B.P. Marsh & Partners PLC Annual Report 2017

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FY2017 Annual Report · B.P. Marsh & Partners PLC

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Annual Report 2017

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B.P. Marsh & Partners plc
4 Matthew Parker Street
London, SW1H 9NP

T +44 (0)20 7233 3112
E enquiries@bpmarsh.co.uk

www.bpmarsh.co.uk

B.P. Marsh & Partners PLC (the “Group”,
the “Company” and “B.P. Marsh”) is a
specialist venture capital/private equity
investor in early stage financial services
intermediary businesses, including
insurance intermediaries, financial
advisors, wealth and fund managers
and specialist advisory and consultancy
firms. It considers investment opportunities
based in the United Kingdom, Europe,
North America and Internationally.

seek to impose exit pressures, preferring
to be able to take a long-term view where
required and work alongside management
to a mutually beneficial exit route that
maximises value.

B.P. Marsh has invested in 44 businesses
since it was founded in 1990 and its
management team has a wealth of
experience and a well-developed network
within the financial services sector.

The Group invests amounts of up to £5m
in the first round. Investment structure is
flexible and investment stage ranges from
start up to more developed. The Group only
takes minority equity positions and does not

The Group’s aim is to be the capital
provider of choice for the financial
services intermediary sector and to deliver
to its investors long-term capital growth
alongside a sustainable distribution policy.

We are farmers,
not hunters

B.P. Marsh • 2017 Annual Report • Contents

Contents

2 Operating and financial highlights

5 Chairman’s statement

7 Business update

14 Current investments – United Kingdom

16 Current investments – Rest of the world

18 Directors

21 Directors’ Report & Strategic Report & Consolidated Financial Statements

22 Directors biographies

24 Corporate governance

27 Report of the Remuneration Committee

31 Group Report of the Directors

36 Group Strategic Report

Independent Auditor’s Report

44 Consolidated Statement of Comprehensive Income

45 Consolidated and Parent Company Statements of Financial Position

46 Consolidated Statement of Cash Flows

47 Parent Company Statement of Cash Flows

47 Consolidated and Parent Company Statements of Changes in Equity

48 Notes to the consolidated financial statements

B.P. Marsh • 2017 Annual Report • Operating and financial highlights

Operating
and financial
highlights

B.P. Marsh & Partners PLC, the niche
venture capital provider to early stage
Financial Services businesses, announces
its audited Group final results for the year
to 31 January 2017.

The highlights of the results are:
• Increase in the Equity Value of the Portfolio

of 22.1% over the year

• Net Asset Value of £79.7m (31 January 2016:
£70.8m), a 12.5% increase, net of Dividend
• Net Asset Value increase to 273p per share

(31 January 2016: 243p)

• Total return to Shareholders in the year

of 13.9% (2016: 13.7%)

• Consolidated profit after tax of £9.8m

(31 January 2016: £8.7m)

Group valuations

• Average Net Asset Value annual compound

growth rate of 11.4% since 1990

• Final Dividend of 3.76p per share declared
(31 January 2016: 3.42p), a 9.9% increase

• Cash and treasury funds balance of

£12.6m at year end

• Three new investments – ARB, Fiducia

and SSRU

• Further investments in LEBC, Nexus

and PLUM

• Three disposals – Hyperion, R&Q

and Broucour

• Agreement reached on Besso and Trireme

disposals (completion post Year End)
• Current uncommitted cash of £29.2m

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Year ended

Six months ended

NB: The valuation at 31 January 2007 includes

£10.1m net proceeds raised on AIM.

31.01.05

31.01.07

31.01.10

31.01.13

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31.01.17

B.P. Marsh • 2017 Annual Report • Chairman’s statement

“We have concluded a further
year in which our Company has
built on its past achievements.
The portfolio businesses continue
to perform well as we support
them in their development, we
have interesting new investment
opportunities to complete and a
much increased supply of cash”

Brian Marsh OBE, Chairman

B.P. Marsh • 2017 Annual Report • Chairman’s statement

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 2017.

The financial year proved to be one of the
most productive of our 27 year history, with
three new investments, three disposals, two
further investments in the existing portfolio
and agreement reached on the sale of
our investment in Besso. The value of the
investment portfolio increased by 22.1% in
the year and our Net Asset Value by 12.5%,
demonstrating the momentum we have
been building in recent years.

The results show the Group to be in a strong
position, with robust profitability, a healthy
cash balance and an attractive portfolio of
growth investments. This puts us in a good
position to continue to develop and deliver
attractive returns over the long-term for our
investors, with a Total Shareholder Return
in the year of 13.9% and an average NAV
compound annual growth rate of 11.4%
since 1990.

During the year we agreed the disposal of
our investment in Besso, which brought to
a close two decades of partnership. We also
completed our exit from Hyperion. These
investments typify our investment approach
at B.P. Marsh; long-term, patient development
of early stage businesses in partnership with
ambitious management teams. We view all
of our investments as a true partnership and
we supported, counselled and encouraged
Besso and Hyperion through relationships of
over twenty years. Our internal rate of return
(IRR) on Besso was 21.9% since 1995 and
on Hyperion was 25.6% since 1994, proving
the effectiveness of our investment model.

We made three new investments during
the year. The first was in an established
reinsurance broker based in Singapore,
Asia Reinsurance Brokers PTE Ltd. We also
launched two start-up Managing General
Agency businesses: Fiducia in Leeds, UK
and SSRU in Toronto, Canada. During the
year we disposed of non-core holdings in
Randall & Quilter and Broucour.

In addition, we made further investments in
the existing portfolio, in Nexus, LEBC and
PLUM. All of these businesses are making
significant headway in their sectors and
we believe have exciting futures.

Subsequent to the year-end we have made
an investment in CBC, an established
Lloyd’s Broker, completed the disposal of
Besso, and also disposed of our investment
in Trireme by sale back to our Texas-based
partners, US Risk Insurance Group Inc.

To reflect the growth in our business and to
enable us effectively to exploit our pipeline
opportunities the Board agreed in February
2017 that we would increase our initial
investment limit from £3m to £5m. The
Board will continue to strike a balance
between rewarding shareholders by
generating value through investing funds
in opportunities that will deliver long-term
capital growth and a sustainable ongoing
dividend. The Final Dividend declared of
3.76p per share is an increase of 10% on
the previous year and represents a yield of
just under 2% (based on the Company’s
share price as at 5 June 2017). The Board is
aiming at least to maintain this level in the
coming two years.

B.P. Marsh • 2017 Annual Report • Chairman’s statement

Chairman’s statement
continued

The Company’s share price increased by
35% from 1 February 2016 to year end, and
there has been a narrowing in the discount
to NAV at which the Company’s shares
trade in the same period. We maintain our
efforts to close this gap and will continue
our policy to make low volume share buy
backs when the NAV discount reaches 25%
and when trading restrictions allow.

We have now been in business for 27 years
and over the last five years in particular
have built upon our reputation for being the
leading investor in our corner of the market.
Our team is fully focused on bringing in
new investments, tending to the portfolio
and developing our network, whilst ensuring
our story is more widely known in the
broader investment community. I believe
that our momentum is building and that
our management team is well equipped to
continue to drive the business forward.

Brian Marsh OBE,
Chairman

B.P. Marsh • 2017 Annual Report • Business update

Business
update

Summary of Developments
in the Portfolio

During the financial year ended 31 January
2017 and in the ensuing months to date, the
following developments have taken place
within the Group and its portfolio:-

New Investments
Asia Reinsurance Brokers PTE Ltd (“ARB”)
The Group extended its geographic spread
when it invested in ARB, the Singapore-based
specialist reinsurance broker on 21 April 2016,
acquiring a 20% shareholding for a total
consideration of SGD $2.40m.

Stewart Specialty Risk Underwriting Ltd
(“SSRU”)
The Group completed its investment into
SSRU on 30 January 2017, subscribing for
a 30% shareholding.

The investment represents a further
geographic growth step for the Group,
with this business based in Toronto,
Canada. SSRU is a start-up Managing
General Agency and, like Fiducia, was
thinly capitalised. In addition to the equity,
a loan facility of CAD $0.85m has been
provided, with drawdown being subject to
SSRU meeting certain conditions.

ARB was established in 2008, following a
management buy-out of the business from
AJ Gallagher, led by the CEO, Richard Austen.
The business has offices in Singapore,
Malaysia, the Philippines and Indonesia.

SSRU provides specialist insurance products
to clients in the construction, manufacturing,
onshore Energy and Transportation sectors.
Its Founder and CEO, Stephen Stewart, has
over 25 years of industry experience.

The Group considered this an exciting
opportunity to invest in a well-established,
profitable business with an experienced
management team and strong growth
potential.

The Fiducia MGA Company Ltd (“Fiducia”)
On 23 November 2016 the Group subscribed
for a 25% shareholding in Fiducia, for a
consideration of £0.075m alongside a loan
facility of £1.725m. Of this, £0.35m was drawn
down on completion and the remainder is
subject to Fiducia attaining agreed targets.

Fiducia is a start-up registered Lloyd’s
Coverholder specialising in Marine risks
and based in Leeds, UK. The Founder and
CEO, Gerry Sheehy, has over 30 years’
insurance industry experience.

Disposals
Hyperion Insurance Group Ltd (“Hyperion”)
In July 2016 the Group realised its remaining
1.6% stake in Hyperion for £7.3m cash. As
announced on 5 January 2017, Hyperion
repaid, in full, its remaining £6.04m loan at
the end of January 2017, allowing these
funds to be reinvested to grow the ongoing
equity portfolio.

R&Q and Broucour
The Group streamlined its portfolio by
disposing of two non-core investments.
On 22 April 2016, the Group sold its 49%
stake in The Broucour Group Ltd (“Broucour”)
and on 4 May 2016, the Group sold its
1.32% stake in Randall & Quilter Investment
Holdings Ltd (“R&Q”).

B.P. Marsh • 2017 Annual Report • Business update

Business update
continued

Portfolio Developments

United Kingdom
Nexus Underwriting Management Ltd
(“Nexus”)
The Group acquired an additional 6.87% in
Nexus, the independent specialty Managing
General Agency from two of the founding
shareholders for a total consideration of
£4m on 15 December 2016.

The Group made an initial investment in
Nexus in August 2014, acquiring 5%, and
since then has steadily built on this position
with a number of follow-on investments.
The Group’s current shareholding in Nexus
stands at 18.6%.

Since investment in August 2014, Nexus has
seen premium income grow by 93%, from
£56m to £108m in 2016. In the same period,
commission income has increased 59%,
from £12.3m to £19.6m with EBITDA increasing
92% from £2.6m to £5m.

In 2017 Nexus is forecasting Gross Written
Premium Income of £120m and EBITDA of
£7m, a 40% EBITDA increase over prior year,
this growth will generated from organic
growth from within the business, without
any M&A activity.

LEBC Holdings Ltd (“LEBC”)
LEBC, the national IFA and pension advisory
business with 15 branches across the UK,
continues to grow strongly, boosted by
investment in technology to build a hybrid
advice and technology model and success
in targeting the ‘at retirement’ market.

The Group acquired an additional 8.02% in
LEBC from legacy shareholders for £1.91m in
June 2016 and then acquired a further 0.42%
for £0.11m in November 2016 and the Group’s
holding now stands at 43.03%.

LEBC Group Ltd, LEBC’s trading subsidiary,
reported a turnover of £15.4m and a trading
profit of £2.1m for the year to 30 September
2016, a 17% increase on trading profit in the
prior year and despite the impact of the
Sunset Clause banning legacy payments
that came into effect on 6 April 2016 as part
of the FCA’s Retail Distribution Review (RDR).

LEBC is undertaking the process of direct
regulation by the FCA and will accordingly
leave the Tenet network once approval
is obtained.

Walsingham Motor Insurance Ltd
(“Walsingham”)
Walsingham is a Managing General Agency
providing fleet insurance cover for taxis,
couriers, vans and general fleets with A- rated
capacity from New India Assurance Co. Ltd.
Walsingham has seen fleet Gross Written
Premiums increase to £19.9m in the year
to 31 March 2017, from £12.4m in the year to
31 March 2016, representing an overall
increase of 60% inclusive of renewals.

Walsingham is making good progress in line
with the Group’s expectations and is on
course to achieve its 2017 budget.

Europe
Summa Insurance Brokerage SL (“Summa”)
For the year ended 31 December 2016
Summa performed in line with budget,
reporting revenue of €6.1m and recurring
EBITDA of €1.4m.

B.P. Marsh • 2017 Annual Report • Business update

The Spanish economy’s GDP grew by 3.2%
in 2016, better than the expected 2.8%.
This level of growth made Spain one of the
fastest-growing countries in the Eurozone.

In regard to the Spanish Insurance sector,
gross written premiums reached around
€63.8bn in 2016, an increase of c. 12% over
that of 2015. Despite some consolidation
following the financial crisis, the Spanish
insurance intermediary market remains
fragmented, with a high number of small
regional players. Summa is one of the
largest consolidators of regional insurance
brokers in Spain, with an extensive network
of offices and agents throughout the
country. As such, the Group believes that
Summa is well positioned to take advantage
of growth opportunities moving forward.

To this end, the Group has been instrumental
in the appointment of Nicholas Walker to
the Board of Summa as a Non-Executive
Director. Nick Walker is a founding Partner
of Socios Financieros, S.A., one of Spain’s
leading independent corporate finance
firms, based in Madrid. He brings to the
Board of Summa extensive local and
international M&A and corporate finance
experience and will assist Summa’s Board
in all areas of its work.

Australia
Sterling Insurance Holdings (PTY) Ltd
(“Sterling”)
MB Prestige Holdings (PTY) Ltd (“MB”)
The Group’s two investments in Australia,
Sterling and MB, continue to perform in line
with or above the Group’s expectations at
the current time.

South Africa
Bastion Reinsurance Brokerage (PTY) Ltd
(“Bastion Re”)
Bulwark Investment Holdings (PTY) Ltd
(“Bulwark”)
Property and Liability Underwriting
Managers (PTY) Ltd (“PLUM”)
The Group’s South African investments,
Bastion Re, PLUM, and Bulwark, continue
to gain traction within their markets
and are performing in line with the
Group’s expectations.

During the year PLUM met its EBITDA target,
activating the deferred consideration
provisions in the original investment
documents. The Group paid an additional
£300,000 as deferred consideration by
October 2016. On 5 October 2016 the
Group also acquired a further 22.5% for
consideration of £613,400 taking the
Group’s holding in PLUM to 42.5%

Post Year End Investments

CBC (UK) Ltd (“CBC”)
The Group announced on 17 February 2017
that it had acquired an effective 35%
shareholding in CBC.

CBC is an established Lloyd’s retail and
wholesale broker, serving commercial
and personal clients as well as providing
broking solutions to intermediaries. For the
year ending 31 December 2017, CBC has a
forecast revenue of £5.54m and a forecast
EBITDA of £0.644m.

The Group partnered with CBC’s
management team to buy out an existing
shareholder, delivering a 50% shareholding
to the CBC management team, a 15%
shareholding to Andrew Wallas, the newly
appointed Non-Executive Chairman and
35% to B.P. Marsh. The transaction was

B.P. Marsh • 2017 Annual Report • Business update

Business update
continued

undertaken by the Group through a newly-
established company, Paladin Newco Ltd,
now called Paladin Holdings Ltd, (“Paladin”),
to which the Group provided £4m of
funding, with subscription for the 35%
shareholding in Paladin of £3,500 and
provision of a loan facility of £3.99m, which
was fully drawn down on completion.

CBC’s CEO, Rob Cottingham, has over
30 years’ insurance sector experience and
the new Chairman, Andrew Wallas, is well
known to the Group from his 40 years in
the industry, including at Glencairn Ltd
and as Non-Executive Chairman of
Martello Underwriting.

Post year end Disposals

Besso Insurance Group Ltd (“Besso”)
The Group announced on 4 January 2017 that
it had reached agreement to sell its entire
37.94% shareholding in Besso for cash, with
completion subject to, inter alia, regulatory
approval, to BGC Partners Inc (“BGC”).

Completion was announced on 28 February
2017, with the Group receiving £21.6m in
cash (net of transaction costs and pre-tax)
following BGC’s 100% acquisition of Besso
for an enterprise valuation of approximately
£70.5m. Various adjustments were then made
by reference to completion accounts, resulting
in a further £0.4m of pre-tax consideration
proceeds (net of transaction costs and
pre-tax) being payable to the Group.

Trireme Insurance Group Ltd (“Trireme”)
On 3 April 2017 the Group announced
the disposal of its 29.94% shareholding
in Trireme for £2.96m cash, to its fellow
shareholder US Risk Midco, LLC (“US Risk”).
This was approved at a General Meeting of
the Company’s Members on 19 April 2017.

This disposal represents an uplift of 15%
over the Group’s valuation at 31 July 2016
and an IRR (including fees) of 15.6% since
2010, the date of investment.

As part of the disposal, Trireme repaid in full
the outstanding £2.16m drawn down under
its £2.42m loan facility with the Group, plus
fees and any accrued interest. As such, the
total pre-tax proceeds received by the Group
amounted to £5.19m.

From 2010 to the year ended 31 December
2016, Trireme grew Revenue from £5.5m to
£12.76m and EBITDA from £0.3m to £1.76m.
During the period of investment the Group
played a key role in the acquisition and
integration of the broking and underwriting
businesses James Hampden International
Insurance Brokers Ltd and Abraxas Insurance
AG into the Trireme group and oversaw the
establishment of Antarah Underwriting Ltd,
the Managing General Agent, in Dubai. The
Group was also instrumental in assisting
Trireme with its management incentive
programme and has served as a resource
for senior management throughout the
seven years of partnership.

The Group’s final proceeds from this sale
represents an increase of £0.7m on the
valuation at 31 January 2017 and an IRR
of 21.9% since 1995. It also represents an
increase of 58% on its last published valuation
of the same stake in Besso of £13.9m at
31 July 2015, being the last valuation prior
to the commencement of the sale process.

In July 2016 the private equity house Kohlberg
& Company LLC made an investment in US
Risk Insurance Group Inc which resulted
in that business reassessing their strategy
and looking to simplify their partnership
arrangements with other investors.
Agreement was therefore reached on the
Group’s disposal of its interest in Trireme.

B.P. Marsh • 2017 Annual Report • Business update

Investment Strategy

Following the year end, the Board approved
an increase in the Group’s upper limit for new
investments to £5m, previously limited to £3m.

The Board agreed to this change to the
Company’s investment criteria having
considered the Company’s cash resources
following the receipt of funds from the
disposals of Hyperion and Besso. The
Board has agreed the Company should
widen its investment criteria to consider
investments up to £5m in the first round to
enable the Company to consider a wider
range of opportunities.

All other investment criteria remain the same:
• To take minority positions in financial
services intermediary businesses;
• Investments being relationship-driven

and long-term; and

• No set exit on investment (average holding
period is 5 years, however, the longest has
been over 20 years).

Dividend

The Board has recommended a dividend of
3.76 pence per share (£1.1m) for the financial
year ending 31 January 2017. The dividend will
be paid on 28 July 2017 to all Shareholders
on the Register as at 30 June 2017.

This represents an increase of 10% over the
dividend of 3.42p per share (£1m) paid in
respect of the prior year.

It is the Board’s aspiration to maintain
a dividend of at least 3.76p per share for
the years ending 31 January 2018 and
31 January 2019, subject to ongoing review
and approval by the Board and the
Company’s shareholders.

When considering payment of such a
dividend, the Board will continue to strike
a balance between rewarding shareholders
by generating value through investing
available funds in opportunities that will
deliver long-term capital growth and
providing a meaningful dividend.

Share Buy-Backs

The Board’s published Share Buy-back Policy is
to continue to pursue a strategy of undertaking
low volume share buy-backs at times
when the Group’s Share Price represents
a discount to Net Asset Value of 25% or more,
with a maximum of £150,000 allocated by the
Company to the Policy. The Board considers
that this is a useful stabilising mechanism
during periods of market volatility.

As such, following the EU Referendum
decision, the Group undertook a buyback
of 5,726 ordinary shares of 10 pence each
in the Company (“Ordinary Shares”) at a
price of 153.78 pence per Ordinary Share,
with shares being held in Treasury. Further
buy-backs took place post-year end and
a total of 34,372 shares are held in
Treasury currently.

New Business Opportunities

The financial year closed with a total of
84 new opportunities having been
presented to the Group during the year, in
comparison with 71 in the previous year. The
increased deal flow reflects increased M&A
activity in the global insurance market in
general and an increased level of activity
by the management team in developing
the Group’s network that is the source of
new opportunities. This has resulted in a
strong pipeline for the Group to consider
and it is confident that it is well placed to

B.P. Marsh • 2017 Annual Report • Business update

Business update
continued

capitalise on this, applying the Company’s
usual rigour and disciplined approach to
the investment process.

developed regulatory and compliance
environment. With this policy in mind, North
America continues to represent a logical
opportunity base.

Having completed investment in two start-up
Managing General Agencies, in Leeds and
Toronto, Canada, and an established broker
in Singapore during the year, the Group’s
attention is focused on investment in
established businesses in the UK and
continuing assessment of the opportunities
presented in North America.

This focus was rewarded in February, with
the announcement of the investment in the
Lloyd’s broking business CBC.

Of the 84 proposals, 63% 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, specialist consultancy firms, as
well as marketplace lending platforms and
Software-as-a-service enquiries.

The investment in Canada, SSRU, represents
the first step back into the North American
continent, as part of the Group’s policy of
expanding into territories where there is good
opportunity for growth in partnership with a
London-based investor and a suitably

At year end the Group had £12.6m in cash
and treasury funds. Following the realisations
of Besso and Trireme, the Group currently
has £29.2m available for new investment
opportunities after commitments.

Financial Performance

At 31 January 2017, the net asset value of
the Group was £79.7m, or 273p per share
(2016: £70.8m, or 243p per share) including
a provision for deferred tax. This equates to
an increase in net asset value of 12.5%
(2016: 12.4%) for the year.

The Group increased its dividend payment
to £1.0m (or 3.42p per share) during the year,

as announced previously (2016: £0.8m or
2.75p per share). Total shareholder return
for the year was therefore 13.9% (2016:
13.7%) including the dividend payment and
the net asset value increase.

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

31 January
2016
valuation
£m

54.1

Acquisitions
at cost
£m

Disposal
proceeds
£m

Impairment
provisions
£m

Adjusted
31 January
2016
valuation
£m

31 January
2017
valuation
£m

8.3

(10.3)

–

52.1

63.6

This equates to an increase in the portfolio
valuation of 22.1% (2016: 23.8%).

B.P. Marsh • 2017 Annual Report • Business update

The net asset value of £79.7m at 31 January
2017 represented a total increase in net
asset value of £67.1m 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 12.6% to £9.8m
(2016: profit of £8.7m). The consolidated profit
on ordinary activities before taxation was
£12.2m (2016: profit of £10.7m), of which
£11.2m was derived from unrealised gains on
revaluing the equity investment portfolio in line
with current market conditions, an increase of
9.5% on the previous year (2016: net unrealised
gains of £10.3m). The Group’s strategy is
to cover expenses from the portfolio yield.
On an underlying basis, including treasury
returns, but excluding unrealised equity and
all underlying treasury portfolio movement,
this was achieved with a pre-tax profit of
£0.6m for the year (2016: £0.5m).

The Group invested £1.4m in new equity
investments and £6.9m 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
£1.2m. Repayment of loans by the portfolio
amounted to £7.3m in the year. Cash funds
(including treasury funds) at 31 January
2017 were £12.6m.

the portfolio repaying debt in accordance
with agreed repayment schedules. Fees
were 50.8% higher mainly due to a number
of one-off fees received in 2017 as well as
fees derived from new investments.

The Group continues to invest in new and
existing opportunities. Operating expenses,
including costs of making new investments,
increased by 31.0% during the year to £3.1m
(2016: £2.4m). Of this, £0.1m related to
expenses directly incurred in making new
investments which, under IFRS, need to
be expensed. £0.2m related to a provision
against doubtful debts, £0.1m related to
the newly created SIP Trust and £0.05m for
costs incurred in the office move. Excluding
these atypical expenses, overall expenses
rose by £0.25m (10.0%) in proportion with
managing a growing portfolio.

Due to favourable market conditions, the
Group’s treasury funds increased by 8.6%
over the year (net of fund management
charges) (2016: 0.4%).

Outlook

There is no doubt that there are challenges
ahead for the UK and its economy as it begins
preparations to exit the European Union.
We believe our business is equipped to meet
these challenges and that our focus on the
long-term will serve us well in the coming
months and years ahead. Continued global
insurance M&A activity presents opportunity
for our portfolio and our pipeline, as
individuals or teams of people seek to start
new enterprises or join smaller businesses,
allowing their creativity and entrepreneurial
spirit to flourish. The portfolio businesses are
showing solid growth and our management
team is keen to continue to demonstrate
their commitment to our business and to
deliver to our shareholders.

B.P. Marsh • 2017 Annual Report • Current investments • United Kingdom

Current
investments

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:
Equity stake:
31 January 2017 valuation: £13,058,000

April 2007
43.03%

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 (“Besso”) in June 2011.

Date of investment:
Equity stake:
31 January 2017 valuation: £21,309,000

February 1995
37.94%

CBC UK Limited
(www.cbcinsurance.co.uk)
Established in 1985, CBC is a Retail and Wholesale Lloyd’s
Insurance Broker, offering a wide range of services to
commercial and personal clients as well as broking solutions
to intermediaries. The Group assisted in an MBO of CBC
allowing Management to buy out a major shareholder.

Date of investment:
Equity stake:
31 January 2017 valuation:

February 2017
35%
N/A

B.P. Marsh • 2017 Annual Report • Current Investments • United Kingdom

United
Kingdom

The Fiducia MGA Company Limited
(www.fiduciamga.co.uk)
Fiducia is a recently established UK Marine Cargo
Underwriting Agency, established by its CEO Gerry Sheehy.
Fiducia is a Lloyd’s Coverholder which specialises in the
provision of insurance solutions across a number of Marine
risks including, Cargo, Transit Liability, Engineering and
Terrorism Insurance.

Date of investment:
Equity stake:
31 January 2017 valuation:

November 2016
25%
£75,000

Nexus Underwriting Management Limited
(www.nexusunderwriting.com)
In 2014 the Group invested in Nexus Underwriting Management
Limited (“Nexus”), an independent specialty Managing General
Agency, founded in 2008. Through its operating subsidiaries,
Nexus specialises in the provision of Directors & Officers,
Professional Indemnity, Financial Institutions, Accident &
Health, Trade Credit, Political Risks Insurance, Surety, Bond
and Latent Defect Insurance, both in the UK and globally.

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 which commenced trading in July 2013.
In 2015 the Group acquired a further 10.5% equity, taking
the current shareholding to 40.5%.

Date of investment:
Equity stake:
31 January 2017 valuation: £13,915,000

August 2014
18.6%

Date of investment:
Equity stake:
31 January 2017 valuation: £200,000

December 2013
40.5%

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:
Equity stake:
31 January 2017 valuation: £2,908,000

July 2010
29.94%

B.P. Marsh • 2017 Annual Report • Current investments • Rest of the world

Current
investments

Stewart Specialty Risk Underwriting Ltd
A Canadian based Managing General Agent,
providing insurance solutions to a wide array of
clients in the Construction, Manufacturing,
Onshore Energy, Public Entity and Transportation
sectors. SSRU was established by its CEO Stephen
Stewart, who has over 25 years’ experience in the
insurance industry having had senior management
roles at both Ironshore and Lombard in Canada.

Date of investment:
Equity stake:
31 January 2017 valuation: £0

January 2017
30%

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:
Equity stake:
31 January 2017 valuation: £4,840,000

January 2005
77.25%

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:
Equity stake:
31 January 2017 valuation: £0

April 2015
35%

B.P. Marsh • 2017 Annual Report • Current investments • Rest of the world

Rest of
the world

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:
Equity stake:
31 January 2017 valuation: £1,353,000

April 2016
20%

Sterling Insurance PTY Limited
(www.sterlinginsurance.com.au)
In June 2013, in a joint venture enterprise alongside
Besso, (Neutral Bay Investments Limited) the Group
invested in Sterling Insurance PTY Limited, an
Australian specialist underwriting agency offering
a range of insurance solutions within the Liability
sector, specialising in niche markets including
mining, construction and demolition.

Date of investment:
Equity stake:
31 January 2017 valuation: £2,378,000

June 2013
19.7%

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:
Equity stake:
31 January 2017 valuation: £100,000

December 2014
35%

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:
Equity stake:
31 January 2017 valuation: £1,846,000

June 2015
42.5%

MB Prestige Holdings PTY Limited
(www.mbinsurance.com.au)
In December 2013 the Group invested in MB
Prestige Holdings PTY Ltd (“MB Group”), 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:
Equity stake:
31 January 2017 valuation: £1,585,000

December 2013
40%

B.P. Marsh • 2017 Annual Report • Directors

Directors

Brian Marsh OBE
Executive Chairman

Alice Foulk BA (Hons)
Managing Director

Daniel Topping MCSI, ACIS
Chief Investment Officer

Jonathan Newman ACMA,
CGMA, MCSI
Group Finance Director

B.P. Marsh • 2017 Annual Report • Directors

Camilla Kenyon
Director

Stephen Clarke FCA
Non-executive

Campbell Scoones
Non-executive

Pankaj Lakhani FCCA
Non-executive

B.P. Marsh • 2017 Annual Report • Directors’ Report & Strategic Report & Consolidated Financial Statements

Directors’ Report &
Strategic Report &
Consolidated Financial
Statements
For the year ended 31 January 2017

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

B.P. Marsh • 2017 Annual Report • Directors biographies

Directors biographies

Brian Marsh OBE, aged 76
(Executive Chairman) (R) (I) (V) (N) (D)
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 with a direct
beneficial interest in 53.3% of the Company
(in addition to 4.0% held by the Marsh
Christian Trust, of which Brian is a trustee
and Settlor) and 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), aged 30
(Managing Director) (R) (I) (V) (N) (D)
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 in January
2016 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 was appointed a member
of the Valuation Committee in October
2016 and the Remuneration Committee in
December 2016 and is also a member of
the Investment, Nominations and Disclosure
Committees. 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 as well as a
beneficial interest in 8,120 ordinary shares in
B.P. Marsh which are held in the Company’s
SIP Trust.

Jonathan Newman ACMA, CGMA, MCSI,
aged 42 (Group Finance Director) (I) (V)
Jonathan is a Chartered Management
Accountant with over 20 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 as
well as a beneficial interest in 8,120 ordinary
shares in B.P. Marsh which are held in the
Company’s SIP Trust.

Daniel Topping MCSI, ACIS, aged 33
(Chief Investment Officer) (I) (V) (N)
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

B.P. Marsh • 2017 Annual Report • Directors biographies

and investment strategy for B.P. Marsh,
working alongside the Board and the
Investment Directors to structure, develop,
support and monitor the portfolio. Daniel is
a member of the Valuation, Investment and
Nominations Committees, evaluates new
investment opportunities and currently has
multiple nominee appointments across nine
investee companies. Daniel has a direct
beneficial interest in 44,118 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
and 8,120 ordinary shares in B.P. Marsh
which are held in the Company’s SIP Trust.

Camilla Kenyon, aged 44
(Director) (I)
Camilla Kenyon was appointed to the main
board in 2011, following her appointment as
Head of Investor Relations in February 2009.
She has dual responsibilities within the
Group, running both Investor Relations and
the New Business Department and is Chair
of the New Business Committee evaluating
new investment opportunities. She has two
nominee directorships across one investee
company and is a member of the Investment
Committee. She has over 20 years’ experience
in the financial services industry, including
numerous Board appointments. She 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 as well as a
beneficial interest in 8,120 ordinary shares
in B.P. Marsh which are held in the Company’s
SIP Trust.

Campbell Scoones, aged 70
(Non-executive) (R)
Campbell joined B.P. Marsh in April 2013
and has over 45 years’ experience in the
Lloyds and overseas insurance broking and
underwriting markets. Having started his
career in 1966, Campbell has worked for a
number of Lloyd’s insurance broking and
underwriting firms during this time, including,
inter alia, Nelson Hurst & Marsh Group,
Admiral Underwriting, Marsh & McLennan
Companies and Encon Underwriting.
Campbell owns 46,000 ordinary shares
in B.P. Marsh.

Stephen Clarke FCA, aged 79
(Non-executive) (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, aged 63
(Non-executive) (R) (A) (V) (N)
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 and Chairman of the
Audit Committee and is also a member of
the Nominations Committee. Pankaj owns
30,000 ordinary shares in B.P. Marsh.

Key

( R )

( A )

( I )

( V )

( N )

( D )

Member of the Remuneration
Committee during the year

Member of the Audit Committee
during the year

Member of the Investment
Committee during the year

Member of the Valuation
Committee during the year

Member of the Nominations
Committee during the year

Member of the Disclosure
Committee during the year

B.P. Marsh • 2017 Annual Report • Corporate governance

Corporate governance

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, and the Committees
of the Board, takes place annually and is
assessed on an on-going basis by the other
members 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 six standing
committees, the Audit Committee, the
Remuneration Committee, the Investment
Committee, the Valuation Committee,
the Nominations Committee (established
21 July 2016) and the Disclosure Committee
(established 6 October 2016).

Audit Committee
The Audit Committee is comprised of two of
the non-executive directors of the Company
and during the year was chaired by Pankaj
Lakhani (following the resignation of the
previous Chairman of the Committee,
Philip Mortlock, on 7 April 2016). 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.

B.P. Marsh • 2017 Annual Report • Corporate governance

Remuneration Committee
During the year the Remuneration Committee
was comprised of the non-executive
directors of the Company, together with
Brian Marsh and Alice Foulk (appointed on
1 December 2016) 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 27 to 30.

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, Pankaj Lakhani,
Philip Mortlock (until his resignation on
7 April 2016) and Alice Foulk (appointed on
6 October 2016) 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.

Nominations Committee
On 21 July 2016 the Nominations Committee
was established and is comprised of at
least three directors (including at least one
member of the Committee being a non-
executive director) and was comprised of
Brian Marsh, Alice Foulk, Daniel Topping,
Pankaj Lakhani and the Group’s Company
Secretary, Sinead O’Haire. In accordance
with its terms of reference the Committee is
responsible for reviewing the structure, size
and composition of the Board and senior
staff and for identifying and nominating
for approval of the Board, candidates to fill
Board and other senior staff vacancies as
and when they arise. The Committee is also
responsible for reviewing the leadership of
the Group, including the consideration of
succession planning with a view to ensuring
the continued ability of the Group to
compete effectively in the marketplace.

Disclosure Committee
On 6 October 2016 the Disclosure
Committee was established regarding
Market Abuse Regulation Disclosure and
was comprised of Brian Marsh, Alice Foulk
and the Group’s Company Secretary,
Sinead O’Haire. In accordance with its
terms of reference the Committee is
responsible for overseeing the Company’s
compliance with its obligations (as laid
down by the AIM Rules, Disclosure and
Transparency Rules and the Market Abuse
Regulation) in respect of the disclosure and
control of inside information directly
concerning the Company.

B.P. Marsh • 2017 Annual Report • Corporate governance

Corporate governance
continued

Relations with Shareholders

Internal Controls and Risk Management

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 flow of information throughout
the year.

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.

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.

A statement of the directors’ responsibilities
in respect of the consolidated financial
statements is set out on pages 31 - 32.

By order of the Board

S.C. O’Haire
Company Secretary
5 June 2017

B.P. Marsh • 2017 Annual Report • Report of the Remuneration Committee

Report of the
Remuneration Committee

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
(resigned from the Committee on 20 April
2017) and Pankaj Lakhani, as well as the
Executive Chairman of the Group, Brian
Marsh and Alice Foulk (appointed on
1 December 2016). The Committee is
responsible for setting the remuneration of
the executive directors and other members
of staff, as detailed in the Remuneration
policy below.

to join the Remuneration Committee in order
to express her views on the performance of
the Company and Remuneration levels.

The Committee’s terms of reference provide
that for as long as the Chairman and the
Managing Director of the Company are
executive, they should attend as members
and be invited to express their views on
remuneration levels, but should not be
present when their own salaries are decided
or when decisions are taken on performance
targets for incentive arrangements in which
they participate.

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 Board has delegated the review
and setting of non-executive director
remuneration to a sub-committee of the
Board consisting of Brian Marsh, Alice Foulk
and Sinead O’Haire.

The Committee receives advice from external
remuneration advisers where appropriate.

Directors’ Service Agreements

On 1 December 2016 the Company’s
Managing Director, Alice Foulk, was invited

The executive directors entered into service
agreements with the Company on the
following dates:

Director

B.P. Marsh

D.J. Topping

J.S. Newman

C.S. Kenyon

A.H.D. Foulk

Date of service agreement

Term Notice period

30 January 2006

Continuous

1 March 2011

Continuous

30 January 2006

Continuous

1 March 2011

Continuous

16 February 2015

Continuous

6 months

B.P. Marsh • 2017 Annual Report • Report of the Remuneration Committee

Report of the
Remuneration Committee
continued

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. Mortlock1

S.S. Clarke

C.R. Scoones

P.B. Lakhani

Date of Office tenure

Initial period Notice period

30 January 2006

19 April 2013

21 May 2015

12 months

3 months

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

Director

J.S. Newman

D.J. Topping

C.S. Kenyon

A.H.D. Foulk

Total

Number of
jointly-owned
shares

% of total
jointly-owned
shares

355,283

241,592

127,901

1,080,059

25%

17%

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.

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.

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:

B.P. Marsh • 2017 Annual Report • Report of the Remuneration Committee

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 24 to the
financial statements.

Share Incentive Plan (“SIP”)
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.

On 27 June 2016, a total of 9 eligible
employees (including 4 executive directors
of the Company) applied for the 2016-17
SIP and were each granted 2,285 ordinary
shares (“16-17 Free Shares”), representing
£3,600 at the price of issue.

(“Matching Shares”) up to a total of £3,600
worth of shares. All 9 eligible employees
(including 4 executive directors of the
Company) took up the offer and acquired
the full £1,800 worth of Partnership Shares
(1,142 ordinary shares) and were therefore
awarded 2,285 Matching Shares.

The 16-17 Free and Matching Shares are
subject to a 1 year forfeiture period.

A total of 73,080 Free, Matching and
Partnership Shares were granted to the 9
eligible employees during the year
(including 32,480 granted to 4 executive
directors of the Company).

Following the SIP awards made during
the year to 31 January 2017, 4 executive
directors have a beneficial interest in the
ordinary shares of the Company (specifically
held within its two independent share plans)
as follows:

Director

J.S. Newman

D.J. Topping

C.S. Kenyon

A.H.D. Foulk

Total

Ordinary
shares held
under JSOP

Ordinary
shares held
under SIP

355,283

241,592

127,901

8,120

1,080,059

32,480

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

2017
£

1,027,726

21,000

46,000

2016
£

846,542

37,750

36,325

B.P. Marsh • 2017 Annual Report • Report of the Remuneration Committee

Report of the
Remuneration Committee
continued

Aggregate Directors’ Emoluments

Salaries and
fees
£

Benefits
£

Annual
bonuses
£

Termination
payments
£

115,000

80,000

165,000

90,000

36,000

77,000

45,000

12,500

806

2,768

5,057

8,335

5,079

60,000

50,000

68,000

33,000

30,000

B.P. Marsh

A.H.D. Foulk

J.S. Newman

D.J. Topping

C.S. Kenyon

S.S. Clarke

C.R. Scoones

P.B. Lakhani

P.J. Mortlock1

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

2017
Emoluments
excluding
pension
contributions
£

115,806

142,768

220,057

241,335

128,079

36,000

77,096

45,085

42,500

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

Audit
The tables in this report (including the
Notes thereto) have been audited by
Rawlinson & Hunter Audit LLP.

B.P. Marsh

A.H.D. Foulk

J.S. Newman

D.J. Topping

C.S. Kenyon

2017
£

–

4,000

16,500

9,000

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 5 June 2017.

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

B.P. Marsh • 2017 Annual Report • Group Report of the Directors

Group Report
of the Directors

Directors

B.P. Marsh OBE (Chairman)
A.H.D. Foulk BA (Hons)
J.S. Newman ACMA, CGMA, MCSI
D.J. Topping MCSI, ACIS
C.S. Kenyon
C.R. Scoones (non-executive)
S.S. Clarke FCA (non-executive)
P.B. Lakhani FCCA (non-executive)
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, Bastion London Limited and
the B.P. Marsh SIP Trust) for the year ended
31 January 2017.

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. The
directors are required by the AIM Rules of
the London Stock Exchange to prepare
Group and Company financial statements
in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by
the EU and have elected under company
law to prepare the Group and Company
financial statements in accordance with

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.

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.

B.P. Marsh • 2017 Annual Report • Group Report of the Directors

Group Report
of the Directors
continued

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 44.
The directors consider the current state of
affairs of the Group to be satisfactory.

Dividends

A dividend of £999,335 (3.42p per share)
was paid on 29 July 2016 (24 July 2015:
£802,093 or 2.75p per share). The directors
have recommended a final dividend of
3.76p per share (£1,096,955) which will be
paid, subject to Shareholder approval, on
28 July 2017 to Shareholders registered at
the close of business on 30 June 2017.

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.

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

B.P. Marsh • 2017 Annual Report • Group Report of the Directors

Significant Interests

As at 19 May 2017 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:

Mr B.P. Marsh1

IS Partners Investment Solutions

B.P. Marsh Management Limited2

James Sharp & Co

Hargreaves Lansdown Asset Management

No. of
Ordinary
shares of 10p
each held

% of issued
Share
capitall

15,565,271

1,823,100

1,421,130

1,256,265

1,015,108

53.3%

6.3%

4.9%

4.3%

3.5%

1 In addition, the Marsh Christian Trust, of which Mr B.P. Marsh is a trustee and Settlor, held 1,154,000 ordinary shares (4.0%

of the issued share capital) in the Company.

2 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
2017
Ordinary
shares of
10p each

31 January
2016
Ordinary
shares of
10p each

18,184,401

405,374

363,403

249,712

136,021

46,000

18,800

18,184,401

385,219

355,283

241,592

127,901

46,000

18,800

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 614,000
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, 8,120 ordinary shares held within the Company’s SIP
Trust and 41,971 ordinary shares directly owned by Mr D.J. Topping.

3 Total interest includes 355,283 ordinary shares co-owned with BPMM under a Joint Share Ownership Agreement between
Mr J.S. Newman, BPMM and the Company dated 6 November 2014 and 8,120 ordinary shares held within the Company’s
SIP Trust.

4 Total interest includes 241,592 ordinary shares co-owned with BPMM under a Joint Share Ownership Agreement between
Ms C.S. Kenyon, BPMM and the Company dated 6 November 2014 and 8,120 ordinary shares held within the Company’s
SIP Trust.

5 Total interest includes 127,901 ordinary 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 and 8,120 ordinary shares held within the Company’s
SIP Trust.

B.P. Marsh • 2017 Annual Report • Group Report of the Directors

Group Report
of the Directors
continued

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

On 1 February 2017 the Group provided
£3,600,000 of further loan funding to Besso
Insurance Group Limited (“Besso”) to enable
it to fund an overseas acquisition. This
additional loan facility increased Besso’s
outstanding loan balance to £4,907,500
(£1,307,500 as at 31 January 2017).

On 17 February 2017 the Group acquired,
through a newly established company
Paladin NewCo Limited (“Paladin”), an
effective 35% shareholding in CBC UK
Limited (“CBC”), a Retail and Wholesale
Lloyd’s insurance broker. The Group
partnered with CBC’s management team
to buy out an existing shareholder and the
acquisition of CBC was made through
Paladin, to which the Group provided
£4,000,000 of funding (comprising cash
consideration of £3,500 for the 35% equity
and a loan facility of £3,996,500 which
was fully drawn down on completion).

On 17 February 2017 The Fiducia MGA
Company Limited (“Fiducia”) drew down
£194,400 of its agreed loan facility and on
8 May 2017 drew down a further £275,000.
As at 31 January 2017 the total loan
outstanding was £350,000 and following
the aforementioned drawdowns stands at
£819,400, leaving a remaining undrawn
facility of £905,600 at the date of this
report (Note 22).

On 28 February 2017 the Group sold its
entire 37.94% stake in Besso to an affiliate
of BGC Partners, Inc (“BGC”), for an initial
consideration of £21,566,157 (net of
transaction costs). On 12 April 2017 the
Group received further cash consideration
of £441,638 pursuant to an adjustment
based upon Besso’s 28 February 2017 final
completion accounts, bringing the total
consideration received by the Group to
£22,007,795. The total consideration received
represents a realised gain of £698,795 when
compared to the carrying value of the
Group’s investment in Besso of £21,309,000
as at 31 January 2017. Outstanding loans
of £4,907,500 were also repaid in full
on completion.

On 28 February 2017 the Group entered
into an operating lease agreement relating
to its new office premises at 5th Floor,
4 Matthew Parker Street, London, SW1H
9NP. The operating lease is for a period of
10 years with a 5 year break clause in
February 2022.

On 9 March 2017 Bulwark Investment
Holdings (PTY) Limited (“Bulwark”) drew down
£20,000 of its remaining total loan facility
of £665,000. As at 31 January 2017 the total
loan outstanding was £615,000 and following
the aforementioned drawdown stands at
£635,000 at the date of this report. Pursuant
to the Group providing loan funding to a
related investee company, Property and
Liability Underwriting Managers (PTY)
Limited (“PLUM”), on 19 April 2017 (as noted
below), the remaining £30,000 of the
original £665,000 facility made available
to Bulwark was cancelled.

B.P. Marsh • 2017 Annual Report • Group Report of the Directors

On 6 April 2017 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
(“the Trust”), a grant-making charitable
trust of which Mr B.P. Marsh is also Trustee
and Settlor, for nil consideration, taking the
total number of shares held by the Trust in
the Company to 1,198,000 at that time.
Pursuant to a Share Sale Plan announced by
the Group on 5 April 2017 (which provides
for the sale of up to 200,000 shares between
5 April 2017 and 14 September 2018), on
24 April 2017 the Trust sold 44,000 of these
shares at a price of 201p per share. This
sale reduced the Trust’s holding down to
1,154,000 ordinary shares (4.0% of the
Company) at the date of this report.

On 19 April 2017 the Group provided
£400,000 of loan funding to Property and
Liability Underwriting Managers (PTY)
Limited (“PLUM”) for working capital
purposes. £129,000 was drawn down
immediately and a further £125,000 was
drawn down on 18 May 2017, resulting in a
total amount drawn down of £254,000 and
a remaining £146,000 undrawn facility at
the date of this report.

On 21 April 2017 the Group sold its entire
29.94% stake (351,000 B ordinary shares,
3,400 preferred shares and 292 ordinary
shares) in Trireme Insurance Group Limited
(“Trireme”) to its fellow shareholder, US
Risk Midco, LLC, for cash consideration of
£2,908,350 as well as an additional payment
of £51,345 in lieu of a preferred dividend.
The consideration of £2,908,350 equates to
the Group’s 31 January 2017 valuation of its
investment in Trireme. The outstanding loan
of £2,155,113 as at 31 January 2017 was
also repaid on completion.

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 2017 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.

Appointment of Auditor

In accordance with section 489 of the
Companies Act 2006, a resolution proposing
the reappointment of Rawlinson & Hunter
Audit LLP as the Group’s Auditor will be put
to members at the forthcoming AGM.

Registered Office:
5th Floor
4 Matthew Parker Street
London
SW1H 9NP

By order of the Board
S.C. O’Haire
Company Secretary
5 June 2017

B.P. Marsh • 2017 Annual Report • Group Strategic Report

Group Strategic Report

Business Review

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

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 amount of £35,000 drawn down in
May 2016. On 27 September 2016 the facility
was further increased by an additional
£65,000 to £665,000, with £30,000 drawn
down immediately. As at 31 January 2017
the total loans drawn down by Bulwark
amounted to £615,000, leaving a remaining
undrawn facility of £50,000 (Note 22).

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, on 27 June 2016, a total of 9
eligible employees (including 4 executive
directors of the Company) applied for the
2016-17 SIP and were each granted 2,285
ordinary shares (“16-17 Free Shares”),
representing £3,600 at the price of issue.

All eligible employees were also invited to
take up the opportunity to acquire up to
£1,800 worth of ordinary shares (“Partnership
Shares”) whereby for each Partnership Share
acquired by the employee, the SIP Trust
offered two ordinary shares in the Company
(“Matching Shares”) up to a total of £3,600
worth of shares. All 9 eligible employees
(including 4 executive directors of the
Company) took up the offer and acquired
the full £1,800 worth of Partnership Shares
(1,142 ordinary shares) and were therefore
awarded 2,285 Matching Shares. The 16-17
Free and Matching Shares are subject to
a 1 year forfeiture period. A total of 73,080
Free, Matching and Partnership Shares
were granted to the 9 eligible employees
during the year (including 32,480 granted
to 4 executive directors of the Company).
Refer to the Report of the Remuneration
Committee and Note 24 for further details.

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. As at 31 January 2017 the
total number of shares held by the Marsh
Christian Trust in the Company was 614,000.

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 equated to the
Group’s 31 January 2016 valuation of its
investment in Broucour (Note 14). The
outstanding loan (£329,834 at the date of
sale and £254,837 as at 31 January 2017),
together with the cash due from the sale,
will be repaid in full in instalments.

B.P. Marsh • 2017 Annual Report • Group Strategic Report

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 represented a realised gain of
£246,992 on the investment when compared
to the carrying value of £773,000 as at
31 January 2016 (Note 14).

During the year, Property and Liability
Underwriting Managers (PTY) Limited
(“PLUM”) achieved its target earnings before
interest, tax, depreciation and amortisation
(“EBITDA”) of ZAR 8,299,927 over the first
year of the Group’s investment. This EBITDA
target had been agreed upon at initial
investment in June 2015 and provided
for further consideration of £300,000 to
become payable in order to maintain the
Group’s equity stake in PLUM at 20%. On
9 June 2016 the Group paid £150,000 of
this consideration and on 5 October 2016
the Group paid the remaining £150,000,
bringing the total consideration payable
for the 20% to £606,463. In addition, on
5 October 2016, the Group acquired a further
22.5% preferred equity stake in PLUM for
consideration of £613,400. Following this

additional investment, the Group’s equity
stake in PLUM stood at 42.5% as at
31 January 2017.

On 14 June 2016 the Group acquired a
further 8.02% preferred equity stake in LEBC
Holdings Limited (“LEBC”) for aggregate
consideration of £1,911,120. These shares
were acquired from a number of legacy
shareholders, predominantly retired
ex-employees of LEBC. On 16 November 2016
the Group acquired an additional 0.4%
preferred equity stake in LEBC from another
legacy shareholder for consideration of
£110,514. Following these purchases, and as
at 31 January 2017, the Group had an
aggregate shareholding in LEBC of 43.03%.

On 30 June 2016 the Group sold its
remaining 1.6% equity stake (1,405,880
ordinary shares) in Hyperion Insurance Group
Limited (“Hyperion”) for consideration of
£7,310,576. This consideration represents
a realised gain of £576 when compared
to the carrying value of £7,310,000 as at
31 January 2016 (Note 14). In addition, on
31 January 2017 the Group received full
repayment of its £6,037,361 outstanding loan
originally made to Hyperion in May 2013.

B.P. Marsh • 2017 Annual Report • Group Strategic Report

Group Strategic Report
continued

Besso’s buy-back of the shares at cost,
the Group’s holding returned to 37.94%
and remained as such at 31 January 2017.
As the shares were acquired by Besso at
their 31 January 2016 carrying value, no
gain or loss resulted on disposal.

On 22 November 2016 the Group acquired
a 25% cumulative preferred ordinary
shareholding in The Fiducia MGA Company
Limited (“Fiducia”), a newly established UK
Marine Cargo Underwriting Agency, for
total consideration of £75,000. In addition
to the equity investment, the Group
provided Fiducia with a loan facility of
up to £1,725,000. £350,000 of this facility
was drawn down on completion and was
outstanding as at 31 January 2017, leaving
a remaining undrawn facility of £1,375,000
(Note 22). The further provision of funds
will be subject to Fiducia meeting certain
conditions, as outlined in the agreed
business plan.

On 15 December 2016 the Group acquired
a further 6.87% equity stake in Nexus
Underwriting Management Limited (“Nexus”)
for a total consideration of £4,000,000.
The Group acquired this additional equity
from two of Nexus’ founding shareholders.
Following this additional investment, the
Group’s equity stake in Nexus stood at
18.6% as at 31 January 2017.

On 27 January 2017 the Group acquired
a 30% cumulative preferred ordinary
shareholding in Stewart Specialty Risk
Underwriting Limited (“SSRU”), a start-up
Specialty Casualty Underwriting Agency
based in Toronto, Canada for consideration
of CAD 30 (£19). In addition to the equity,
a six year loan facility of CAD 850,000 has
been provided, subject to SSRU meeting
certain conditions. CAD 250,000 (£152,420)
was drawn down immediately on completion
and was outstanding as at 31 January 2017,
with a remaining undrawn facility of CAD
600,000 (Note 22).

Financial Performance
At 31 January 2017, the net asset value of
the Group was £79.7m, or 273p per share
(2016: £70.8m, or 243p per share) including
a provision for deferred tax. This equates
to an increase in net asset value of 12.5%
(2016: 12.4%) for the year.

The Group increased its dividend payment
to £1.0m (or 3.42p per share) during the year,

as announced previously (2016: £0.8m or
2.75p per share). Total shareholder return for
the year was therefore 13.9% (2016: 13.7%)
including the dividend payment and the
net asset value increase.

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

31 January
2016
valuation
£m

54.1

Acquisitions
at cost
£m

Disposal
proceeds
£m

Impairment
provisions
£m

Adjusted
31 January
2016
valuation
£m

31 January
2017
valuation
£m

8.3

(10.3)

–

52.1

63.6

This equates to an increase in the portfolio
valuation of 22.1% (2016: 23.8%).

B.P. Marsh • 2017 Annual Report • Group Strategic Report

Overall, income from investments increased
by 5.5% to £3.0m (2016: £2.8m). Dividend
income increased by 23.2% over the year
due to the strengthening performance of the
portfolio companies, whilst income from loans
fell by 16.6%, which was largely the result of
the portfolio repaying debt in accordance
with agreed repayment schedules. Fees
were 50.8% higher mainly due to a number
of one-off fees received in 2017 as well as
fees derived from new investments.

The consolidated profit on ordinary activities
after taxation increased by 12.6% to £9.8m
(2016: profit of £8.7m). The consolidated
profit on ordinary activities before taxation
was £12.2m (2016: profit of £10.7m), of which
£11.2m was derived from unrealised gains
on revaluing the equity investment portfolio
in line with current market conditions,
an increase of 9.5% on the previous year
(2016: net unrealised gains of £10.3m). The
Group’s strategy is to cover expenses from
the portfolio yield. On an underlying basis
including treasury returns, but excluding
unrealised equity and all underlying treasury
portfolio movement, this was achieved with
a pre-tax profit of £0.6m for the year
(2016: £0.5m).

The Group continues to invest in new and
existing opportunities. Operating expenses,
including costs of making new investments,
increased by 31.0% during the year to
£3.1m (2016: £2.4m). Of this, £0.1m related
to expenses directly incurred in making
new investments which, under IFRS, need to
be expensed. £0.2m related to a provision
against doubtful debts, £0.1m related to
the newly created SIP Trust and £0.05m for
costs incurred in the office move. Excluding
these atypical expenses, overall expenses
rose by £0.25m (10.0%) in proportion with
managing a growing portfolio.

Due to favourable market conditions, the
Group’s treasury funds increased by 8.6%
over the year (net of fund management
charges) (2016: 0.4%).

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.

B.P. Marsh • 2017 Annual Report • Group Strategic Report

Group Strategic Report
continued

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

Net asset value

Net asset value per share

Equity portfolio increase

Dividend per share

Total shareholder return (including dividends)

Total shareholder return on opening shareholders’ funds

Annual operating cash surplus / (deficit)

Cash investment for the year – Equity

Cash investment for the year – Loans

Cash funds (including Treasury) at end of year

Realisations (net of disposal costs)

Gross profit on realisations

Loans repaid by investee companies in the year

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 2017 the Group was debt
free (31 January 2016: 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

Year to/as at
31 January
2017

Year to/as at
31 January
2016

£79.7m

273p

22.1%

3.42p

£9.9m

13.9%

£7.9m

£8.3m

£1.2m

£12.6m

£10.3m

£6.7m

£7.3m

£70.8m

243p

23.8%

2.75p

£8.6m

13.7%

(£1.7m)

£5.2m

£1.7m

£5.3m

£0.1m

–

£4.6m

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.

B.P. Marsh • 2017 Annual Report • Group Strategic Report

Interest rate risk
At 31 January 2017, 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 23).

New investment risk
An inherent risk of realising an investment is
the loss of a performing asset and a potential
lack of suitable new investments to replace
the lost income and capital growth. Prior
to reinvestment, returns on cash can be
significantly lower, which may reduce
underlying profitability on a short-term
basis until funds are reinvested. The Group
has an active New Business department
which continues to receive a strong pipeline
of new investment opportunities. In addition,
there is often potential for further investment
within the Group’s existing portfolio.

Concentration risk
Although the Group only invests in financial
service businesses, and specifically
insurance intermediaries, the Group has a
wealth of experience in this specific sector.
It seeks to manage concentration risk by

making investments across a variety of
geographic areas, development stages of
business and classes of product.

Political risk
As a UK domiciled business, the Group is
exposed to the risks associated with the
UK’s decision to leave the European Union
(“Brexit”). The Board is continually assessing
the potential impact of Brexit on the Group
and its underlying investments, however it is
the Group’s intention to continue to invest
into the international financial services market,
a policy which has historically had little or
no direct impact from the UK’s membership
of the European Union. As outlined under
‘Currency risk’ above, the Group continues
to monitor the movements in its foreign
currency denominated income and assets
and manages this risk accordingly.

Policy on Payment of Suppliers

The Group’s policy on the payment of
suppliers is to settle transactions based
upon the supplier’s agreed terms of trade.
Average supplier days were 42 (2016: 37)
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 2018 and
2019, including cash flows 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
5 June 2017

B.P. Marsh • 2017 Annual Report • Independent Auditor’s Report

Independent
Auditor’s Report
to the Members of B.P. Marsh & Partners PLC

We have audited the Group and Parent
Company financial statements of B.P. Marsh
& Partners Plc for the year ended 31 January
2017 which comprise the Consolidated
Statement of Comprehensive Income, the
Consolidated and Parent Company
Statements of Financial Position, the
Consolidated and Parent Company
Statements of Cash Flows, the Consolidated
and Parent 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 Parent
Company financial statements, as applied
in accordance with the provisions of the
Companies Act 2006.

This report is made solely to the Parent
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 Parent 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 Financial Reporting Council’s
(FRC’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 Parent
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

B.P. Marsh • 2017 Annual Report • Independent Auditor’s Report

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 Parent Company’s affairs as at
31 January 2017 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 Parent 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 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, and, based on the work
undertaken in the course of our audit, the
Strategic Report and the Group Report of the
Directors have been prepared in accordance
with applicable legal requirements.

Matters on which we are required
to report by exception

In the light of the knowledge and
understanding of the Group and Parent
Company and its environment obtained
in the course of the audit, we have not
identified any material misstatement in
the Strategic Report or the Group Report
of the Directors.

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 Parent Company’s financial

statements 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

5 June 2017

B.P. Marsh • 2017 Annual Report • Consolidated Statement of Comprehensive Income

Consolidated Statement
of Comprehensive Income
for the year ended 31 January 2017

Notes

£’000

2017

£’000

Gains on investments

Realised gains on disposal of equity investments
(net of costs)

Unrealised gains on equity investment revaluation

Income

Dividends

Income from loans and receivables

Fees receivable

Operating income

Operating expenses

Operating profit

Financial income

Financial expenses

Exchange movements

Profit on ordinary activities before taxation

Income taxes

Profit on ordinary activities after taxation
attributable to equity holders

Total comprehensive income for the year

Earnings per share – basic and diluted (pence)

12, 14

1, 25

2, 4

2, 3

2, 8

248

11,243

787

1,351

816

467

(36)

402

2016

£’000

10,269

11,491

10,275

639

1,619

541

(31)

(12)

2,799

13,074

(2,356)

10,718

(25)

10,693

(1,993)

8,700

29.8p

2,954

14,445

(3,086)

11,359

833

12,192

(2,398)

9,794

33.5p

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

The notes on pages 48 to 80 form
part of these financial statements.

B.P. Marsh • 2017 Annual Report • Consolidated and Parent Company Statements of Financial Position

Consolidated and Parent
Company Statements of
Financial Position
31 January 2017

Assets

Non-current assets

Property, plant and equipment

Investments – equity portfolio

Investments – subsidiaries

Investments – treasury portfolio

Loans and receivables

Current assets

Non-current assets as held for sale

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)

Notes

2017
£’000

Group

2016
£’000

Company

2017
£’000

2016
£’000

39,350

54,051

–

5,230

7,157

51,752

24,217

5,062

7,327

36,606

88,358

–

3,482

14,660

72,208

–

3,054

1,814

4,868

77,076

(6,728)

(5,625)

(718)

(1,230)

(1,948)

(8,676)

79,682

2,923

9,381

26,191

393

40,783

79,682

273p

(588)

(51)

(639)

(6,264)

70,812

2,923

9,370

22,524

393

35,593

70,812

243p

–

69,442

10,239

–

60,656

10,170

–

79,681

70,826

–

79,682

70,827

–

(15)

–

(15)

79,682

70,812

2,923

9,381

67,299

–

2,923

9,370

58,512

–

79,682

273p

70,812

243p

The Financial Statements were approved by the Board of Directors and authorised for
issue on 5 June 2017 and signed on its behalf by:

B.P. Marsh & J.S. Newman

The notes on pages 48 to 80 form
part of these financial statements.

B.P. Marsh • 2017 Annual Report • Consolidated Statement of Cash Flows

Consolidated Statement
of Cash Flows
for the year ended 31 January 2017

Cash from/(used by) operating activities

Income from loans to investees

Dividends

Fees received

Operating expenses

Net corporation tax (paid)/repaid

Purchase of equity investments1

Net proceeds from sale of equity investments1

Net repayments of loans from investee companies1

Adjustment for non-cash share incentive plan

Increase in receivables

Increase in payables

Depreciation

Net cash from / (used by) operating activities

Net cash (used by) / from investing activities

Purchase of property, plant and equipment

Purchase of treasury investments

Net proceeds from sale of treasury investments

Net cash (used by) / from investing activities

Net cash used by financing activities

Financial income

Financial expenses

Dividends paid

Notes

12, 14

Payments made to repurchase company shares

19, 20

Net cash used by financing activities

Change in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Exchange movement

Cash and cash equivalents at end of year2

2017
£’000

1,351

787

816

(3,086)

(102)

(8,278)

10,253

6,046

(160)

129

2016
£’000

1,619

639

541

(2,356)

145

(5,209)

2,905

(189)

142

7,850

(1,674)

(8)

(11,976)

10,652

(1,332)

(999)

(9)

(1,001)

5,517

1,814

(4)

7,327

(4)

(3,084)

5,902

2,814

(802)

(57)

(853)

287

1,531

(4)

1,814

1 These items are now correctly included under operating activities.
2 The above cash and cash equivalents balance excludes treasury portfolio funds which are referred to in Note 13. Including
treasury portfolio balances of £5,230k, total available cash and treasury portfolio funds as at 31 January 2017 was £12,557k
(as at 31 January 2016: £5,296k, including £3,482k of treasury portfolio funds).

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 48 to 80 form
part of these financial statements.

B.P. Marsh • 2017 Annual Report • Parent Company Statement of Cash Flows

Parent Company Statement
of Cash Flows
for the year ended 31 January 2017

No Company Statement of Cash Flows has been prepared as there has been no cash flow
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 reflected in the Company through
an intercompany adjustment. Accordingly the Company’s “cash and cash equivalents”
balance as at 31 January 2017 remains at £1k (2016: £1k).

Consolidated and Parent
Company Statements of
Changes in Equity
for the year ended 31 January 2017

Opening total equity

Comprehensive income for the year

Dividends paid

Repurchase of company shares

Share incentive plan

Total equity

2017
£’000

70,812

9,794

(999)

(9)

Group

2016
£’000

62,971

8,700

(802)

(57)

2017
£’000

70,812

9,794

(999)

(9)

Company

2016
£’000

62,971

8,700

(802)

(57)

79,682

70,812

79,682

70,812

Refer to Note 20 for detailed analysis of the changes in the components of equity

The notes on pages 48 to 80 form
part of these financial statements.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
for the year ended 31 January 2017

1. Accounting Policies

B.P. Marsh & Partners Plc is a public limited company incorporated in England and Wales under the Companies Act 2006 and
domiciled in the United Kingdom. The address of the Company’s registered office is 5th Floor, 4 Matthew Parker Street, London
SW1H 9NP. The consolidated financial statements for the year ended 31 January 2017 comprise the financial statements of the
Parent Company and its consolidated subsidiaries (collectively “the Group”).

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;
b) 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

c) 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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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 trading 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.

The most significant estimates relate to the fair valuation of the equity investment portfolio as detailed in Note 12 to the Financial
Statements. 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.

Adopted IFRS not yet applied
None of the 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 2017 include:
• Disclosure Initiative (Amendments to IAS 7) – effective 1 January 2017
• Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) – effective 1 January 2017
• IFRS 15: Revenue from Contracts with Customers – effective 1 January 2018
• IFRS 9: Financial Instruments – effective 1 January 2018
• Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) – effective 1 January 2018
• IFRS 16: Leases – effective 1 January 2019

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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

1. Accounting Policies continued

Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power
over the investee. Specifically, the Group controls an investee if and only if the Group has:
a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
b) exposure, or rights, to variable returns from its involvement with the investee; and
c) the ability to use its power over the investee to affect its returns.

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) rights arising from other contractual arrangements; and
b) 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, together with other subsidiaries (except for Summa Insurance Brokerage, S.L. (“Summa”)), are consolidated
into the Group consolidated financial statements. 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.

(ii) Associates
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating
policies. Investments that are held as part of the Group’s investment portfolio are carried in the statement of financial position
at fair value even though the Group may have significant influence 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 reflecting the difference between the
book value of the shares issued by B.P. Marsh & Partners Plc as consideration for the acquisition of the share capital of B.P. Marsh
& Company Limited. This compliance with IFRS 3: Business Combinations (“IFRS 3”) also represented a departure from the
Companies Act.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating
policies. Investments that are held as part of the Group’s investment portfolio are carried in the Consolidated Statement of
Financial Position at fair value even though the Group may have significant influence over those companies. This treatment is
permitted by IAS 28: Investment in Associates (“IAS 28”), which requires investments held by venture capital organisations to be
excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss
and accounted for in accordance with IAS 39: 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 £9,794,327, prior to a dividend distribution of £999,335 (2016: profit of
£8,700,450 prior to a dividend distribution of £802,093).

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
reflect actual or estimated levels of vesting with the corresponding entry to capital contribution.

During the period the Group also established an HMRC sanctioned Share Incentive Plan (“SIP”). Ordinary shares in the Company
(previously repurchased and held in Treasury by the Company) have been transferred to The B.P. Marsh SIP Trust (“the SIP Trust”),
an employee share trust, in order to be issued to eligible employees.

Under the rules of the SIP, eligible employees can each be granted up to £3,600 worth of ordinary shares (“Free Shares”) by the
SIP Trust in each tax year. The number of shares granted is dependent on the share price at the date of grant. In addition, all
eligible employees have been invited to take up the opportunity to acquire up to £1,800 worth of ordinary shares (“Partnership
Shares”) in each tax year 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 Free and Matching Shares are subject to a one
year forfeiture period, however the awards are not subject to any vesting conditions, hence the related expenses are recognised
when the awards are made and are apportioned over the forfeiture period.

The fair value of the services received is measured by reference to the listed share price of the parent company’s shares listed
on the AIM on the date of award of the free and matching shares to the employee.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

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 reflect the estimated extent of impairment;

b) by reference to underlying funds under management;
c) by applying appropriate multiples to the earnings and revenues and/or premiums of the investee company; or
d) by reference to expected future cash flow from the investment where a realisation or flotation is imminent.

Both realised and unrealised gains and losses arising from changes in fair value are taken to the Consolidated Statement of
Comprehensive Income for the 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.

Equity portfolio investments are treated as ‘Non-current Assets’ within the Consolidated Statement of Financial Position unless
the directors have committed to a plan to sell the investment and an active programme to locate a buyer and complete the plan
has been initiated. Where such a commitment exists, and if the carrying amount of the equity portfolio investment will be recovered
principally through a sale transaction rather than through continuing use, the investment is classified as a ‘Non-current asset
as held for sale’ under ‘Current Assets’ within the Consolidated Statement of Financial Position.

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;
b) dividends from equity investments are recognised in the Consolidated Statement of Comprehensive Income when the

shareholders rights to receive payment have been established; and

c) advisory fees from management services provided to investee companies, which are recognised on an accruals basis in

accordance with the substance of the relevant investment advisory agreement.

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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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.

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.

Income taxes
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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

1. Accounting Policies continued

Income taxes continued
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.

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 of the lease.

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 flows from a financial asset expire, or
when a liability is extinguished.

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities greater than 12 months after the reporting period 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 flows through the expected life of the liabilities.
Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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.

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 realised and unrealised gains and losses on the Group’s current and 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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

2. Segmental Reporting continued

Operating income

Operating expenses

Segment operating profit/(loss)

Financial income

Financial expenses

Exchange movements

Profit/(loss) before tax

Income tax (expense)/credit

Profit/(loss) for the year

Geographic segment 1:
UK & Channel Islands

Geographic segment 2:
Non UK & Channel Islands

2017
£’000

11,770

(2,198)

9,572

333

(26)

(1)

9,878

(1,935)

7,943

2016
£’000

12,588

(1,742)

10,846

(23)

(6)

10,830

(2,020)

8,810

2017
£’000

2,675

(888)

1,787

134

(10)

403

2,314

(463)

1,851

2016
£’000

486

(614)

(128)

(8)

(6)

(137)

(110)

2017
£’000

14,445

(3,086)

11,359

467

(36)

402

12,192

(2,398)

9,794

Group

2016
£’000

13,074

(2,356)

10,718

(31)

(12)

10,693

(1,993)

8,700

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:

Investee Company

Hyperion Insurance Group Limited

Besso Insurance Group Limited

LEBC Holdings Limited

Trireme Insurance Group Limited

Nexus Underwriting Management Limited1

Total income attributable to
the investee company
£’000

% of total realised operating
income (excluding gains
on investments)

Reportable geographic
segment

2017

453

450

432

377

353

2016

453

609

351

407

–

2017

2016

2017

2016

–

1&2

–

1 There are no disclosures shown for Nexus Underwriting Management 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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Geographic segment 1:
UK & Channel Islands

Geographic segment 2:
Non UK & Channel Islands

2017
£’000

27,248

5,230

3,050

35,540

24,217

4,522

7,327

–

36,066

71,606

(6,363)

(718)

(1,230)

(1,948)

63,295

10,428

(1,332)

(1,001)

8,095

2016
£’000

45,956

3,482

11,129

60,580

–

2,705

1,814

–

4,519

65,099

(5,674)

(588)

(51)

(6,313)

58,786

(1,165)

2,814

(853)

796

2017
£’000

12,102

–

4,107

16,212

–

540

–

540

16,752

(365)

–

2016
£’000

8,095

–

3,531

11,628

–

349

–

398

12,026

–

16,387

12,026

(2,578)

(509)

–

(2,578)

(509)

Non-current assets

Property, plant and equipment

Investments – equity portfolio

Investments – treasury portfolio

Loans and receivables

Current assets

Non-current assets as held for sale

Trade and other receivables

Cash and cash equivalents

Deferred tax assets

Total assets

Non-current liabilities

Deferred tax liabilities

Current liabilities

Trade and other payables

Corporation tax provision

Total liabilities

Net assets

Additions to property, plant and equipment

Depreciation of property, plant and equipment

Cash flow arising from:

Operating activities

Investing activities

Financing activities

Change in cash and cash equivalents

3. Financial Expenses

Investment management costs (Note 13)

4. Financial Income

Bank and similar interest

Income from treasury portfolio investments – dividend and similar income (Note 13)

Income from treasury portfolio investments – net unrealised gains/(losses) on revaluation (Note 13)

2017
£’000

39,350

5,230

7,157

51,752

24,217

5,062

7,327

–

36,606

88,358

(6,728)

(718)

(1,230)

(1,948)

79,682

7,850

(1,332)

(1,001)

5,517

2017
£’000

382

467

Group

2016
£’000

54,051

3,482

14,660

72,208

–

3,054

1,814

4,917

77,125

(5,674)

(588)

(51)

(6,313)

70,812

(1,674)

2,814

(853)

287

2016
£’000

389

(377)

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

5. Staff Costs

The average number of employees, including all directors (executive and non-executive), employed by the Group during the year
was 17 (2016: 17); 6 of those are in a management role (2016: 6) and 11 of those are in a support role (2016: 11). All remuneration
was paid by B.P. Marsh & Company Limited.

The related staff costs were:

Wages and salaries

Social security costs

Pension costs

Other employment costs (Note 24)

2017
£’000

1,605

210

1,961

2016
£’000

1,368

174

1,605

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 27 and Note 24 for further details.

During the year the Group also established a Share Incentive Plan (“SIP”) under which certain eligible directors and employees
were granted Ordinary shares in the Company. These shares are being held on behalf of these directors and employees within
the B.P. Marsh SIP Trust. Refer to the Report of the Remuneration Committee on page 27 and Note 24 for further details.

Charges of £66,740 (2016: £Nil) relating to the SIP and £2,013 (2016: £2,013) relating to the Joint Share Ownership Agreements
are included within ‘Other employment costs’ above.

6. Directors’ Emoluments

The aggregate emoluments of the directors were:

Management services – remuneration

Fees

Pension contributions – remuneration

2017
£’000

1,028

1,095

2016
£’000

847

921

1,080,059 of the 1,421,130 shares, in respect of which joint interests were granted during the year ended 31 January 2015, were
issued to directors.

Of the total 73,080 Free, Matching and Partnership Shares granted under the SIP during the year, 32,480 were granted to
directors of the Company.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Of the £2,013 (2016: £2,013) charge relating to the Joint Share Ownership Plan and the £66,740 (2016: £Nil) charge relating to
the SIP, £1,529 (2016: £1,529) and £29,664 (2016: £Nil) related to the directors respectively.

Refer to the Report of the Remuneration Committee on page 27 and Note 24 for further details.

Highest paid director

Emoluments

Pension contribution

2017
£’000

241

258

2016
£’000

199

209

The highest paid director also has a joint interest in 355,283 shares pursuant to a Joint Share Ownership Agreement entered
into during the year ended 31 January 2015 as well as 8,120 shares held within the Company’s SIP. Refer to the Report of the
Remuneration Committee on page 27 and Note 24 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 (2016: 4) accrued benefits under these defined contribution pension schemes.

The key management personnel comprises of the directors.

7. Dividends

Ordinary dividends

Dividend paid:

3.42 pence each on 29,226,040 Ordinary shares (2016: 2.75 pence each on 29,167,000 Ordinary shares)

2017
£’000

2016
£’000

999

802

In the current year a total dividend of £3,340 was payable on the 97,652 ordinary shares held by the B.P. Marsh SIP Trust (“SIP
Trust”); these shares having been held in Treasury at the start of the year and subsequently transferred to the SIP Trust in March
2016. No dividend was payable on the 59,040 ordinary shares held by the Company in Treasury in the prior year.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

8. Profit on Ordinary Activities Before Taxation

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

Depreciation of owned tangible fixed assets

Auditor’s remuneration :-

Audit fees for the Company

Other services:

Audit of subsidiaries’ accounts

Taxation

Other advisory

Exchange (gain)/loss

Operating lease rentals of land and buildings

9. 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

Total income taxes charged in the Consolidated Statement of Comprehensive Income

2017
£’000

2016
£’000

(402)

2017
£’000

1,326

(31)

1,295

1,103

–

1,103

2,398

2016
£’000

(22)

1,964

–

1,964

1,993

The tax assessed for the year is lower (2016: 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 20.00% (2016: 20.17%)

Tax effects of:

Expenses not deductible for tax purposes

Prior year current tax overprovision

Re-measurement of deferred tax upon change in tax rate

Tax payable on realised gains on disposal of investments

Capital gains on disposal of investments

Other adjustments

Other effects:

Management expenses utilised

Non-taxable income (dividends received)

2017
£’000

12,192

2,438

(31)

–

(1,326)

1,318

104

–

(157)

2016
£’000

10,693

2,157

(22)

–

(1)

(33)

–

(128)

Total income taxes charged in the Consolidated Statement of Comprehensive Income

2,398

1,993

There are no factors which may affect future tax charges except as set out in Note 17.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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 total comprehensive income 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

Number of dilutive shares under option

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

2017
£’000

9,794

33.5p

2016
£’000

8,700

29.8p

Number

29,207,421

29,165,774

Nil

29,207,421

29,165,774

During the year the Company paid a total of £8,805 (2016: £56,414) in order to repurchase 5,726 (2016: 38,612) ordinary shares
at an average price of 154 pence per share (2016: 146 pence per share). All 5,726 ordinary shares are being held by the Company
in Treasury (2016: all 38,612 ordinary shares were held by the Company in Treasury).

Distributable reserves have been reduced by £8,805 as a result (2016: reduction of £56,414).

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 2017 a total of 5,726 ordinary shares were held by the Company in Treasury (31 January 2016: 97,652 ordinary
shares were held by the Company in Treasury, prior to being transferred to the B.P. Marsh SIP Trust (“SIP Trust”) in the current year).

The repurchase of the ordinary shares is borne from the Group’s commitment to reduce share price discount to net asset value.
Its policy has been throughout the year (and previously) to buy small parcels of shares when the share price drops to more than
25% below its published Net Asset Value and place them into Treasury. Following the year end, on 3 March 2017 the Group
announced a Share Buy-Back Policy outlining this commitment.

The increase to the weighted average number of ordinary shares between 2016 and 2017 is attributable to the transfer of the
97,652 ordinary shares held by the Company in Treasury as at 31 January 2016 to the SIP Trust during the year. These shares
have therefore been treated as re-issued for the purposes of calculating earnings per share. 73,080 of the 97,652 ordinary shares
transferred to the SIP Trust were subsequently allocated to the participating employees as Free, Matching and Partnership shares
under the share incentive plan arrangement (Note 24).

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

11. Property, Plant and Equipment

Group

Cost

At 1 February 2015

Additions

Disposals

At 31 January 2016

At 1 February 2016

Additions

Disposals

At 31 January 2017

Depreciation

At 1 February 2015

Eliminated on disposal

Charge for the year

At 31 January 2016

At 1 February 2016

Eliminated on disposal

Charge for the year

At 31 January 2017

Net book value

At 31 January 2017

At 31 January 2016

At 31 January 2015

Furniture &
Equipment
£’000

Leasehold
Fixtures &
Fittings
£’000

Total
£’000

–

(5)

–

(5)

–

116

–

120

(5)

123

–

105

(5)

108

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

12. Investments – Equity Portfolio

Group

At valuation

At 1 February 2015

Additions

Disposals

Provisions

Unrealised gains in this period

At 31 January 2016

At 1 February 2016

Transfers between categories

Additions

Disposals

Provisions

Unrealised gains in this period

At 31 January 2017

At cost

At 1 February 2015

Additions

Disposals

Provisions

At 31 January 2016

At 1 February 2016

Transfers between categories

Additions

Disposals

Provisions

At 31 January 2017

Shares in investee companies

Continuing
investments
£’000

Non-current
investments as
held for sale1
£’000

38,647

5,209

(74)

–

10,269

54,051

(21,836)

8,278

(8,424)

–

7,281

39,350

20,816

5,209

(74)

–

25,951

(6,821)

8,278

(1,961)

–

21,836

–

(1,581)

–

3,962

24,217

–

6,821

–

(1,581)

–

25,447

5,240

Total
£’000

38,647

5,209

(74)

–

10,269

54,051

–

8,278

(10,005)

–

11,243

63,567

20,816

5,209

(74)

–

25,951

–

8,278

(3,542)

–

30,687

1 Since 31 January 2017 the Group has disposed of its investments in both Besso Insurance Group Limited (“Besso”) and Trireme Insurance Group Limited (“Trireme”) (Note 26).
Although the completion of these disposals took place after the year end, the intention to dispose of each investment was entered into prior to 31 January 2017. In the case of
Besso, the Group’s intention to dispose of its investment was also publicly announced prior to the year end. In accordance with the provisions of IFRS 5: Non-current Assets
Held for Sale and Discontinued Operations (“IFRS 5”) these investments have been moved from Non-current Assets to Current Assets and as at 31 January 2017 are shown
within the Statement of Financial Position as “Non-current assets as held for sale”. In addition, the movements in valuation and cost attributable to these specific investee
companies have been categorised separately within the Group’s investment movement table above. For the income generated from these two investments refer to Note 2.

The additions relate to the following transactions in the year:

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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

12. Investments – Equity Portfolio continued

On 14 June 2016 the Group acquired a further 8.02% preferred equity stake in LEBC Holdings Limited (“LEBC”) for aggregate
consideration of £1,911,120. These shares were acquired from a number of legacy shareholders, predominantly retired ex-
employees of LEBC. On 16 November 2016 the Group acquired an additional 0.4% preferred equity stake in LEBC from another
legacy shareholder for consideration of £110,514. Following these purchases, and as at 31 January 2017, the Group had an
aggregate shareholding in LEBC of 43.03%.

During the year, Property and Liability Underwriting Managers (PTY) Limited (“PLUM”) achieved its target earnings before interest,
tax, depreciation and amortisation (“EBITDA”) of ZAR 8,299,927 over the first year of the Group’s investment. This EBITDA target
had been agreed upon at initial investment in June 2015 and provided for further consideration of £300,000 to become payable
in order to maintain the Group’s equity stake in PLUM at 20%. On 9 June 2016 the Group paid £150,000 of this consideration
and on 5 October 2016 the Group paid the remaining £150,000, bringing the total consideration payable for the 20% to
£606,463. In addition, on 5 October 2016, the Group acquired a further 22.5% preferred equity stake in PLUM for consideration
of £613,400. Following this additional investment, the Group’s equity stake in PLUM stood at 42.5% as at 31 January 2017.

On 15 December 2016 the Group acquired a further 6.87% equity stake in Nexus Underwriting Management Limited (“Nexus”)
for a total consideration of £4,000,000. The Group acquired this additional equity from two of Nexus’ founding shareholders.
Following this additional investment, the Group’s equity stake in Nexus stood at 18.6% as at 31 January 2017.

The disposals relate to the following transactions in the year:

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 equated to the Group’s 31 January 2016 valuation of its
investment in Broucour. The outstanding loan (£329,834 at the date of sale and £254,837 as at 31 January 2017) will be repaid
in full in instalments.

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 represented a realised gain of £246,992 on the investment when compared to
the carrying value of £773,000 as at 31 January 2016 (Note 14).

On 30 June 2016 the Group sold its remaining 1.6% equity stake (1,405,880 ordinary shares) in Hyperion Insurance Group
Limited (“Hyperion”) for consideration of £7,310,576. This consideration represents a realised gain of £576 when compared to
the carrying value of £7,310,000 as at 31 January 2016 (Note 14). On 31 January 2017 the Group received full repayment of its
£6,037,361 outstanding loan originally made to Hyperion in May 2013.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

On 9 September 2016 the Group entered into a share buy-back agreement with Besso Insurance Group Limited (“Besso”) for
Besso to re-purchase 437,769 A Ordinary shares being held by the Group. This equity was originally acquired by the Group in
September 2015 (at the time of acquisition equating to 7.03% of Besso) and was a capped participation which was stated within
the Group’s valuation of Besso at cost (£1,581,147) alongside its main economic participation of 37.94% (total 44.97%) as at
31 January 2016. Following Besso’s buy-back of the shares at cost, the Group’s holding returned to 37.94% and remained as
such at 31 January 2017. As the shares were acquired by Besso at their 31 January 2016 carrying value, no gain or loss resulted
on disposal.

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), Property and Liability Underwriting Managers (PTY) Limited (South Africa), Asia Reinsurance Brokers Pte
Limited (Singapore) and Stewart Specialty Risk Underwriting Limited (Canada) are as follows:

% holding
of share
capital

Date
information
available to

Aggregate
capital and
reserves
£

Post tax
profit/(loss)
for the year
£

Principal
activity

Name of company

Asia Reinsurance Brokers Pte Limited

Bastion Reinsurance Brokerage (PTY) Limited

Besso Insurance Group Limited

Bulwark Investment Holdings (PTY) Limited

LEBC Holdings Limited

MB Prestige Holdings PTY Limited

Neutral Bay Investments Limited

Nexus Underwriting Management Limited

Property and Liability Underwriting Managers
(PTY) Limited

Stewart Specialty Risk Underwriting Limited

20.00

35.00

37.94

35.00

43.03

40.00

49.90

18.60

42.50

30.00

31.12.15

30.09.16

31.12.16

31.03.16

31.12.15

1,772,106

(263,528)

4,737,544

(82,040)

1,911,727

1,473,790

4,039,192

7,975,270

220,331

(289,315)

265,114

(82,084)

Specialist reinsurance broker

Reinsurance broker

Insurance intermediary

Holding company for South African
Managing General Agents

1,627,160

Independent financial advisor company

464,298

229,779

Specialist Australian Motor
Managing General Agency

Investment holding company

1,687,050

Specialist Managing General Agency

31.12.15

(181,225)

(152,042)

–

Summa Insurance Brokerage, S.L.

77.25

31.12.15

7,686,491

56,158

The Fiducia MGA Company Limited

Trireme Insurance Group Limited

25.00

30.86

–

31.12.15

(22,105)

(566,961)

Walsingham Motor Insurance Limited1

40.50

30.09.15

(1,470,124)

(586,214)

Specialist South African Property
Managing General Agency

Specialist Canadian Casualty
Underwriting Agency

Consolidator of regional
insurance brokers

Specialist UK Marine Cargo
Underwriting Agency

Holding company for
insurance intermediaries

Specialist UK Motor
Managing General Agency

1 By virtue of its interest in Walsingham Motor Insurance Limited, the Group also has a 50% equity holding in Walsingham Holdings Limited, a company incorporated in the

year to 31 January 2016, and which remains dormant at the year end.

Financial data for The Fiducia MGA Company Limited and Stewart Specialty Risk Underwriting Limited is not yet available as
these companies were incorporated and commenced trading in 2016.

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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

12. Investments – Equity Portfolio continued

Company

At valuation

At 1 February 2015

Additions

Unrealised gains in this period

At 31 January 2016

At 1 February 2016

Additions

Unrealised gains in this period

At 31 January 2017

At cost

At 1 February 2015

Additions

At 31 January 2016

At 1 February 2016

Additions

At 31 January 2017

Shares
in group
undertakings
£’000

52,815

–

7,841

60,656

–

8,786

69,442

2,143

–

2,143

–

2,143

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

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

Bastion London Limited

% Holding of
Share Capital

Aggregate capital
and reserves at
31 January 2017
£

Profit/(loss) for
the year to
31 January 2017
£

100

79,680,380

15,118,409

23,485

1,000

9,792,314

1,073,547

–

Principal Activity

Consulting services and
investment holding company

Investment holding company

Consulting services

Dormant

Loans to the subsidiaries of £10.239 million (2016: £10.170 million) are now treated as capital contributions.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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

Rathbone Investment Management Limited

Total

2017
£’000

3,482

11,976

(10,652)

424

5,230

3,581

–

1,649

5,230

2016
£’000

6,319

3,084

(5,902)

(19)

3,482

3,377

105

–

3,482

The treasury portfolio comprises of investment funds managed and valued by the Group’s investment managers, GAM London
Limited and Rathbone Investment Management Limited (and also previously Banque Heritage SA until July 2016). 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 £35,832 (2016: £31,257) were charged to the Consolidated Statement of Comprehensive Income
for the current year (Note 3).

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

14. Realised Gains on Disposal of Equity Investments

The realised gains on disposal of investments comprises of a net gain of £247,568. £246,992 of this net gain is in respect of the
Group’s disposal of its entire 1.32% investment in Randall & Quilter Investment Holdings Limited (“R&Q”) at its carrying value of
£773,000 for a consideration of £1,019,992. The remaining net gain of £576 is in respect of the Group’s disposal of its remaining
1.6% investment in Hyperion Insurance Group Limited (“Hyperion”) at its carrying value of £7,310,000 for a consideration of
£7,310,576 (see Note 12 for further details of these disposals).

Additionally, during the year the Group disposed of its investment in The Broucour Group Limited (“Broucour”) at its carrying
value of £341,000 and made a partial disposal of its investment (7.03% capped participation) in Besso Insurance Group Limited
at its carrying value of £1,581,147 (Note 12). As a result of these disposals being made at carrying value, no gain or loss was
included in the Consolidated Statement of Comprehensive Income for the year.

In aggregate, the above disposals resulted in a net release to Retained Earnings from the Fair Value Reserve of £5,238,270,
comprising of a £6,605,942 release of fair value which has been reduced by tax payable on disposal (gross of management
expenses available for tax relief ) of £1,367,672 (see Note 20).

The realised gains on disposal of investments of £6,141 for the year to 31 January 2016 were in respect of capital distributions
made by R&Q.

15. Loans and Receivables – Non-Current

Loans to investee companies (Note 25)

Other receivables (Note 25)

See Note 25 for terms of the loans.

16. Trade and Other Receivables – Current

Trade receivables

Less provision for impairment of receivables

Loans to investee companies (Note 25)

Corporation tax repayable

Other receivables

Prepayments and accrued income

2017
£’000

6,816

341

7,157

2017
£’000

451

(178)

273

4,170

–

603

Group

2016
£’000

14,660

–

14,660

Group

2016
£’000

592

–

592

1,965

461

5,062

3,054

2017
£’000

–

Company

2016
£’000

–

2017
£’000

Company

2016
£’000

–

Included within net trade receivables is a gross amount of £436,526 (2016: £535,560) owed by the Group’s participating
interests, against which a provision for bad debts of £178,018 has been provided for (2016: £Nil).

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

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. There were no such provisions in the previous year.

Movement in the allowance for doubtful debts:

Balance at 1 February

Increase in allowance recognised in the

Statement of Comprehensive Income

Balance at 31 January

2017
£’000

–

178

Group

2016
£’000

–

2017
£’000

–

Company

2016
£’000

–

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 £272,753 (2016: £591,532), of which
£188,841 (2016: £514,865) 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 other than over £73,308 (2016: £259,824) included within the net trade receivables balance relating
to loan interest due from investee companies which is secured on the assets of the investee company.

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

2017
£’000

137

273

Group

2016
£’000

215

245

592

2017
£’000

Company

2016
£’000

–

There were no provisions made against loans to investee companies in both the current or prior year.

See Note 25 for terms of the loans and Note 23 for further credit risk information.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

17. Deferred Tax Liabilities – Non-Current

At 1 February 2015

Tax movement relating to investment revaluation and disposal of revalued investments for the year (Note 9)

At 31 January 2016

At 1 February 2016

Tax movement relating to investment revaluation and disposal of revalued investments for the year (Note 9)

At 31 January 2017

Group
£’000

3,661

1,964

5,625

1,103

6,728

Company
£’000

–

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, £6,728,000 (2016: £5,625,000) of tax on capital gains would become payable by the Group at a corporation
tax rate of 20% (2016: 20%).

As at 31 January 2017 the enacted tax rate was 19% from April 2017 and 17% from April 2020. The Group is unable to determine
when exactly such timing on the deferred tax might take place, however if the appropriate rates are used based on the estimated
timings when the deferred tax liability is expected to crystallise, then the deferred tax liability would potentially be reduced by
some £157,000.

18. Current Liabilities

Trade and other payables

Trade payables

Other taxation & social security costs

Accruals and deferred income

Corporation tax (Note 9)

2017
£’000

105

567

718

1,230

1,948

Group

2016
£’000

127

409

588

639

2017
£’000

Company

2016
£’000

–

The corporation tax as at 31 January 2017 relates to the estimated tax payable on the disposal of the Group’s investments in
Broucour, R&Q and Hyperion during the year (Note 12) of £1,367,672, less £90,000 of quarterly instalment payments on account
already made during the year, £6,098 of foreign withholding tax deducted at source and £41,423 of estimated tax credit from
excess management expenses arising on the on the Group’s underlying profit for the year.

The corporation tax as at 31 January 2016 of £51,227 related to the estimated tax payable on the Group’s underlying profit for
that year of £51,101 and £126 of tax payable in respect of the year ended 31 January 2015.

All of the above liabilities are measured at amortised cost.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

19. Called Up Share Capital

Allotted, called up and fully paid

29,226,040 Ordinary shares of 10p each (2016: 29,226,040)

2017
£’000

2,923

2016
£’000

2,923

Distributable reserves have been reduced by £8,805 as a result (2016: reduction of £56,414).

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

20. Reconciliation of Movements in Shareholders’ Funds

Reverse
acquisitio
reserve
£’000

Captial
redemption
reserve
£’000

Capital
contribution
reserve
£’000

Group

At 1 February 2015

Comprehensive income for the year

Dividends paid (Note 7)

Repurchase of Company shares (Note 19)

Share based payments (Note 24)

At 31 January 2016

At 1 February 2016

Comprehensive income for the year

Transfers on sale of investments (Note 14)

Other transfers

Dividends paid (Note 7)

Repurchase of Company shares (Note 19)

Share based payments (Note 24)

Share Incentive Plan

At 31 January 2017

Share
capital
£’000

2,923

Share
premium
account
£’000

9,370

–

2,923

9,370

–

Fair
value
reserve
£’000

13,992

8,532

–

22,524

8,870

(5,238)

–

393

–

393

–

Retained
earnings
£’000

36,286

168

(802)

(57)

(2)

35,593

924

5,238

(35)

(999)

(9)

(2)

Total
£’000

62,971

8,700

(802)

(57)

–

70,812

9,794

–

(999)

(9)

–

2,923

9,381

26,191

393

40,783

79,682

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

20. Reconciliation of Movements in Shareholders’ Funds continued

Company

At 1 February 2015

Comprehensive income for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share based payments (Note 24)

At 31 January 2016

At 1 February 2016

Comprehensive income for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share Incentive Plan

At 31 January 2017

21. Operating Lease Commitments

Share
capital
£’000

2,923

Share
premium
account
£’000

9,370

–

2,923

9,370

–

Fair
value
reserve
£’000

50,671

7,841

–

58,512

8,787

–

2,923

9,381

67,299

Captial
redemption
reserve
£’000

Capital
contribution
reserve
£’000

Retained
earnings
£’000

–

(1)

–

859

(802)

(57)

1,007

(999)

(9)

Total
£’000

62,971

8,700

(802)

(57)

–

70,812

9,794

(999)

(9)

79,682

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

2017
Land and
buildings
£’000

–

2016
Land and
buildings
£’000

–

The “earlier than one year” operating lease commitment that existed as at 31 January 2017 related to the temporary extension
of the lease on the Group’s office premises at 2nd Floor, 36 Broadway, London, SW1H 0BH until 9 May 2017. The original five year
lease expired on 26 December 2016.

Following the year end, on 28 February 2017 the Group entered into a new operating lease agreement relating to its new office
premises at 5th Floor, 4 Matthew Parker Street, London, SW1H 9NP. Refer to Note 26 for further details.

22. Loan and Equity Commitments

On 22nd 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
made in the prior year, as at 31 January 2017 the total loan drawn down amounted to £2,155,113, leaving a remaining undrawn
facility of £24,402.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

On 15 April 2015 (as varied on 13 April 2016 and 27 September 2016) the Group entered into an agreement to provide a loan facility
of £665,000 to Bulwark Investment Holdings (PTY) Limited, an investee company. As at 31 January 2017 £615,000 of this facility had
been drawn down, leaving a remaining undrawn facility of £50,000.

On 22 November 2016 the Group entered into an agreement to provide a loan facility of up to £1,725,000 (subject to meeting
certain conditions) to The Fiducia MGA Company Limited (“Fiducia”), an investee company. As at 31 January 2017 £350,000 of
this facility had been drawn down, leaving a remaining undrawn facility of £1,375,000.

On 27 January 2017 the Group entered into an agreement to provide a loan facility of CAD 850,000 (subject to certain conditions)
to Stewart Specialty Risk Underwriting Limited (“SSRU”), an investee company. As at 31 January 2017 CAD 250,000 (£152,420) of
this facility had been drawn down, leaving a remaining undrawn facility of CAD 600,000.

Please refer to Note 26 for details of loan amounts drawn down after the year end.

23. Financial Instruments

The Group’s financial instruments comprise loans to participating interests, cash and liquid resources and various other items,
such as trade debtors, trade creditors, 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 unless there are economic reasons for doing so, as determined by the directors.

The main risks arising from the Group’s financial instruments are price risk, credit risk, liquidity risk, interest rate risk, currency risk,
new investment risk, concentration risk and political 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 £7,327,000 (2016: £1,814,000), 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 1.0% p.a. in
the period (2016: deposit rates of interest ranged up to 0.85% p.a.). During the period maturity periods ranged between immediate
access and 9 months (2016: maturity periods ranged between immediate access and 32 days).

Currency hedging
During the year the Group engaged in one currency hedging transaction amounting to €1,000,000 (2016: None) to mitigate the
exchange rate risk for certain foreign currency receivables. This was settled before the year end. A net gain of £94,788 (2016: £Nil)
relating to this hedging transaction was recognised under Exchange Movements within the Consolidated Statement of Comprehensive
Income when the transaction was settled before the year end.

Financial liabilities
The Company had no borrowings as at 31 January 2017 (2016: £Nil).

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

23. Financial Instruments continued

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

• Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, observed either

directly as prices or indirectly from prices; and

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

The following presents the Group’s assets and liabilities that are measured at fair value at 31 January 2017:

Assets

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

Treasury portfolio investments

Level 1
£’000

–

5,230

Level 2
£’000

–

Level 3
£’000

63,567

–

63,567

The Group’s assets and liabilities that are measured at fair value at 31 January 2016 are presented as follows:

Assets

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

Treasury portfolio investments

Level 1
£’000

773

3,482

4,255

Level 2
£’000

–

Level 3
£’000

53,278

–

53,278

Total
£’000

63,567

5,230

68,797

Total
£’000

54,051

3,482

57,533

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

24. Share Based Payment Arrangements

Joint Share Ownership Plan
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

Date of grant

Number of instruments granted

Exercise price (pence)

Share price (market value) at grant (pence)

Hurdle rate

Vesting period (years)

Vesting conditions

Share appreciation rights (joint beneficial ownership)

6 November 2014

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

b) a person becoming bound or entitled to acquire shares in the Company pursuant to sections 974 to 991

of the Companies Act 2006; or

c) 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

Settlement

% expected to vest (based upon leavers)

Number expected to vest

Valuation model

Black-Scholes value (pence)

Deduction for carry charge (pence)

Fair value per granted instrument (pence)

Charge for year ended 31 January 2017

20%

Cash settled on sale of shares

85%

1,207,960

Black –Scholes

15.00

14.50

0.50

£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).

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.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

24. Share Based Payment Arrangements continued

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.

There has been no movement during the year in terms of the numbers of shares to be exercised (2016: no movement).

Share Incentive Plan
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 (“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.

On 27 June 2016, a total of 9 eligible employees (including 4 executive directors of the Company) applied for the 2016-17 SIP
and were each granted 2,285 ordinary shares (“16-17 Free Shares”), representing £3,600 at the price of issue.

Additionally, on 27 June 2016, all eligible employees were also invited to take up the opportunity to acquire up to £1,800 worth
of ordinary shares (“Partnership Shares”). 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. All 9 eligible employees (including
4 executive directors of the Company) took up the offer and acquired the full £1,800 worth of Partnership Shares (1,142 ordinary
shares) and were therefore awarded 2,285 Matching Shares.

The 16-17 Free and Matching Shares are subject to a 1 year forfeiture period.

A total of 73,080 Free, Matching and Partnership Shares were granted to the 9 eligible employees during the year, including
32,480 granted to 4 executive directors of the Company (Note 6).

£66,740 of the IFRS 2 charges (2016: £Nil) associated with the award of the SIP shares to the 9 eligible directors and employees
of the Company have been recognised in the Statement of Comprehensive Income as employment expenses (Note 5).

The results of the SIP Trust have been fully consolidated within these financial statements on the basis that the SIP Trust is controlled
by the Company.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

25. Related Party Disclosures

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

The Broucour Group Limited

Bastion Reinsurance Brokerage (PTY) Limited

Besso Insurance Group Limited

Bulwark Investment Holdings (PTY) Limited

The Fiducia MGA Company Limited

Hyperion Insurance Group Limited

LEBC Holdings Limited

Trireme Insurance Group Limited

Walsingham Motor Insurance Limited

Summa Insurance Brokerage, S.L.

MB Prestige Holdings PTY Limited

Stewart Specialty Risk Underwriting Limited

2017
£

254,837

341,831

1,807,500

615,000

350,000

–

1,005,000

2,155,113

1,200,000

2016
£

1,041,500

341,831

2,341,540

398,624

–

6,037,361

1,005,000

2,155,113

1,200,000

€

2,731,434

AUD

1,257,740

CAD

250,000

AUD

1,417,334

CAD

–

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.

In addition, the sole shareholder of The Broucour Group Limited (“Broucour”) owed the Group £341,000 at the year end, being
cash receivable from the sale of the equity holding in Broucour by the Group. This will be receivable after more than one year as
shown in Note 15. The directors consider that the present value of the amount is not materially different from the amount stated.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

25. 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 investee companies (including their subsidiaries and other related entities) of the
Company and its subsidiaries for the year were as follows:

Asia Reinsurance Brokers Pte Limited

The Broucour Group Limited

Bastion Reinsurance Brokerage (PTY) Limited

Besso Insurance Group Limited

Bulwark Investment Holdings (PTY) Limited

Hyperion Insurance Group Limited

The Fiducia MGA Company Limited

LEBC Holdings Limited

MB Prestige Holdings PTY Limited

Neutral Bay Investments Limited

Nexus Underwriting Management Limited

Property & Liability Underwriting Managers (PTY) Limited

Stewart Specialty Risk Underwriting Limited

Summa Insurance Brokerage, S.L.

Trireme Insurance Group Limited

Walsingham Motor Insurance Limited

2017
£

42,316

16,930

56,448

449,960

77,959

452,802

11,963

431,891

138,882

112,542

353,202

60,053

436

208,077

377,124

121,000

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

In addition, the Group made management charges of £34,000 (2016: £34,000) to the Marsh Christian Trust, a grant making
charitable Trust of which Mr B.P. Marsh, the Executive Chairman and majority shareholder of the Company, is also the Trustee
and Settlor.

The Group also made management charges of £8,900 (2016: £8,900) 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 (Notes 12 & 14).

Mr B.P. Marsh, the Chairman and majority shareholder of the Company is also the Chairman and majority shareholder of Brian
Marsh Enterprises Limited.

On 6 April 2016 Mr B.P. Marsh gifted 584,000 ordinary shares in the Company to the Marsh Christian Trust for nil consideration.
Following the transfer, and as at 31 January 2017, the Marsh Christian Trust held 614,000 shares in the Company.

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

Of the total dividend payments made during the year of £999,335, £625,301 was paid to the directors or parties related to them
(2016: total dividend payments of £802,093, of which £510,703 was paid to the directors or parties related to them).

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

26. Events after the Reporting Date

On 1 February 2017 the Group provided £3,600,000 of further loan funding to Besso Insurance Group Limited (“Besso”) to enable it
to fund an overseas acquisition. This additional loan facility increased Besso’s outstanding loan balance to £4,907,500 (£1,307,500
as at 31 January 2017).

On 17 February 2017 the Group acquired, through a newly established company Paladin NewCo Limited (“Paladin”), an effective
35% shareholding in CBC UK Limited (“CBC”), a Retail and Wholesale Lloyd’s insurance broker. The Group partnered with CBC’s
management team to buy out an existing shareholder and the acquisition of CBC was made through Paladin, to which the Group
provided £4,000,000 of funding (comprising cash consideration of £3,500 for the 35% equity and a loan facility of £3,996,500
which was fully drawn down on completion).

On 17 February 2017 The Fiducia MGA Company Limited (“Fiducia”) drew down £194,400 of its agreed loan facility and on
8 May 2017 drew down a further £275,000. As at 31 January 2017 the total loan outstanding was £350,000 and following the
aforementioned drawdowns stands at £819,400, leaving a remaining undrawn facility of £905,600 at the date of this report
(Note 22).

On 28 February 2017 the Group sold its entire 37.94% stake in Besso to an affiliate of BGC Partners, Inc (“BGC”), for an initial
consideration of £21,566,157 (net of transaction costs). On 12 April 2017 the Group received further cash consideration of £441,638
pursuant to an adjustment based upon Besso’s 28 February 2017 final completion accounts, bringing the total consideration
received by the Group to £22,007,795. The total consideration received represents a realised gain of £698,795 when compared
to the carrying value of the Group’s investment in Besso of £21,309,000 as at 31 January 2017. Outstanding loans of £4,907,500
were also repaid in full on completion.

On 28 February 2017 the Group entered into an operating lease agreement relating to its new office premises at 5th Floor,
4 Matthew Parker Street, London, SW1H 9NP. The operating lease is for a period of 10 years with a 5 year break clause in
February 2022.

On 9 March 2017 Bulwark Investment Holdings (PTY) Limited (“Bulwark”) drew down £20,000 of its remaining total loan facility of
£665,000. As at 31 January 2017 the total loan outstanding was £615,000 and following the aforementioned drawdown stands
at £635,000 at the date of this report. Pursuant to the Group providing loan funding to a related investee company, Property
and Liability Underwriting Managers (PTY) Limited (“PLUM”), on 19 April 2017 (as noted below), the remaining £30,000 of the
original £665,000 facility made available to Bulwark was cancelled.

On 6 April 2017 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 (“the Trust”), a grant-making charitable trust of which Mr B.P. Marsh is also Trustee
and Settlor, for nil consideration, taking the total number of shares held by the Trust in the Company to 1,198,000 at that time.
Pursuant to a Share Sale Plan announced by the Group on 5 April 2017 (which provides for the sale of up to 200,000 shares
between 5 April 2017 and 14 September 2018), on 24 April 2017 the Trust sold 44,000 of these shares at a price of 201p per share.
This sale reduced the Trust’s holding down to 1,154,000 ordinary shares (4.0% of the Company) at the date of this report.

B.P. Marsh • 2017 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

26. Events after the Reporting Date continued

On 19 April 2017 the Group provided £400,000 of loan funding to Property and Liability Underwriting Managers (PTY) Limited (“PLUM”)
for working capital purposes. £129,000 was drawn down immediately and a further £125,000 was drawn down on 18 May 2017,
resulting in a total amount drawn down of £254,000 and a remaining £146,000 undrawn facility at the date of this report.

On 21 April 2017 the Group sold its entire 29.94% stake (351,000 B ordinary shares, 3,400 preferred shares and 292 ordinary shares)
in Trireme Insurance Group Limited (“Trireme”) to its fellow shareholder, US Risk Midco, LLC, for cash consideration of £2,908,350
as well as an additional payment of £51,345 in lieu of a preferred dividend. The consideration of £2,908,350 equates to the Group’s
31 January 2017 valuation of its investment in Trireme. The outstanding loan of £2,155,113 as at 31 January 2017 was also repaid
on completion.

27. Ultimate Controlling Party

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