (PTY) Limited (“Bastion”)
The Group’s broking investment (Bastion) is also developing well and is assisting in the placement of underwriting
agreements on behalf of underwriting agencies. The Board sees these operations as natural adjuncts that should drive solid
investment returns.

2016 is expected to be a positive year for Bastion and Bulwark from both an increasing revenue and profitability
standpoint.

POST YEAR END INVESTMENTS AND DISPOSALS

INVESTMENT IN ASIA REINSURANCE BROKERS
On 21 April 2016 the Group acquired a 20% shareholding in Asia Reinsurance Brokers Pte Limited (“ARB”), the
Singapore-headquartered independent specialist reinsurance and insurance risk solutions provider, for a total
consideration of SGD $2,398,424.

The Group may increase its shareholding in ARB to 25% for an additional cash consideration of up to SGD $500,000.
The consideration paid by the Group will be dependent on the performance of ARB in its financial year ending 31
December 2017.

ARB was established in 2008, following a management buy-out of the business from AJ Gallagher, led by the CEO,
Richard Austen. ARB specialises in the provision of long-term reinsurance and insurance solutions to a wide range of
insurance and reinsurance companies throughout Asia and has offices across the region, including in Malaysia, the
Philippines and Indonesia.

The Group considered this an exciting opportunity to invest in a well-established and profitable business with an
experienced and respected management team and strong growth potential. The investment will be used to build on ARB’s
position in the Asian market and to assist them with their growth ambitions.

DISPOSALS

The Broucour Group
On 22 April 2016 the Group sold its 49% stake in The Broucour Group Limited (“Broucour”) to the Founder and
Managing Director Mr. Rupert Cattell for consideration of up to £341,000, which equates to the Company’s most recent
published valuation. The outstanding loan (£330,000) will likewise be repaid in full.

Randall & Quilter
On 4 May 2016 the Group sold its 1.32% stake in Randall & Quilter Investment Holdings Ltd (“R&Q”) to Brian Marsh
Enterprises Limited for consideration of £1,020,000, resulting in a realised gain for the Company of £247,000, a 25%
increase to the year-end valuation of £773,000. The Board took the view that the realised funds would be better utilised
in an opportunity to which the Group could add value. Brian Marsh Enterprises Limited is owned by Brian Marsh,
Chairman and majority shareholder of the Company.

C H A I R M A N ’ S

S T A T E M E N T

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. During the year the Group acquired 38,612
shares for a total cash consideration of £56,580. The Board believes that these buybacks, whilst low-volume, are a useful
stabilising mechanism and proved to be so particularly during the recent period of market volatility.

DIVIDEND
The Group is pleased to announce that the Board has recommended a final dividend of 3.42p per share for the year ended
31 January 2016, subject to Shareholder approval at the Company’s next Annual General Meeting. If approved the
recommended dividend will be payable on 29 July 2016 to all the shareholders on the register of members at the close of
business on the record date of 1 July 2016.

It remains the Board’s aspiration to maintain at least this level of dividend for the current year ending 31 January 2017,
subject to ongoing review and approval by the Board and the Shareholders.

INVESTMENT STRATEGY AND NEW OPPORTUNITIES
The Group typically invests amounts of up to £3.5m 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 six years. The Group requires its investee companies to adopt certain minority shareholder protections and
appoint a director to its board.

The Group’s network of well-respected contacts ensure access to a wide variety of new investment opportunities and
enable discussions on these to be initiated at an early stage. Value creation is driven by partnering with ambitious, highly-
skilled entrepreneurs seeking a long-term partnership that will provide them not only with growth capital but also access
to a team that brings a substantial knowledge base in mergers, acquisitions, business sales, business growth and
transformation, as well as the financial and legal aspects inherent in growing a business.

During the year the Group saw an increased f low of new business opportunities that fall within its heartland of interest
and this increase is continuing to date. In addition, the pipeline includes opportunities for bolt-ons to existing portfolio
companies and several referrals have been made.

The Group received 71 relevant new investment proposals during the year (59 in previous year), of which 66% proceeded
to NDA stage and 28% warranted continued detailed investigation.

Of the proposals 34% fell within the insurance sector, the area of the Group’s specialism. The opportunities have ranged
from start-ups to investments in established businesses. These have included brokers and MGAs, as well as other
intermediary businesses such as claims administrators. The Group has also looked at IFA and advisory businesses, as well
as marketplace lending platforms and software-as-a-service enquiries.

At year end the Group had £5.3m in cash and treasury funds, of which £3.6m is currently available for new investment
opportunities after commitments. In July 2016 the Group is expecting a return of £7.3m cash from a realisation.

FINANCIAL PERFORMANCE
At 31 January 2016 the net asset value of the Group was £70.8m, or 243p per share (2015: £63.0m, or 216p per share)
including a provision for deferred tax. This equates to an increase in net asset value of 12.4% (2015: 6.9%) for the year.

The Group continued to maintain a £0.8m (or 2.75p per share) dividend payment during the year, as announced
previously (2015: £0.8m or 2.75p per share). Total shareholder return for the year was therefore 13.7% (2015: 8.2%)
including the dividend payment and the net asset value increase.

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

31 JA N UA RY
2015 VA L UAT I O N

AC Q U I S I T I O N S
AT C O ST

D I S P O SA L
P RO C E E D S

I M PA I R M E N T
P ROV I S I O N S

£38.6m

£5.2m

£(0.1)m

£nil

A DJ U ST E D 31
JA N UA RY 2015
VA L UAT I O N
£43.7m

31 JA N UA RY
2016 VA L UAT I O N

£54.1m

C H A I R M A N ’ S

S T A T E M E N T

Including a £7.3m holding in Hyperion Insurance Group Limited (“Hyperion”) which is capped, this equates to an
increase in the portfolio valuation of 23.8% (2015: increase of 15.5%). Excluding the holding in Hyperion, the remaining
portfolio increased by 28.2% over the year (2015: 19.5% increase).

The net asset value of £70.8m at 31 January 2016 represented a total increase in net asset value of £58.2m 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 11.4% 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 76.3% to £8.7m (2015: profit of £4.9m). The
consolidated profit on ordinary activities before taxation was £10.7m (2015: profit of £5.9m), of which £10.3m was
derived from unrealised gains on revaluing the equity investment portfolio in line with current market conditions, an
increase of 102.0% on the previous year (2015: net unrealised gains of £5.1m). The Group’s strategy is to cover expenses
from the portfolio yield, and on an underlying basis (excluding equity and treasury portfolio movement) this was achieved
with a pre-tax profit of £0.4m for the year (2015: £0.4m).

The Group invested £6.9m in new investments and follow-on financing to its existing portfolio during the year.
Repayment of loans by the portfolio amounted to £4.6m in the year (2015 £1.2m). Cash funds (including treasury funds)
at 31 January 2016 were £5.3m.

Income from investments remained consistent with 2015 at £2.8m for the year (2015: £2.8m). Dividend income increased
by 48% over the year due to the strengthening performance of the portfolio companies, whilst income from loans fell by
10%, which was largely the result of the portfolio repaying debt in accordance with agreed repayment schedules. Fees were
6% lower mainly due to one-off fees received in 2015 which were not repeated in 2016.

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 £2.4m (2015: £2.2m) in line with the increase in value of the portfolio.

Due to challenging market conditions, the Group’s treasury funds decreased by 0.4% over the year (net of fund
management charges). Although this was disappointing, it compared favourably with the FTSE 100, which decreased by
9.9% over the same period.

INTERNAL APPOINTMENTS
The Board was pleased to promote Alice Foulk to Managing Director and Dan Topping to Chief Investment Officer in
January 2016. These changes seek to formalise developments in their roles within the Company.

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 established herself as a central part
of the management team. In February 2015 she was appointed as a Director of B.P. Marsh and a member of the Investment
Committee.

Dan joined B.P. Marsh in February 2007, having started his career at a specialist London accountancy practice. In 2011 he
was appointed a Director of B.P. Marsh and is the Senior Executive with overall responsibility for the portfolio and
investment strategy for B.P. Marsh, working alongside the Board and the Investment Directors to structure, develop,
support and monitor the portfolio.

OUTLOOK
Despite the economic and political uncertainty caused by the forthcoming EU Referendum and the prospect of volatile
markets ahead, we believe we are well-placed to meet these challenges. The portfolio businesses are performing well as we
support them in their development, we have interesting new investment opportunities in the pipeline and a healthy supply
of cash. The Board, therefore, looks forward to the year ahead with confidence.

Brian Marsh OBE
7 June 2016

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 31 January 2016 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%
31 January 2016 valuation: £100,000

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: 44.97%*
31 January 2016 valuation: £19,720,000*

* This includes 7.03% that is being held by the Group on behalf of Besso. Besso can invoke a share purchase transaction to buy back and
cancel the shares and these are therefore stated at cost within the valuation.

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%
31 January 2016 valuation: N/A

The Broucour Group Limited
(www.turnerbutler.co.uk)
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%
31 January 2016 valuation: £341,000

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 DUAL
International, 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, and following this merger Hyperion became the world’s largest employee-owned
insurance and reinsurance intermediary group.
Date of investment: November 1994
Equity: 1.66%
31 January 2016 valuation: £7,310,000

E Q U I T Y

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

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: 34.66%
31 January 2016 valuation: £9,497,000

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%
31 January 2016 valuation: £1,440,000

Nexus Underwriting Management Limited
(www.nexusunderwriting.com)
In August 2014 the Group invested in Nexus Underwriting Management Limited (“Nexus”), an 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: 13.48%
31 January 2016 valuation: £5,999,000

Property & Liability Underwriting Managers (PTY) Limited
(www.plumsa.co.za)
In June 2015 the Group completed an investment in Property And Liability Underwriting Managers (PTY) Limited
(“PLUM”), a Managing General Agent based in Johannesburg, South Africa. PLUM specialises in large corporate
property insurance risks in South Africa and is supported by both domestic South African insurance capacity and A-rated
international reinsurance capacity.
Date of investment: June 2015
Equity stake: 20%
31 January 2016 valuation: £307,000

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: 1.32%
31 January 2016 valuation: £773,000

E Q U I T Y

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

Sterling Insurance PTY Limited
(www.sterlinginsurance.com.au)
In June 2013, in a joint venture enterprise alongside Besso, 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: 19.7%
31 January 2016 valuation: £1,917,000

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%
31 January 2016 valuation: £4,331,000

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: 30.44%
31 January 2016 valuation: £2,116,000

Walsingham Motor Insurance Limited
(www.walsinghamunderwriting.com)
In December 2013 the Group invested in Walsingham Motor Insurance Limited (“WMIL”), a niche UK Motor Managing
General Agency. WMIL 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%,
and subsequently WMIL launched a £15m f leet facility with capacity from New India.
Date of investment: December 2013
Equity stake: 40.5%
31 January 2016 valuation: £200,000

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:

Asia Reinsurance Brokers (PTE) Limited
(www.arbrokers.asia)
In April 2016 the Group invested in Asia Reinsurance Brokers Pte Limited (“ARB”), the Singapore headquartered
independent specialist reinsurance and insurance risk solutions provider. ARB was established in 2008, following a
management buy-out of the business from AJ Gallagher, led by the CEO, Richard Austen.
Date of investment: April 2016
Equity stake: 20%
31 January 2016 valuation: N/A

B.P. MARSH & PARTNERS PLC

(COMPANY NO: 05674962)

DIRECTORS’ REPORT, STRATEGIC REPORT & CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2016

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 75 (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 55.3% of the Company (excluding 2.1% held by
the Marsh Christian Trust, of which Brian is a trustee and Settlor), 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.

Alice Foulk BA (Hons)
Managing Director, aged 29 (I) appointment date 16 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 established herself as a central part
of the management team. In February 2015 Alice was appointed as a director of B.P. Marsh and a member of the
Investment Committee. In January 2016 Alice was appointed Managing Director where she is responsible for the overall
performance of the Company and monitoring the Company’s overall progress towards achieving its objectives and goals,
as set by the Board. Alice has a beneficial interest (as joint owner) in 127,901 ordinary shares in B.P. Marsh held as part of
the Company’s Joint Share Ownership Plan. In March 2016 Alice was also gifted 2,408 ordinary shares in B.P. Marsh
which are held in the Company’s SIP Trust.

Jonathan Newman ACMA, CGMA, MCSI
Group Finance Director, aged 41 (I) (V)
Jonathan is a Chartered Management Accountant with over 19 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, provides senior financial advice to
all companies within the Group’s portfolio, evaluates new investment opportunities and is also the Group’s nominee
director on the board of one of its investee companies. Jonathan has a beneficial interest (as joint owner) in 355,283
ordinary shares in B.P. Marsh held as part of the Company’s Joint Share Ownership Plan. In March 2016 Jonathan was
also gifted 2,408 ordinary shares in B.P. Marsh which are held in the Company’s SIP Trust.

Daniel Topping MCSI, ACIS
Chief Investment Officer, aged 32 (I) (V)
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 in January 2016 was appointed as
Chief Investment Officer. In his position as Chief Investment Officer Daniel has overall responsibility for the portfolio
and investment strategy for B.P. Marsh, working alongside the Board and the Investment Directors to structure, develop,
support and monitor the portfolio. In May 2015 Daniel was appointed as a member of the Valuation Committee and is a
member of the Investment Committee, evaluates new investment opportunities and currently has seven nominee
appointments across the portfolio. Daniel has a direct beneficial interest in 33,253 ordinary shares in B.P. Marsh, together
with a beneficial interest (as joint owner) in 355,283 ordinary shares in B.P. Marsh held as part of the Company’s Joint
Share Ownership Plan. In March 2016 Daniel was also gifted 2,408 ordinary shares in B.P. Marsh which are held in the
Company’s SIP Trust.

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

Camilla Kenyon
Director, aged 43 (I)
Camilla Kenyon was appointed as Head of Investor Relations at B.P. Marsh in February 2009, having four years’ prior
experience with the Company. She was appointed to the main board in 2011. Camilla is Head of the New Business
Department and Chair of the New Business Committee evaluating new investment opportunities. She has a number
of nominee directorships over two investee companies and is a member of the Investment Committee. She holds a
Certificate in Investor Relations and is a Member of the Investor Relations Society. Camilla has a beneficial interest
(as joint owner) in 241,592 ordinary shares in B.P. Marsh held as part of the Company’s Joint Share Ownership Plan.
In March 2016 Camilla was also gifted 2,408 ordinary shares in B.P. Marsh which are held in the Company’s SIP Trust.

Campbell Scoones
Non-executive Deputy Chairman, aged 69 (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, Cam pbell 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.

Stephen Clarke FCA
Non-executive, aged 78 (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.

Pankaj Lakhani FCCA
Non-executive, aged 62 (R) (V) appointment date 21 May 2015
Pankaj joined B.P. Marsh in May 2015 and has over 30 years’ experience within the global insurance sector, having worked
at Marsh McLennan Group, Nelson Hurst & Marsh Group, Admiral Underwriting and Victor O. Schinnerer. Upon
joining the Group Pankaj was appointed a member of the Remuneration Committee and the Valuation Committee. In May
2016 Pankaj was also appointed a member of the Audit Committee. Pankaj owns 18,800 ordinary shares in B.P. Marsh.

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 during the year was
chaired by Philip Mortlock. Following the resignation of Philip Mortlock on 7 April 2016, Pankaj Lakhani was appointed
as Chairman of the Committee. The external auditor, 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 four non-executive directors of the Company and
Brian Marsh and was chaired by Philip Mortlock. Following the resignation of Philip Mortlock on 7 April 2016, Pankaj
Lakhani was appointed as Chairman of the Committee. 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.

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 )

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.

Valuation Committee
During the year the Valuation Committee was comprised of Brian Marsh, Jonathan Newman, Daniel Topping, Philip
Mortlock (resigned 7 April 2016) and Pankaj Lakhani 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, larger retail brokers 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
6 June 2016

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 of the non-executive
directors of the Company, Philip Mortlock (resigned 7 April 2016), Stephen Clarke, Campbell Scoones and Pankaj
Lakhani, 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

30 January 2006
30 January 2006
1 March 2011
1 March 2011
16 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

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

INITIAL
PERIOD

12 months
12 months
12 months
12 months

**P.J. Mortlock resigned as a non-executive director of the Company on 7 April 2016.

NOTICE
PERIOD

3 months
3 months
3 months
3 months

AUDITED INFORMATION

Joint Share Ownership Plan (“JSOP”)
During the year to 31 January 2015, and following the resignation of J.K.N. Dunbar on 6 November 2014, 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.

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.

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 )

Of the 1,421,130 ordinary shares in respect of which joint interests were granted, the following directors of the Company
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

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

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

355,283
355,283
241,592
127,901
1,080,059

25%
25%
17%
9%
76%

The form of JSOA used on this occasion was approved by the Remuneration Committee on 6 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 provides, 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 25 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

Emoluments
Fees
Pension contributions

2016
(£)

846,542
37,750
36,325

2015
(£)

796,195
23,250
40,500

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

B.P. Marsh
J.S. Newman
D.J. Topping
C.S. Kenyon
A.H.D. Foulk†
P.J. Mortlock**
S.S. Clarke
C.R. Scoones
P.B. Lakhani

SALARIES
AND FEES

BENEFITS

ANNUAL
BONUSES

(£)

2016 EMOLUMENTS
EXCLUDING
PENSION
CONTRIBUTIONS
(£)

115,000
160,000
144,000
51,953
60,000
35,500
36,000
77,000
41,083

2,114
5,150
5,149
5,761
2,582
-
-
-
-

-
30,000
50,000
23,000
40,000
-
-
-
-

117,114
195,150
199,149
80,714
102,582
35,500
36,000
77,000
41,083

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
A.H.D. Foulk†

2016
(£)

-
15,900
9,500
8,300
2,625

** P.J. Mortlock resigned as a non-executive director of the Company on 7 April 2016.

† The directors’ emoluments and pension for A.H.D. Foulk are for the full year, although her appointment as a director of
the Company was from 16 February 2015.

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, Pankaj Lakhani, on 6 June 2016.

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 16 February 2015)
C.R. Scoones (Non-executive Deputy Chairman)
S.S. Clarke FCA (non-executive)
P.B. Lakhani FCCA (non-executive) (appointed 21 May 2015)
P.J. Mortlock MA, FCA (non-executive) (resigned 7 April 2016)

The directors submit their report and the audited financial statements of the Company and the Group (namely B.P. Marsh
& Partners Plc, B.P. Marsh & Company Limited, Marsh Insurance Holdings Limited, B.P. Marsh Asset Management
Limited, B.P. Marsh & Co. Trustee Company Limited, Marsh Development Capital Limited and Bastion London
Limited) for the year ended 31 January 2016.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual report (including the Group Report of the Directors and the Group
Strategic 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
• 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.

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 )

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 £802,093 (2.75p per share) was paid on 24 July 2015 (25 July 2014: £803,825 or 2.75p per share). The
directors have recommended a final dividend of 3.42p per share which will be paid, subject to Shareholder approval, on
29 July 2016 to Shareholders registered at the close of business on 1 July 2016.

SIGNIFICANT INTERESTS
As at 19 May 2016 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:

NO. OF ORDINARY SHARES
OF 10P EACH HELD

% OF ISSUED
SHARE CAPITAL

Mr B.P. Marsh†
IS Partners Investment Solutions
James Sharp & Co
B.P. Marsh Management Limited*

16,149,271
1,842,500
1,443,073
1,421,130

55.3%
6.3%
4.9%
4.9%

† In addition the Marsh Christian Trust, of which Mr B.P. Marsh is a trustee and Settlor, held 614,000 ordinary shares

(2.1% of the issued share capital) in the Company.

* 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:

Mr B.P. Marsh1
Mr D.J. Topping2
Mr J.S. Newman3
Ms C.S. Kenyon4
Ms A.H.D. Foulk5
Mr C.R. Scoones
Mr P.B. Lakhani

31 JANUARY 2016
ORDINARY SHARES OF
10P EACH

31 JANUARY 2015
ORDINARY SHARES OF
10P EACH

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

18,184,401
385,219
355,283
241,592
127,901
46,000
18,800

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 30,000 ordinary shares held by the Marsh Christian Trust of which Mr B.P. Marsh is Trustee and Settlor.

2 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 6 November 2014 and 29,936 ordinary shares directly
owned by Mr D.J. Topping.

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

Company dated 6 November 2014.

4 Shares co-owned with BPMM under a Joint Share Ownership Agreement between Ms C.S. Kenyon, BPMM and the

Company dated 6 November 2014.

5 Shares co-owned with BPMM under a Joint Share Ownership Agreement between Ms A.H.D. Foulk, BPMM and the

Company dated 6 November 2014.

The beneficial interests of Ms A.H.D. Foulk (appointed as a director of the Company on 16 February 2015) and Mr P.B.
Lakhani (appointed as a director of the Company on 21 May 2015) are not shown in the 31 January 2015 disclosure as they
were not appointed as directors until after this date.

SHARE CAPITAL
Information relating to the Company’s ordinary share capital (including share repurchases and cancellation) is shown in
Note 19 to the financial statements.

EVENTS AFTER THE REPORTING DATE
In February and March 2016 the Group provided the remaining £101,376 of an agreed £500,000 loan facility (£398,624
drawn down as at 31 January 2016) to Bulwark Investment Holdings (PTY) Limited (“Bulwark”); £73,073 provided on
15 February 2016 and £28,303 on 17 March 2016. On 13 April 2016 the loan facility to Bulwark was increased by a further
£100,000 to £600,000, with £50,000 of this facility drawn down immediately and a further £35,000 drawn down on
25 May 2016. At the date of this report the total loans drawn down by Bulwark amount to £585,000, leaving a remaining
undrawn facility of £15,000.

On 29 March 2016 the Group established an HMRC sanctioned Share Incentive Plan (“SIP”). A total of 97,652 ordinary
shares in the Company (which were held in Treasury as at 31 January 2016) were transferred to the B.P. Marsh SIP Trust.
A total of 9 employees (including 4 executive directors of the Company) were eligible and applied for the 2015-16 SIP and
were each granted 2,408 ordinary shares (“15-16 Free Shares”), representing £3,600 at the share price on the date of grant.
The 15-16 Free Shares are subject to a 1 year forfeiture period. Additionally, a total of 9 eligible employees (including 4
executive directors of the Company) applied for the 2016-17 SIP and will each be granted a number of ordinary shares
(“16-17 Free Shares”), representing £3,600 at the price of issue. All eligible employees have been invited to take up the
opportunity to acquire up to £1,800 worth of ordinary shares (“Partnership Shares”) and for every Partnership Share that
an employee acquires, the SIP Trust will offer two ordinary shares in the Company (“Matching Shares”) up to a total of
£3,600 worth of shares. The 16-17 Free, Partnership and Matching Shares will be awarded on 27 June 2016, with the 16-
17 Free and Matching Shares being subject to a 1 year forfeiture period.

On 6 April 2016 Mr B.P. Marsh, the Chairman and majority shareholder of the Company, transferred 584,000 ordinary
shares in the Company to the Marsh Christian Trust, a grant-making charitable trust of which Mr B.P. Marsh is also
Trustee and Settlor, for nil consideration. This transfer takes the total number of shares held by the Marsh Christian Trust
in the Company to 614,000 at the date of this report.

On 15 April 2016 the Group sold its entire 49% stake in The Broucour Group Limited (“Broucour”) to the founder and
managing director, Mr Rupert Cattell, for consideration of up to £341,000, which equates to the Group’s 31 January 2016
valuation of its investment in Broucour. The outstanding loan (£356,500 as at 31 January 2016 and £329,834 at the date
of sale) will be repaid in full in instalments.

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 )

On 20 April 2016 the Group acquired a 20% shareholding in Asia Reinsurance Brokers Pte Limited (“ARB”), a Singapore
headquartered independent specialist reinsurance and insurance risk solutions provider, for a total consideration of SGD
2,398,424 (£1,268,336). The Group may increase its shareholding in ARB to 25% for an additional cash consideration of
SGD 500,000 dependent on the performance of ARB in its financial year ending 31 December 2017.

On 4 May 2016 the Group sold its entire 1.32% stake (948,830 ordinary shares) in Randall & Quilter Investment
Holdings Limited (“R&Q”) to Brian Marsh Enterprises Limited, a company owned by Mr B.P. Marsh, the Chairman and
majority shareholder of the Company. The total consideration of £1,019,992 represents a realised gain of £246,992 on the
investment when compared to the carrying value of £773,000 as at 31 January 2016.

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. This insurance was in force throughout the year ended 31 January 2016 and remains in force at the
date of this report.

FINANCIAL RISK MANAGEMENT
The directors’ assessment of the principal risks and uncertainties is set out in the Group Strategic Report.

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

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

By order of the Board
S.C. O’Haire
Company Secretary
6 June 2016

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 20 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 31 January 2015
to 40.5% as at 31 January 2016.

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 31 January 2015) to Bastion Reinsurance Brokerage (PTY) Limited (“Bastion”); £50,000 provided on
9 February 2015, £42,500 on 18 February 2015 and £37,500 on 19 March 2015. As at 31 January 2016 total loans drawn
down by Bastion amounted to £341,831.

On 15 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 £278,624 was drawn down in various
instalments during the year. As at 31 January 2016 total loans drawn down by Bulwark amounted to £398,624, leaving a
remaining undrawn facility of £101,376 (see Note 22).

On 17 June 2015 the Group acquired a further 5% preferred equity stake in Nexus Underwriting Management Limited
(“Nexus”) for a total consideration of £1,554,000. The investment took the Group’s shareholding in Nexus to 9.8% of
its enlarged share capital and enabled Nexus to fund a new acquisition as well as to continue the Group’s strategy of
increasing its shareholding over time to support Nexus’s growth aspirations. On 7 December 2015, in furtherance of this
strategy, the Group acquired an additional preferred equity holding for consideration of £1,467,472. As at 31 January 2016
the Group’s equity investment in Nexus stood at 13.48%.

On 26 June 2015 the Group acquired a 20% preferred equity stake in Property and Liability Underwriting Managers
(PTY) Limited (“PLUM”), a Managing General Agent based in South Africa and specialising in large corporate property
insurance risks, for an initial consideration of £306,463. The total consideration could increase to £600,000 subject to
PLUM achieving EBITDA of ZAR 8,300,000 over the first year of the Group’s investment.

On 10 September 2015, following the departure of a minority shareholder and director of Besso Insurance Group Limited
(“Besso”), the Group entered into an agreement to acquire the exiting director’s 7.03% equity stake in Besso for a total
consideration of £1,581,147. The shares are being held by the Group on behalf of Besso. Besso can invoke a share purchase
transaction to buy back and cancel the shares. As at 31 January 2016 the Group’s equity investment in Besso was 44.97%,
including this 7.03% held on behalf of Besso which is stated at cost within the valuation.

On 18 December 2015 Besso redeemed its £2,750,000 of loan notes outstanding with the Group as part of a refinancing
deal with Clydesdale Bank to support its growth strategy. On the same date the Group provided a further loan facility of
£1,000,000 to Besso, alongside Clydesdale Bank, as part of this refinancing. As at 31 January 2016 total loans drawn down
by Besso amounted to £2,341,540, with a remaining undrawn facility of £414,000 (see Note 22).

Financial Performance
At 31 January 2016, the net asset value of the Group was £70.8m, or 243p per share (2015: £63.0m, or 216p per share)
including a provision for deferred tax. This equates to an increase in net asset value of 12.4% (2015: 6.9%) for the year.

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

31 JANUARY
2015 VALUATION

ACQUISITIONS
AT COST

DISPOSAL
PROCEEDS

IMPAIRMENT
PROVISIONS

ADJUSTED 31
JANUARY 2015
VALUATION

31 JANUARY
2016 VALUATION

£38.6m

£5.2m

£(0.1)m

£nil

£43.7m

£54.1m

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 )

The Group invested £0.3m in new equity investments and £4.9m for follow-on equity financing to its existing portfolio
during the year. In addition the Group provided new loans for working capital to the portfolio of £1.7m. Repayment of
loans by the portfolio amounted to £4.6m in the year. Cash funds (including treasury funds) at 31 January 2016 were £5.3m.

Due to challenging market conditions, the Group’s treasury funds decreased by 0.4% over the year (net of fund
management charges). Although this was disappointing, it compared strongly against the FTSE 100, which decreased by
9.9% 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
31 JANUARY 2016

YEAR TO/AS AT
31 JANUARY 2015

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 surplus
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

£70.8m
243p
23.8%
28.2%
2.75p
£8.6m
13.7%
£0.3m
£5.2m
£1.7m
£0.1m
-
£4.6m

£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

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
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 31 January 2016 the
Group was debt free (31 January 2015: 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.

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 31 January 2016, 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 (see Note 24).

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 37 (2015: 42) 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 2017 and 2018, 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
6 June 2016

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 31 January
2016 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 31 January

2016 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

6 June 2016

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

F O R T H E

Y E A R E N D E D 3 1 J A N U A R Y

I N C O M E
2 0 1 6

NOTES

2016

2015

(£’000)

Gains on investments
Realised gains on disposal of equity investments
(net of costs)
Unrealised gains on equity investment revaluation

12,14

Income
Dividends
Income from loans and receivables
Fees receivable

Operating Income

Operating expenses

Operating Profit

Financial income
Financial expenses
Exchange movements

1,26

2,4

2,3

2,8

Profit on ordinary activities
before share based provision

Share based payment provision

20,25

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)

6
10,269

639
1,619
541

18
(31)
(12)

10,275

2,799

13,074

(2,354)

10,720

(25)

10,695

(2)

10,693

(1,993)

8,700

29.8p

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

-
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 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

F O R T H E

Y E A R E N D E D 3 1 J A N U A R Y

P O S I T I O N
2 0 1 6

(Company Number: 05674962)

NOT E S

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’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
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

Net asset value per share (pence)

15
54,051
3,482
14,660
72,208

3,054
1,814
4,868

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

5,908
1,531
7,439

-
60,656
-
10,170
70,826

-
1
1

-
52,815
-
10,155
62,970

-
1
1

77,076

67,140

70,827

62,971

(5,625)
(5,625)

(3,661)
(3,661)

(588)
(51)
(639)

(446)
(62)
(508)

(6,264)

(4,169)

-
-

(15)
-
(15)

(15)

-
-

-
-
-

70,812

62,971

70,812

62,971

2,923
9,370
22,524
393
6
3
35,593

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

2,923
9,370
58,512
-
6
-
1

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

70,812

62,971

70,812

62,971

243p

216p

243p

216p

The Financial Statements were approved by the Board of Directors and authorised for issue on 6 June 2016
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 1 J A N U A R Y

2 0 1 6

NOTES

2016
(£’000)

2015
(£’000)

Cash from operating activities
Income from loans to investees
Dividends
Fees received from investment activity
Operating expenses
Increase in receivables
Increase / (decrease) in payables
Corporation tax paid in respect of prior year profits
Depreciation

Net cash from operating activities

Net cash from / (used by) 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 repaid / (paid) on equity
investment disposal
Net repayments / (advances) of loans
from / (to) investee companies
Net proceeds from sale of treasury investments

Net cash from / (used by) investing activities

Net cash used by financing activities
Financial income
Financial expenses
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 movement

Cash and cash equivalents at end of period

12,14

19,20

1,619
639
541
(2,354)
(189)
142
(56)
7

349

(4)
(5,209)
(3,084)
80

201

2,905
5,902

791

6
-
(802)
(57)

(853)

287
1,531
(4)

1,814

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

All differences between the amounts stated in the Consolidated Statement of Cash Flows and the Consolidated Statement
of Comprehensive Income are attributed to non-cash movements.

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

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 1 J A N U A R Y

2 0 1 6

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 31 January 2016 is £1k
(2015: £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 1 J A N U A R Y

2 0 1 6

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

G RO U P

C O M PA N Y

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

62,971
8,700
(802)
(57)

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

62,971
8,700
(802)
(57)

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

Total Equity

70,812

62,971

70,812

62,971

Refer to Note 20 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 1 J A N U A R Y

2 0 1 6

1. ACCOUNTING POLICIES

B.P. Marsh & Partners Plc is a public limited company incorporated in the United Kingdom under the Companies
Act 2006. The address of the Company’s registered office is 2nd Floor, 36 Broadway, London SW1H 0BH.

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. The estimates and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable in the circumstances, the results of which form the basis of judgements about the
carrying amounts of assets and liabilities. Actual results may differ from those amounts.

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.

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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
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.

Standards that have been issued, but are not yet effective for the year ended 31 January 2016 include:

Annual improvements to IFRSs 2010-2012 Cycle (1 Feb 2015)
Annual improvements to IFRSs 2011-2013 Cycle (1 Jan 2015)
Annual improvements to IFRSs 2012-2014 Cycle (1 Jan 2016)
IFRS 15 Revenue from Contracts with Customers (1 Jan 2018)
IFRS 9 Financial Instruments (1 Jan 2018)
Disclosure Initiative: Amendments to IAS 1 (1 Jan 2016)

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

Basis of consolidation

Subsidiaries

(i)
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:
power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
a)
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”) is also a subsidiary of B.P. Marsh & Company Limited.
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.

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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: Business Combinations (“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 £8,700,450, prior to a dividend distribution of
£802,093 (2015: profit of £4,934,864 prior to a dividend distribution of £803,825).

Employee services settled in equity instruments
The Group has 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.

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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.

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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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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 are 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.

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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

2016
(£’000)

2015
(£’000)

12,588
Operating income
Operating expenses
(1,740)
Segment operating profit / (loss) 10,848

Financial income
Financial expenses
Exchange movements
Share based payment provision

13
(23)
(6)
(2)

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

10,830
(2,020)
8,810

6,056
(1,670)
4,386

348
(39)
(6)
(1)

4,688
(722)
3,966

2016
(£’000)

486
(614)
(128)

5
(8)
(6)
-

(137)
27
(110)

2015
(£’000)

2016
(£’000)

2015
(£’000)

1,849
(490)
1,359

102
(12)
(238)
-

1,211
(242)
969

13,074
(2,354)
10,720

18
(31)
(12)
(2)

10,693
(1,993)
8,700

7,905
(2,160)
5,745

450
(51)
(244)
(1)

5,899
(964)
4,935

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

2016
(£’000)

2015
(£’000)

2016

2015

2016

2015

Besso Insurance Group Limited
Hyperion Insurance Group Limited
Trireme Insurance Group Limited
LEBC Holdings Limited*

609
453
407
351

849
509
391
-

22
16
15
13

30
18
14
-

1
1
1&2
1

1
1
1&2
-

* There are no disclosures shown for LEBC Holdings Limited in the prior year as the total realised income derived
from this investee company did not exceed the 10% threshold prescribed by IFRS 8 Operating Segments.

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2. SEGMENTAL REPORTING (CONTINUED)

GEOGRAPHIC SEGMENT 1:
UK & CHANNEL ISLANDS

GEOGRAPHIC SEGMENT 2:
NON UK & CHANNEL ISLANDS

GROUP

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’ 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

13
45,956
3,482
11,129
60,580

2,705
1,814
-
4,519

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

5,588
1,531
-
7,119

2
8,095
-
3,531
11,628

349
-
49
398

4
8,034
-
3,251
11,289

320
-
-
320

15
54,051
3,482
14,660
72,208

3,054
1,814
49
4,917

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

5,908
1,531
-
7,439

Total assets

65,099

55,531

12,026

11,609

77,125

67,140

Non-current liabilities
Deferred tax liabilities

Current liabilities
Trade and other payables
Corporation tax provision
Total liabilities

(5,674)
(5,674)

(588)
(51)
(6,313)

(3,406)
(3,406)

(446)
(62)
(3,914)

-
-

-
-
-

(255)
(255)

-
-
(255)

(5,674)
(5,674)

(588)
(51)
(6,313)

(3,661)
(3,661)

(446)
(62)
(4,169)

Net assets

58,786

51,617

12,026

11,354

70,812

62,971

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

366
1,283
(853)
796

73
(1,836)
(843)
(2,606)

(17)
(492)
-
(509)

157
(1,511)
-
(1,354)

349
791
(853)
287

230
(3,347)
(843)
(3,960)

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3. FINANCIAL EXPENSES

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
(losses) / gains on revaluation (Note 13)

2016
(£’000)

31
31

2015
(£’000)

51
51

2016
(£’000)

2015
(£’000)

389

(377)
18

208

198
450

5. STAFF COSTS

The average number of employees, including all directors (executive and non-executive), employed by the Group
during the year was 17 (2015: 17). All remuneration was paid by B.P. Marsh & Company Limited.

The related staff costs were:

Wages and salaries
Social security costs
Pension costs

2016
(£’000)

1,368
174
61
1,603

2015
(£’000)

1,220
154
63
1,437

In addition, during the year to 31 January 2015, 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 and Note 25 for further details.

6. DIRECTORS’ EMOLUMENTS

The aggregate emoluments of the directors were:
Management services – remuneration
Fees
Pension contributions – remuneration

2016
(£’000)

2015
(£’000)

847
38
36
921

796
23
41
860

In addition to the above, during the year to 31 January 2015 an amount of £197,033 was paid to Mr S.S. Clarke in
settlement of a carried interest entitlement which had existed as at 31 January 2014.

Of the 1,421,130 shares in respect of which joint interests were granted in the prior year, 1,080,059 shares were issued
to directors (952,158 shares to directors serving during the year ended 31 January 2015 and 127,901 to an employee
who was appointed a director in the current year). Refer to the Report of the Remuneration Committee on page 18
and Note 25 for further details.

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6. DIRECTORS’ EMOLUMENTS (CONTINUED)

Highest paid director
Emoluments
Pension contribution

2016
(£’000)

2015
(£’000)

199
10
209

205
15
220

The highest paid director also has a joint interest in 355,283 shares pursuant to a Joint Share Ownership Agreement
entered into in the prior year. Refer to the Report of the Remuneration Committee on page 18 and Note 25 for
further details.

The Company contributes into defined contribution pension schemes 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 year, 4 directors (2015: 4) accrued benefits under these defined contribution pension schemes.

7. DIVIDENDS

Ordinary dividends

Dividend paid:
2.75 pence each on 29,167,000 Ordinary shares
(2015: 2.75 pence each on 29,230,000 Ordinary shares)

2016
(£’000)

2015
(£’000)

802
802

804
804

In the current year no dividend was payable on the 59,040 ordinary shares held by the Company in Treasury. In the
prior year there were no ordinary shares held by the Company in Treasury at the time when the dividend was payable
on 25 July 2014.

8. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

The profit for the year is arrived at after charging:
Depreciation of owned tangible fixed assets
Auditor’s remuneration:

Audit fees for the Company
Other services:

Audit of subsidiaries’ accounts
Taxation
Other advisory

Exchange loss
Operating lease rentals of land and buildings

2016
(£’000)

2015
(£’000)

12
10
60
12
84

12
9
24
244
84

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INCOME TAX EXPENSE

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

Total current tax

Deferred tax (Note 17):
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 (2015: 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 20.17% (2015: 21.33%)

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

2016
(£’000)

2015
(£’000)

51
(22)

1,964
-
-

1,964

1,993

10,693

2,157

20
(22)
-
-
(1)
(33)

-
(128)

1,993

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 17.

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 1 J A N U A R Y

2 0 1 6

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

2016
(£’000)

2015
(£’000)

8,700

29.8p

4,935

16.9p

N U M B E R

29,165,774

29,218,815

Number of dilutive shares under option

Nil

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

29,165,774

29,218,815

During the year the Company paid a total of £56,414 (2015: £82,450) in order to repurchase 38,612 (2015: 63,000)
ordinary shares at an average price of 146 pence per share (2015: 131 pence per share). All 38,612 ordinary shares are
being held by the Company in Treasury (2015: 3,960 ordinary shares were immediately cancelled upon purchases
and the remaining 59,040 ordinary shares were held by the Company in Treasury. The repurchase and subsequent
cancellations of 3,960 ordinary shares during the year ended 31 January 2015 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 £56,414 as a result (2015: reduction of £82,054 with the amount of £396,
being the nominal value of the cancelled 3,960 ordinary shares, 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.

As at 31 January 2016 a total of 97,652 ordinary shares were held by the Company in Treasury (31 January 2015:
59,040 ordinary shares).

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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11. PROPERTY, PLANT AND EQUIPMENT

Group

Cost
At 1 February 2014
Additions
Disposals
At 31 January 2015

At 1 February 2015
Additions
Disposals
At 31 January 2016

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

At 1 February 2015
Eliminated on disposal
Charge for the year
At 31 January 2016

Net book value
At 31 January 2016
At 31 January 2015
At 31 January 2014

FURNITURE &
EQUIPMENT
(£’000)

LEASEHOLD FIXTURES
& FITTINGS
(£’000)

TOTAL

(£’000)

51
-
-
51

-
-
-

121
7
(12)
116

116
4
-
120

103
(12)
7
98

98
-
7
105

15
18
18

70
7
(12)
65

65
4
-
69

52
(12)
7
47

47
-
7
54

15
18
18

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

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12. NON-CURRENT INVESTMENTS – EQUITY PORTFOLIO

Group

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

At 1 February 2015
Additions
Disposals
Provisions
Unrealised gains in this period
At 31 January 2016

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

At 1 February 2015
Additions
Disposals
Provisions
At 31 January 2016

SHARES IN INVESTEE COMPANIES
TOTAL (£’000)

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

38,647
5,209
(74)
-
10,269
54,051

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

20,816
5,209
(74)
-
25,951

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

On 20 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 31 January 2015 to 40.5% as at 31 January 2016.

On 15 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 17 June 2015 the Group acquired a further 5% preferred equity stake in Nexus Underwriting Management
Limited (“Nexus”) for a total consideration of £1,554,000, taking the Group’s shareholding in Nexus to 9.8% of its
enlarged share capital. On 7 December 2015 the Group acquired an additional preferred equity holding for
consideration of £1,467,472. As at 31 January 2016 the Group’s equity investment in Nexus stood at 13.48%.

On 26 June 2015 the Group acquired a 20% preferred equity stake in Property and Liability Underwriting Managers
(PTY) Limited (“PLUM”), a Managing General Agent based in South Africa and specialising in large corporate
property insurance risks, for an initial consideration of £306,463. The total consideration could increase to £600,000
subject to PLUM achieving EBITDA of ZAR 8,300,000 over the first year of the Group’s investment.

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

Group (continued)
On 10 September 2015, following the departure of a minority shareholder and director of Besso Insurance Group
Limited (“Besso”), the Group entered into an agreement to acquire the exiting director’s 7.03% equity stake in Besso
for a total consideration of £1,581,147. The shares are being held by the Group on behalf of Besso. Besso can invoke
a share purchase transaction to buy back and cancel the shares. As at 31 January 2016 the Group’s equity investment
in Besso was 44.97%, including this 7.03% held on behalf of Besso which is stated at cost within the valuation.

The unquoted investee companies, which are registered in England except Summa Insurance Brokerage S.L. (Spain),
MB Prestige Holdings PTY Limited (Australia), Bastion Reinsurance Brokerage (PTY) Limited (South Africa),
Bulwark Investment Holdings (PTY) Limited (South Africa) and Property and Liability Underwriting Managers
(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

35.00

31.12.14

30,042

(49,281)

Reinsurance broker

Bastion Reinsurance
Brokerage (PTY) Limited

Besso Insurance Group
Limited

Bulwark Investment
Holdings (PTY) Limited

37.94
7.03*

35.00

31.12.14

5,230,393

(301,299)

Insurance intermediary

Hyperion Insurance Group
Limited

1.66

30.09.15

(27,613,000)

(81,425,000)

LEBC Holdings Limited

34.66

30.09.15

1,171,692

1,359,232

MB Prestige Holdings
PTY Limited

Neutral Bay Investments
Limited

Nexus Underwriting
Management Limited

Property and Liability
Underwriting Managers
(PTY) Limited

Summa Insurance
Brokerage, S.L.

40.00

31.12.15

1,021,966

315,107

49.90

31.03.15

3,905,577

190,163

13.48

31.12.14

4,338,453

1,829,533

20.00

77.25

31.12.14

8,358,239

84,660

Holding company for
South African Managing
General Agents

Insurance holding
company

Independent financial
advisor company

Specialist Australian
Motor Managing
General Agency

Investment holding
company

Specialist Managing
General Agency

Specialist South African
Property Managing
General Agency

Consolidator of regional
insurance brokers

The Broucour Group Limited 49.00

30.04.15

(761,027)

(50,405)

Business transfer agents

Trireme Insurance Group
Limited

Walsingham Motor
Insurance Limited†

30.44

31.12.14

448,452

(2,030,999)

40.50

30.09.14

(723,184)

(645,066)

Holding company for
insurance intermediaries

Specialist UK Motor
Managing General
Agency

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

Group (continued)
In addition, as at 31 January 2016 the Group held 1.32% of the share capital of Randall & Quilter Investment
Holdings Limited (“R&Q”). R&Q is an AIM listed company. During the current year R&Q made two ‘return of
value’ distributions totalling £79,702 to shareholders through the issue and subsequent cancellation of new shares.
These amounts (£47,442 in August 2015 and £32,260 in November 2015) were paid to the Group as ‘capital’
distributions. The Group has treated these distributions as disposal proceeds and reduced the cost base of this
investment accordingly, resulting in a £6,141 realised gain on disposal of investment (see Note 14) which is ref lected
in the Consolidated Statement of Comprehensive Income for the year.

* The Group’s economic participation in Besso as at 31 January 2016 was 37.94%. The additional 7.03% held by the
Group on behalf of Besso is a capped participation and is stated within the Group’s valuation of Besso at cost
(£1,581,147).

† By virtue of its interest in Walsingham Motor Insurance Limited, the Group has also acquired a 50% equity holding
in Walsingham Holdings Limited, a company incorporated during the year, for £1 consideration and which remains
dormant at the year end.

Financial data for Bulwark Investment Holdings (PTY) Limited and Property and Liability Underwriting Managers
(PTY) Limited is not yet available as these companies were incorporated and commenced trading in 2015.

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

At 1 February 2015
Additions
Unrealised gains in this period
At 31 January 2016

At cost
At 1 February 2014
Additions
At 31 January 2015

At 1 February 2015
Additions
At 31 January 2016

SHARES IN GROUP
UNDERTAKINGS
(£’000)

48,767
-
4,048
52,815

52,815
-
7,841
60,656

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

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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 held
throughout the year, 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
31 JANUARY
2016 (£)

PROFIT/(LOSS) FOR
THE YEAR TO
31 JANUARY
2016 (£)

PRINCIPAL
ACTIVITY

B.P. Marsh & Company Limited

100

60,656,234

8,698,438

Marsh Insurance
Holdings Limited

B.P. Marsh Asset
Management Limited

B.P. Marsh & Co. Trustee
Company Limited

Marsh Development
Capital Limited

100

15,994,862

3,307,772

23,485

1,000

Consulting services
and investment
holding company

Investment
holding company

Consulting services

Dormant

In addition, Bastion London Limited, a company 100% owned by the Group, was incorporated during the year. This
company was dormant at the year end.

13. NON-CURRENT INVESTMENTS – TREASURY PORTFOLIO

Group

At valuation

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

Investment fund split:

GAM London Limited
Banque Heritage SA
Total

2016
(£’000)

2015
(£’000)

6,319
3,084
(5,902)
(19)
3,482

3,377
105
3,482

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

4,538
1,781
6,319

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

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

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 31 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 £31,257 (2015: £51,480) were charged to the Consolidated Statement of
Comprehensive Income for the current year (Note 3).

14. REALISED GAINS ON DISPOSAL OF EQUITY INVESTMENTS

The realised gains on disposal of investments comprises of a gain of £6,141 in respect of capital distributions made by
R&Q in the year (see Note 12).

The amount included in realised gains on disposal of equity investments in the year to 31 January 2015 was £Nil.
However, during that 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 for the year ended 31 January 2015.

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 was reduced by estimated tax payable
on disposal of £5,761 and £197,033 of carried interest paid as at 31 January 2015. In the year to 31 January 1999 an
intra-group transfer had already recognised a £450,000 release of fair value in relation to this investment.

Additionally, in the year to 31 January 2015 the tax payable on the partial disposal of the Group’s investment in
Hyperion Insurance Group Limited (“Hyperion”) made in the year to 31 January 2014 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 17).

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 year to
31 January 2015 amounted to £354,711 (Note 20).

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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15. LOANS AND RECEIVABLES – NON-CURRENT

G RO U P

C O M PA N Y

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

Loans to investee companies (Note 26)
Amounts due from subsidiary undertakings

14,660
-
14,660

14,717
-
14,717

-
10,170
10,170

-
10,155
10,155

See Note 26 for terms of the loans.

16. TRADE AND OTHER RECEIVABLES – CURRENT

Trade receivables
Less provision for impairment of receivables

Loans to investee companies (Note 26)
Corporation tax repayable
Other receivables
Prepayments and accrued income

G RO U P

C O M PA N Y

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

592
-
592
1,965
15
21
461

533
-
533
4,822
201
24
328

3,054

5,908

-
-
-
-
-
-
-

Included within trade receivables is £535,560 (2015: £501,493) 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 (2015: 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 £591,532 (2015: £532,877), of
which £514,865 (2015: £361,323) of debtors 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

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16. TRADE AND OTHER RECEIVABLES – CURRENT (CONTINUED)

Ageing of past due but not impaired:

Not past due
Past due: 0 – 30 days
Past due: 31 – 60 days
Past due: more than 60 days

G RO U P

C O M PA N Y

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

77
215
55
245

592

172
122
5
234

533

-
-
-
-

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 31 January 2016 stands at £685,000 (2015:
£685,000).

See Note 26 for terms of the loans and Note 24 for further credit risk information.

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 1 J A N U A R Y

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17. DEFERRED TAX LIABILITIES – NON-CURRENT

G RO U P
(£’000)

C O M PA N Y
(£’000)

At 1 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 31 January 2015

At 1 February 2015
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 31 January 2016

2,736

1,032
(130)
23

3,661

1,964
-
-

5,625

-
-
-

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, £5,625,000 (2015: £3,661,000) of tax on capital gains would become
payable by the Group at a corporation tax rate of 20% (2015: 20%).

As at 31 January 2016 the enacted tax rate was 19% from April 2017. If 19% is used to calculate the deferred tax
liability it would be reduced by some £280,000.

During the year ended 31 January 2015 there was a 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 31 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 31 January 2014 was included in the year ended 31 January 2015 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 1 J A N U A R Y

2 0 1 6

18. 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

2016
(£’000)

2015
(£’000)

2016
(£’000)

2015
(£’000)

127
52
409

588

639

95
38
313

446

508

-
-
15

-
-
-

The corporation tax of £51,227 as at 31 January 2016 relates to the estimated tax payable on the Group’s underlying
profit for the current year of £51,101 and £126 of tax payable in respect of the prior year.

The corporation tax as at 31 January 2015 of £61,779 related to the estimated tax payable on the disposal of the
Group’s investment in in the PDGI businesses in May 2014 of £5,761 and estimated tax payable on the Group’s
underlying profit for that year of £56,018.

19. CALLED UP SHARE CAPITAL

Allotted, called up and fully paid
29,226,040 Ordinary shares of 10p each (2015: 29,230,000)

2016
(£’000)

2015
(£’000)

2,923
2,923

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

As at 31 January 2016 a total of 97,652 ordinary shares were held by the Company in Treasury (31 January 2015:
59,040 ordinary shares).

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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20. 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 1 February 2014

2,923

9,370

9,743

393

Profit for the year

Transfers on sale of
investments (Note 14)

Dividends paid (Note 7)

Share repurchase (Note 19)

Share based payments
(Note 25)

4,604

(355)

At 31 January 2015

2,923

9,370

13,992

At 1 February 2015

2,923

9,370

13,992

Profit for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share based payments
(Note 25)

8,532

393

At 31 January 2016

2,923

9,370

22,524

393

36,488

58,923

331

4,935

355

(804)

(83)

(1)

36,286

62,971

36,286

62,971

168

8,700

(802)

(57)

(2)

35,593

70,812

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

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

Company

SHARE
CAPITAL

(£’000)

SHARE
PREMIUM
ACCOUNT
(£’000)

FAIR VALUE
RESERVE

(£’000)

At 1 February 2014

2,923

9,370

46,623

Profit for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share based payments
(Note 25)

4,048

At 31 January 2015

2,923

9,370

50,671

At 1 February 2015

2,923

9,370

50,671

Profit for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share based payments
(Note 25)

7,841

At 31 January 2016

2,923

9,370

58,512

CAPITAL

RETAINED
CAPITAL
REDEMPTION CONTRIBUTION EARNINGS
RESERVE
(£’000)

RESERVE
(£’000)

(£’000)

TOTAL

(£’000)

58,923

887

4,935

(804)

(83)

(1)

62,971

859

8,700

(802)

(57)

(1)

70,812

21. 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

2016
LAND AND

BUILDINGS
(£’000)

2015
LAND AND

BUILDINGS
(£’000)

76
-

84
76

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

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22. LOAN AND EQUITY COMMITMENTS

On 22 July 2010 (as varied on 8 August 2012, 29 May 2014 and 23 September 2014) the Group entered into an
agreement to provide a loan facility of £2,419,515 to Trireme Insurance Group Limited, an investee company.
Following a repayment of £240,000 during the year, as at 31 January 2016 the total loan drawn down amounted to
£2,155,113, leaving a remaining undrawn facility of £24,402.

On 1 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 31 January 2015 £333,000 of this facility had been drawn down. Following
repayments made during the year on this facility amounting to £125,000 and together with other loans of £2,196,540,
total loans drawn down as at 31 January 2016 amounted to £2,341,540, with a remaining undrawn facility of
£414,000.

On 15 April 2015 the Group entered into an agreement to provide a loan facility of £500,000 to Bulwark Investment
Holdings (PTY) Limited, an investee company. As at 31 January 2016 £398,624 of this facility had been drawn down,
leaving a remaining undrawn facility of £101,376.

Please refer to Note 27 for details of loan amounts drawn down after the year end.

23. 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. The conditions for the first £30,000 due to be paid
on 15 May 2015 were met during the year and the amount was paid to the employee on this date. A further £30,000
was due on 15 May 2016. This amount has been included in these financial statements on the basis that as at
31 January 2016 an undertaking had been received by the employee to remain in the employment of the Company
until at least 15 May 2016 and therefore would meet the performance conditions relating to this incentive. The
£30,000 was paid to the employee on the due date of 15 May 2016.

24. 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 £1,814,000 (2015: £1,531,000), 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 0.85% p.a. in the period (2015: deposit rates of interest ranged up to 2.0% p.a.). During the period
maturity periods ranged between immediate access and 32 days (2015: 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 (2015: None).

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24. FINANCIAL INSTRUMENTS (CONTINUED)

Financial liabilities
The Company had no borrowings as at 31 January 2016 (2015: £Nil).

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 presents the Group’s assets and liabilities that are measured at fair value at 31 January 2016:

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)

773

3,482

4,255

53,278

54,051

3,482

53,278

57,533

The Group’s assets and liabilities that are measured at fair value at 31 January 2015 are presented as follows:

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

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25. SHARE BASED PAYMENT ARRANGEMENTS

During the year to 31 January 2015, 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

6 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

Expected dividends expressed as a dividend yield

20%

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)

1,207,960

Black-Scholes

15.00

14.50

0.50

Charge for year ended 31 January 2016

£2,013

On 6 November 2014 1,421,130 10p Ordinary shares in the Company were transferred into joint beneficial
ownership for 6 employees (4 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.

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).

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25. SHARE BASED PAYMENT ARRANGEMENTS (CONTINUED)

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.

26. 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:

2016
(£)

2015
(£)

1,041,500
341,831
2,341,540
398,624
6,037,361
1,005,000
2,155,113
1,200,000

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

(€)

Summa Insurance Brokerage, S.L.

2,731,434

3,203,064

(AUD)

MB Prestige Holdings PTY Limited

1,417,334

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.

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26. 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
Bulwark Investment Holdings (PTY) 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
Property & Liability Underwriting Managers (PTY) Limited
Summa Insurance Brokerage, S.L.
Trireme Insurance Group Limited
Walsingham Motor Insurance Limited

2016
(£)

43,458
64,989
608,906
39,961
452,802
350,876
129,232
106,505
194,889
-
31,971
204,605
407,150
121,000

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

In addition, the Group made management charges of £34,000 (2015: £32,000) 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 £8,900 (2015: £5,100) to Brian Marsh Enterprises Limited.

On 4 May 2016 the Group also sold its entire 1.32% stake (948,830 ordinary shares) in Randall & Quilter Investment
Holdings Limited (“R&Q”) to Brian Marsh Enterprises Limited. The total consideration of £1,019,992 represents
a realised gain of £246,992 on the investment when compared to the carrying value of £773,000 as at 31 January 2016
(Note 27).

Mr B.P. Marsh, the Chairman and majority shareholder of the Company is also the Chairman and majority
shareholder of Brian Marsh Enterprises Limited. Ms C.S. Kenyon (a director of the Company) was also a director of
Brian Marsh Enterprises Limited until her resignation from this company on 8 October 2015.

On 24 November 2015 the Marsh Christian Trust sold 171,000 ordinary shares in the Company that had originally
been gifted to it for nil consideration in the year to 31 January 2015 for 152.25p per share.

On 17 December 2015 Mr B.P. Marsh gifted 180,000 ordinary shares in the Company to the Marsh Christian Trust
for nil consideration. On 22 December 2015 the Marsh Christian Trust sold 150,000 of these shares for 153.00p per
share, retaining an interest in 30,000 shares as at 31 January 2016.

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

Of the total dividend payments made during the year of £802,093, £510,703 was paid to the directors or parties
related to them (2015: total dividend payments of £803,825, of which £509,905 was paid to the directors or parties
related to them).

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27. EVENTS AFTER THE REPORTING DATE

In February and March 2016 the Group provided the remaining £101,376 of an agreed £500,000 loan facility
(£398,624 drawn down as at 31 January 2016) to Bulwark Investment Holdings (PTY) Limited (“Bulwark”);
£73,073 provided on 15 February 2016 and £28,303 on 17 March 2016. On 13 April 2016 the loan facility to Bulwark
was increased by a further £100,000 to £600,000, with £50,000 of this facility drawn down immediately and a further
£35,000 drawn down on 25 May 2016. At the date of this report the total loans drawn down by Bulwark amount to
£585,000, leaving a remaining undrawn facility of £15,000.

On 29 March 2016 the Group established an HMRC sanctioned Share Incentive Plan (“SIP”). A total of 97,652
ordinary shares in the Company (which were held in Treasury as at 31 January 2016) were transferred to the B.P.
Marsh SIP Trust. A total of 9 employees (including 4 executive directors of the Company) were eligible and applied
for the 2015-16 SIP and were each granted 2,408 ordinary shares (“15-16 Free Shares”), representing £3,600 at the
share price on the date of grant. The 15-16 Free Shares are subject to a 1 year forfeiture period. Additionally, a total
of 9 eligible employees (including 4 executive directors of the Company) applied for the 2016-17 SIP and will each
be granted a number of ordinary shares (“16-17 Free Shares”), representing £3,600 at the price of issue. All eligible
employees have been invited to take up the opportunity to acquire up to £1,800 worth of ordinary shares
(“Partnership Shares”) and for every Partnership Share that an employee acquires, the SIP Trust will offer two
ordinary shares in the Company (“Matching Shares”) up to a total of £3,600 worth of shares. The 16-17 Free,
Partnership and Matching Shares will be awarded on 27 June 2016, with the 16-17 Free and Matching Shares being
subject to a 1 year forfeiture period.

On 6 April 2016 Mr B.P. Marsh, the Chairman and majority shareholder of the Company, transferred 584,000
ordinary shares in the Company to the Marsh Christian Trust, a grant-making charitable trust of which Mr B.P.
Marsh is also Trustee and Settlor, for nil consideration. This transfer takes the total number of shares held by the
Marsh Christian Trust in the Company to 614,000 at the date of this report.

On 15 April 2016 the Group sold its entire 49% stake in The Broucour Group Limited (“Broucour”) to the founder
and managing director, Mr Rupert Cattell, for consideration of up to £341,000, which equates to the Group’s 31
January 2016 valuation of its investment in Broucour. The outstanding loan (£356,500 as at 31 January 2016 and
£329,834 at the date of sale) will be repaid in full in instalments.

On 20 April 2016 the Group acquired a 20% shareholding in Asia Reinsurance Brokers Pte Limited (“ARB”), a
Singapore headquartered independent specialist reinsurance and insurance risk solutions provider, for a total
consideration of SGD 2,398,424 (£1,268,336). The Group may increase its shareholding in ARB to 25% for an
additional cash consideration of SGD 500,000 dependent on the performance of ARB in its financial year ending 31
December 2017.

On 4 May 2016 the Group sold its entire 1.32% stake (948,830 ordinary shares) in Randall & Quilter Investment
Holdings Limited (“R&Q”) to Brian Marsh Enterprises Limited, a company owned by Mr B.P. Marsh, the
Chairman and majority shareholder of the Company. The total consideration of £1,019,992 represents a realised gain
of £246,992 on the investment when compared to the carrying value of £773,000 as at 31 January 2016.

28. ULTIMATE CONTROLLING PARTY

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

N O T E S

IF GOOD PEOPLE WORK HARD ON GOOD BUSINESS

FOR LONG ENOUGH, A GOOD HARVEST CAN BE EXPECTED.

THAT IS WHAT IS MEANT BY PROSPERITY

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 A ND PRO DUCED BY KURT Z LIMIT ED

PHOTO G RAPHY BY RO DNEY SMIT H