B.P. Marsh & Partners PLC Annual Report 2018

← All annual reports

FY2018 Annual Report · B.P. Marsh & Partners PLC

Loading PDF…

Annual Report 2018

B
P
M
a
r
s
h
&
P
a
r
t
n
e
r
s
P
L
C
A
n
n
u
a

R
e
p
o
r
t
2
0
1
8

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 48 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

Company Information

DIRECTORS
Brian Marsh OBE (Chairman)
Alice Foulk (Managing Director)
Jonathan Newman (Group Director of Finance)
Daniel Topping (Chief Investment Officer)
Camilla Kenyon (Director)
Campbell Scoones (Non-executive)
Pankaj Lakhani (Non-executive)
Nicholas Walker (Non-executive)

COMPANY SECRETARY
Sinead O’Haire

COMPANY NUMBER
05674962

REGISTERED OFFICE
4 Matthew Parker Street
London, SW1H 9NP

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

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

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

www.graphicalagency.com

B.P. Marsh • 2018 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

50 Consolidated Statement of Comprehensive Income

51 Consolidated and Parent Company Statements of Financial Position

52 Consolidated Statement of Cash Flows

53 Parent Company Statement of Cash Flows

53 Consolidated and Parent Company Statements of Changes in Equity

54 Notes to the consolidated financial statements

B.P. Marsh • 2018 Annual Report • Operating and financial highlights

Operating
and financial
highlights

B.P. Marsh & Partners Plc (AIM: BPM),
the niche venture capital provider to
early stage financial services businesses,
announces its audited Group final results
for the year to 31 January 2018.

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

Portfolio of 31.3% (£18.9m)
• Net Asset Value of £98.9m
(31 January 2017: £79.7m),
a 24.1% increase, net of Dividend
• Net Asset Value increased to 339p
per share (31 January 2017: 273p)
• Total return to Shareholders in the

year of 25.5% (2017: 13.9%)

• Consolidated profit after tax of £20.2m

100

(31 January 2017: £9.8m)

• Average Net Asset Value annual compound

growth rate of 12.0% since 1990

• Final Dividend of 4.76p per share declared
(31 January 2017: 3.76p), a 27% increase

• Cash and treasury funds balance of

£5.4m at year end

• Four new investments – two in

Lloyd’s Brokers and two in the USA
• Two disposals – Besso and Trireme
• Further investment into LEBC of £7.1m
• Provision of follow-on funding to Nexus

of £4m

• Current uncommitted cash of £0.5m

s
n
o

i
l
l
i

m
£

Group valuations

31.01.05

31.01.07

31.01.10

31.01.13

31.01.14

31.01.15

31.01.16

31.07.16

31.01.17

31.07.17

31.01.18

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

B.P. Marsh • 2018 Annual Report • Chairman’s statement

“ On the conclusion of an excellent year,

the Group is in a sound financial
position, has a strong portfolio of
investments and a management team
committed to driving our business
forward. The Group is growing strongly,
delivering consistent year on year
returns to shareholders and is well-
positioned to deal with any uncertainty
arising from the UK’s exit from the EU
by April 2019. The Board looks forward
to the year ahead with confidence.”

Brian Marsh OBE, Chairman

B.P. Marsh • 2018 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 2018.

It has proved to be another year of strong
growth and significant positive developments
for the Group.

The value of the equity portfolio has increased
by 31.3% in the year, driven in particular by
robust growth in Nexus, LEBC and CBC, and
Net Asset Value has increased by 24.1% to
£98.9m or 339p per share. We are delighted
to have delivered a total shareholder return
in the year of 25.5%.

We made four new investments during the
year. We were pleased to make two new
Lloyd’s broking investments in London and
to further our geographic expansion with
two new North American investments.

Within the existing portfolio, we provided
further support to LEBC and increased our
shareholding by an additional 17.84%, to
take us to a majority position of 60.88%.
In December 2017, LEBC completed the £5m
acquisition of Aspira, a Bristol-based IFA
business, to which we contributed loan
funding of £1.5m.

The disposal of Besso, after a partnership
spanning two decades, at an Internal
Rate of Return (“IRR”) of 21.9%, further
demonstrates the success of our model.
We also successfully disposed of our
Trireme investment by way of sale back to
the majority shareholder in that business,
US Risk Inc, at an IRR of 15.6%.

Our Group now has a geographically
diverse portfolio with a range of investments
from those which are well-developed and
considering their options for further growth,
to the recent start-ups which are beginning
to make headway.

We continue to do all that we can to build
value for our shareholders whilst providing
a sustainable dividend and are pleased to
announce a 27% increase in the dividend
to 4.76p per share.

On the conclusion of an excellent year, the
Group is in a sound financial position, has
a strong portfolio of investments and a
management team committed to driving
our business forward. The Board notes the
current level of uncommitted cash and is
considering its options in this respect. We
believe that the Group is at a key phase of
its development and we look forward to the
year to come.

We supported Nexus with a £4m loan
facility that has enabled it to pursue its
acquisition strategy, with four acquisitions
during the year.

Brian Marsh OBE,
Chairman

B.P. Marsh • 2018 Annual Report • Business update

Business
update

Summary of Developments
in the Portfolio

During and subsequent to the financial
year ended 31 January 2018, the following
developments have taken place:

New Investments – UK
Investment in EC3 Brokers Ltd (“EC3”)
On 18 December 2017 the Group
announced an investment into EC3 through
EC3 Brokers Group Limited. The Group took
an effective 20% equity stake in EC3 for a
total cash consideration of £5m, in a mixture
of Preferred and Ordinary shares.

EC3 is an independent specialist Lloyd’s
broker and reinsurance broker, established
in 2014 by its current CEO, Danny Driscoll.
EC3 provides services to a wide array of
clients across several sectors, including
construction, casualty, entertainment and
cyber & technology, with a focus in the US,
UK and Middle Eastern markets.

Investment in CBC UK Ltd (“CBC”)
On 17 February 2017 the Group acquired a
35% shareholding in CBC for consideration
of £3,500 and £3,996,500 was provided as
a Loan Facility.

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.

New Investments – USA
Investment in Mark Edward Partners LLC
(“MEP”)
On 12 October 2017 the Group invested in
MEP, taking a 30% equity stake for $6m.

MEP is a specialty insurance broker offering
a wide range of risk management services to
commercial and private clients. Established
in 2009 by Mark Freitas, Founder and CEO,
it is a national U.S. firm with licenses to
operate in all 50 states and has offices in
New York, Palm Beach and Los Angeles.

Investment in XPT Group LLC (“XPT”)
On 13 June 2017, the Group invested US$6m
into XPT, a newly established US specialty
lines insurance distribution company,
subscribing for a 35% stake.

The management team at XPT is a line-up
of industry veterans, led by Tom Ruggieri,
formerly of Marsh McLennan & Companies,
Advisen and Swett & Crawford.

Follow-on Investments and Funding
LEBC Holdings Ltd (“LEBC”)
The Group purchased a further 17.84%
stake in LEBC for aggregate consideration
of £7.14m on 26 July 2017. Following the
purchase, the Company had an aggregate
shareholding of 60.88% in LEBC, with
the balance held by Founder and CEO,
Jack McVitie and LEBC Management. The
Group’s usual strategy is to take minority
equity positions, however in this instance the
opportunity to acquire additional shares
proved compelling and was welcomed by
the LEBC incumbent management.

B.P. Marsh • 2018 Annual Report • Business update

Business update
continued

In December 2017 the Group provided
loan funding of £1.5m to LEBC for the
£5m acquisition of Aspira, a Bristol-based
advisory firm with 50 staff and nearly
£0.5bn of funds under management.
The acquisition completed on 6 February
2018. The Aspira acquisition is expected to
be earnings enhancing in the current year.
As a result of shares issued as part of the
consideration for this transaction the
Group’s shareholding in LEBC was diluted
to 59.34%.

Follow-on Funding
Nexus Underwriting Management Ltd
(“Nexus”)
On 10 July 2017 the Group provided Nexus,
in which it holds an 17.08% shareholding,
with a £4m Loan Facility secured as part
of a wider debt fundraising exercise, to
undertake M&A activity.

Nexus secured £30m in loan funding in
total, with the balance of £26m provided
by funds managed by HPS Investment
Partners, LLC (“HPS”).

Disposals
Besso Insurance Group Ltd (“Besso”)
The Group sold its entire 37.94% shareholding
in Besso for cash to BGC Partners Inc (“BGC”)
on 28 February 2017, with the Group
receiving £22m in cash (net of transaction
costs and pre-tax and after adjustments)
and delivering an IRR of 21.9%.

Trireme Insurance Group Ltd (“Trireme”)
The Group disposed of its 29.94%
shareholding in Trireme for £2.96m cash,
to its fellow shareholder U.S. Risk Midco, LLC
in April 2017. This disposal represents an IRR
(including fees) of 15.6%.

Portfolio Update

United Kingdom
CBC UK Ltd (“CBC”)
CBC has grown strongly since investment
in 2017 and for the financial year ended
31 December 2017 reported unaudited
revenue of £5.5m and EBITDA of £836,000.
This is an increase of £648,000 or 345% on
the 2016 EBITDA of £188,000.

CBC is looking at a number of acquisition
opportunities currently, as well as actively
seeking individuals or teams that would
complement the existing business, to
further its growth ambitions.

CBC Chairman Andrew Wallas commented:
“We are very pleased with the progress that
has been made since our Management Buy
Out. We have created a strong platform
from which to build. Our absolute priority
is to acquire additional quality people
with intellectual capital to support the
continuing growth of our business.”

LEBC Holdings Ltd (“LEBC”)
LEBC Group Ltd (“LEBC Group”), the trading
subsidiary for LEBC, continues to deliver
strong organic growth. In the year to
30 September 2017 it declared a turnover
of £18.1m and a trading profit of £3m for
the year. This represents an increase on
the 2016 results of 17.5% on turnover
(2016 £15.4m) and 42.8% on trading profit
(2016 £2.1m). Currently, on a like for like
basis, LEBC is trading significantly ahead
of last year.

B.P. Marsh • 2018 Annual Report • Business update

On 1 August 2017 LEBC Group successfully
completed the process of becoming a FCA
directly authorised entity, having previously
been an Appointed Representative of
TenetConnect Limited. The key driver of
the application for direct authorisation
was to have a compliance framework
and processes in place tailored to LEBC’s
business, particularly in recognition of the
pace of change in the business and the
industry at large over recent years.

The Aspira acquisition is integrating well
and proving to be an excellent strategic
fit, extending LEBCs geographic reach in
the South West and bringing additional
experienced advisors and valued support
staff in to the business. Full integration is
expected from 1 October 2018.

Nexus Underwriting Management Ltd
(“Nexus”)
Nexus has undertaken a number of
acquisitions in the Group’s financial year
to 31 January 2018, including Vectura
Underwriting, Equinox Global, Zon Re Accident
Reinsurance and Credit Risk Solutions.

Since the Company’s investment in 2014,
Nexus has grown its Gross Written Premium
from £56m in 2014 to £132m in 2017. In the
same period, commission income has
increased from £12.3m to £23.5m in 2017
and EBITDA has increased from £2.6m to
an estimated £10m in 2017. The 2017 figures
included above are on an unaudited basis.

On 19 January 2018 Nexus announced that
it had appointed Mike Sibthorpe as CEO of
Insurance and Reinsurance with effect from
April 2018, as part of a wider management
restructure. Mike Sibthorpe was previously
Chief Underwriting Officer for Amtrust
at Lloyd’s.

USA
XPT Group LLC (“XPT”)
Since the Group’s investment, XPT has made
two acquisitions: Western Security Surplus
Insurance Brokers Inc, a Texas-based wholesale
broker and managing general agency, and
W.E. Love & Associates Inc, a North Carolina
based managing general agency.

XPT has a strong pipeline of further
acquisition opportunities under consideration.

Europe
Summa Insurance Brokerage S.L. (“Summa”)
For the year ended 31 December 2017,
Summa reported unaudited Revenue of
€6.5m and Recurring EBITDA of €1.4m.

The market in which Summa operates
remains competitive, with rates continuing to
soften in both the general and agricultural
insurance markets.

The Group continues to work with
Management to develop the business,
taking advantage of a fragmented
insurance intermediary market to assess
M&A and Franchise opportunities, where
available, as well as developing additional
niche product offerings for the Spanish
insurance market.

B.P. Marsh • 2018 Annual Report • Business update

Business update
continued

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 have
been through a period of difficult trading and
macro-economic conditions. A new strategic
plan, with the benefit of an augmented Board,
has been implemented to effect change
with the support of B.P. Marsh. Nevertheless,
reflecting the Group’s customary prudent
approach, a full impairment has been made
against these investments.

Dividend

In recognition of the Group’s progress during
the year, the Board has recommended an
increase in the dividend of 1p per share, to
4.76 pence per share for the financial year
ending 31 January 2018, which will be paid
on 31 July 2018 to shareholders whose
names are on the register on 13 July 2018.

This is an increase of 27% over the dividend
of 3.76p per share (£1.1m) paid in respect of
the prior year. It is the Group’s aspiration
to maintain this level for the year ending
31 January 2019, subject to ongoing review
and approval by the Board and the
Company’s shareholders.

The Board continues to strike a balance
between investing cash into new opportunities
for long-term capital growth and providing
shareholders with a sustainable yield.

Share Buy-Backs

The Board has a stated policy, regularly
reviewed, of undertaking low volume share
buy-backs at times when the Group’s Share
Price represents a 20% or more discount
to Net Asset Value. The Board considers this
is a useful stabilising mechanism during
periods of market or share price volatility.

Substantial Shareholding Exemption
(“SSE”)

Finance (No.2) Act 2017 introduced
significant changes to the SSE rules in
Taxation of Chargeable Gains Act 1992
Sch. 7AC which applied to share disposals
on or after 1 April 2017. In general terms, the
rule changes relax the conditions for a
company such as B.P. Marsh to qualify for
SSE on a share disposal.

Having reviewed our current investment
portfolio, we consider that the Group
should benefit from this reform to the SSE
rules and, as a result, we would anticipate
that on a disposal of shares in our current
investments, so long as the shares have
been held for 12 months, they should
qualify for SSE and no corporation tax
charge should arise on the disposal.

As such, and having assessed the current
portfolio, we anticipate that there should
currently be no requirement to provide for
deferred tax (£4.9m provision as at 31 July
2017) in respect of unrealised gains on
those investments under the current
requirements of the International Financial

B.P. Marsh • 2018 Annual Report • Business update

Reporting Standards (“IFRS”). As such there
was no deferred tax provision at 31 January
2018. The requirement for a deferred tax
provision is subject to continual assessment
of each investment to test whether the SSE
conditions continue to be met based on
information that is available to the Group and
that there is no change to the accounting
treatment in this regard under IFRS. It should
also be noted that, until the date of the actual
disposal, it will not be possible to ascertain
if all the SSE conditions are likely to have been
met and, moreover, obtaining agreement of
the tax position with HM Revenue & Customs
may possibly not be forthcoming until several
years after the end of a period of accounts.

Given the flexible nature of the Group’s
investment strategy this does not imply
that the Group will only make investment
decisions based upon the SSE rules going
forwards, although this will form part of the
overall investment proposition.

New Business Opportunities and Outlook

The financial year closed with a total of 77
new opportunities having been presented to
the Group during the year. This is broadly
in line with previous years with total number
of opportunities in 2017 and 2016 being 84
and 71 respectively. Of the 77, the majority
were in the insurance sector, with 41
insurance intermediary enquiries, or 53%.

Four new investments were made during
the year, two in the U.S. and two in London.
During the year, several opportunities from
the pipeline were referred on to portfolio
companies as potential bolt-ons.

The Group’s model of making equity
investments in financial services intermediary
businesses with a partnership approach
and a long-term view continues to deliver
attractive opportunities. The recent
investments in the U.S. have ensured that the
portfolio now has geographic representation
in the UK, Europe, U.S., Singapore, Australia,
Canada and South Africa, which the Group
believes represents a solid international
framework and makes it well-positioned to
take advantage of global economic growth.

Cash Balance

At 31 January 2018 the cash balance was
£5.4m, with current uncommitted cash of
£0.5m. The Board notes the current level of
uncommitted cash and is considering its
options in this respect.

Financial Performance

At 31 January 2018, the net asset value of
the Group was £98.9m, or 339p per share
(2017: £79.7m, or 273p per share) including
a provision for deferred tax where relevant.
This equates to an increase in net asset
value of 24.1% (2017: 12.5%) for the year, or
19.5% excluding any deferred tax movement.

The Group increased its dividend payment
to £1.1m (or 3.76p per share) during the
year, as announced previously (2017: £1.0m
or 3.42p per share). Total shareholder
return for the year was therefore 25.5%
(2017: 13.9%) including the dividend
payment and the net asset value increase.

B.P. Marsh • 2018 Annual Report • Business update

Business update
continued

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

31 January 2017
valuation
£m

63.6

Acquisitions
at cost
£m

21.7

Disposal
proceeds
£m

(25.0)

Adjusted
31 January 2017
valuation
£m

31 January 2018
valuation
£m

60.3

79.1

This equates to an increase in the equity
portfolio valuation of 31.3% (2017: 22.1%).

The net asset value of £98.9m at 31 January
2018 represented a total increase in net
asset value of £86.3m 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 12.0% in Group net asset value after
running costs, realisations, losses, distributions
and corporation tax since 1990.

The consolidated profit on ordinary activities
after taxation increased by 107% to £20.2m
(2017: profit of £9.8m). The consolidated
profit on ordinary activities before taxation
was £16.5m (2017: profit of £12.2m), of which
£18.1m was derived from unrealised gains
on revaluing the equity investment portfolio
in line with current market conditions, an
increase of 62% on the previous year (2017:
net unrealised gains of £11.2m). The Group’s
strategy is to cover expenses from the
portfolio yield. On an underlying basis,
including treasury returns, but excluding
investment activity (unrealised gains on
equity, a provision against deferred
consideration receivable, a provision against
loans receivable from investee companies
and all underlying treasury portfolio
movement), this was achieved with a pre-tax
profit of £0.7m for the year (2017: £0.6m).

The Group invested £21.7m during the year
– £14.4m in new equity investments and
£7.3m for follow-on equity financing to its
existing portfolio. In addition, the Group
provided new loans for working capital to
the portfolio of £15.6m. Repayment of loans
by the portfolio amounted to £8.9m in the
year. Cash funds (including treasury funds)
at 31 January 2018 were £5.4m.

Overall, income from investments increased
by 30.1% to £3.9m (2017: £3.0m). Dividend
income increased by 95.4% over the year
due to the strengthening performance of
the portfolio companies, whilst income
from loans fell by 13.4%, which was largely
the result of the portfolio repaying debt
in accordance with agreed repayment
schedules. Fees were 41.4% higher mainly
due to a number of one-off transaction
fees received in 2018 as well as fees derived
from new investments.

The Group realised two investments during
the year, resulting in a combined profit on
disposal (before tax) of £19.7m. The cash
received from these realisations enabled
the Group to invest in a number of new and
existing opportunities throughout the year.

B.P. Marsh • 2018 Annual Report • Business update

Operating expenses, including costs of
making new investments, increased by
34.4% during the year to £4.1m (2017: £3.1m).
Of this, £0.6m related to enhanced bonuses
awarded to directors and staff under a
newly created incentive scheme which is
linked to the Group’s growth in net asset
value and was also based upon the
£19.7m realised gain on successful sale of
investments during the year. £0.2m related
to expenses directly incurred in making
new investments which, under IFRS, are
expensed and £0.1m related to one-off
costs incurred in the office move (which
mainly comprised of rent, rates and service
charge costs incurred for an overlapping
period during the year whilst the Group’s
leases on its old and new office premises
ran concurrently). Excluding these atypical
expenses, overall expenses rose by £0.1m
(3.2%) in proportion with managing a
growing portfolio.

Due to favourable market conditions, the
Group’s treasury funds increased by 4.1%
over the year (net of fund management
charges) (2017: 8.6%).

Joint Share Ownership Plan (“JSOP”)

The Company intends to establish a new
joint share ownership plan (the “2018 JSOP”)
for eligible Group employees and senior
executives to replace the 2014 JSOP, which
matured in November. The purpose of the
2018 JSOP is to provide eligible employees
of the Group with a joint beneficial ownership
in and an opportunity to benefit from
any possible appreciation in the value of
Ordinary Shares in the Company subject to
a suitable hurdle rate.

To implement the 2018 JSOP, the Group has
established an employee benefit trust which
intends to subscribe for up to 1,461,302 new
Ordinary Shares, representing 5.00 per cent.
of the existing issued ordinary share capital
in the Company, at the time the awards
are made.

Outlook

The Group is growing strongly, delivering
consistent year on year returns to
shareholders and is well-positioned to deal
with any uncertainty arising from the UK’s
exit from the EU by April 2019. The Board looks
forward to the year ahead with confidence.

B.P. Marsh • 2018 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 2018 valuation: £33,166,000

April 2007
59.34%

EC3 Brokers Limited
(www.ec3brokers.com)
In December 2017, the Group invested in EC3 Brokers Limited,
an independent specialist Lloyd’s broker and reinsurance
broker, via a newly established NewCo, EC3 Brokers Group
Limited. Founded by its current Chief Executive Officer
Danny Driscoll, who led a management buyout to acquire
EC3’s then book of business from AJ Gallagher in 2014, EC3
provides services to a wide array of clients across a number
of sectors, including construction, casualty, entertainment
and cyber & technology.

Date of investment:
Equity Stake:
31 January 2018 valuation: £5,000,000

December 2017
20%

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 via
parent company Paladin Holdings Limited.

Date of investment:
Equity stake:
31 January 2018 valuation: £2,372,000

February 2017
35%

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

B.P. Marsh • 2018 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 2018 valuation: £75,000

November 2016
25%

Walsingham Motor Insurance Limited
(www.walsinghamunderwriting.com)
In December 2013 the Group invested in Walsingham Motor
Insurance Limited, a niche UK fleet 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 2018 valuation: £692,000

December 2013
40.5%

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.

Date of investment
Equity stake:
31 January 2018 valuation: £20,544,000

August 2014
17.08%

B.P. Marsh • 2018 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. Stewart Specialty Risk Underwriting Ltd
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 2018 valuation: £–

January 2017
30%

Mark Edward Partners LLC
(www.markedwardpartners.com)
Founded in 2010 by Mark Freitas, its President &
Chief Executive Officer, Mark Edward Partners LLC
(“MEP”) provides core insurance products in
Financial & Liability, Property & Casualty, Personal
Lines, Life Insurance, Cyber and Affinity Groups.
MEP is a national U.S. firm with licenses to operate
in all 50 states and has offices in New York, Palm
Beach and Los Angeles.

Date of investment:
Equity stake:
31 January 2018 valuation: £4,219,000

October 2017
30%

XPT Group LLC
(www.xptspecialty.com)
In June 2017 the Group backed the ex-Swett & Crawford
CEO Tom Ruggieri and a strong management team to
develop a New York-based wholesale insurance broking
and underwriting agency platform across the U.S.
Specialty Insurance Sector.

Date of investment:
Equity stake:
31 January 2018 valuation: £4,219,000

June 2017
35%

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 2018 valuation: £4,018,000

January 2005
77.25%

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

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 2018 valuation: £–

April 2015
35%

B.P. Marsh • 2018 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 2018 valuation: £779,000

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 2018 valuation: £2,198,000

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 2018 valuation: £–

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: June 2015
Equity stake: 42.5%
31 January 2018 valuation: £–

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 2018 valuation: £1,840,000

December 2013
40%

B.P. Marsh • 2018 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 • 2018 Annual Report • Directors

Camilla Kenyon
Director

Nicholas Walker MSc,
BA (Comb. Hons.)
Non-executive

Campbell Scoones
Non-executive

Pankaj Lakhani FCCA
Non-executive

B.P. Marsh • 2018 Annual Report • Directors’ Report & Strategic Report & Consolidated Financial Statements

Directors’ Report &
Strategic Report &
Consolidated Financial
Statements
For the year ended 31 January 2018

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 • 2018 Annual Report • Directors biographies

Directors biographies

Brian Marsh OBE, aged 77
(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 member
of the Remuneration, Investment, Valuation,
Nominations and Disclosure Committees.
Brian is a majority shareholder in B.P. Marsh
with a direct beneficial interest in 53.3% of
the Company (in addition to 3.4% held by
the Marsh Christian Trust, of which Brian
is a trustee and Settlor) and a beneficial
interest in a further 4.0% of the Company
through his 100% holding in B.P. Marsh
Management Limited.

Jonathan Newman ACMA, CGMA, MCSI,
aged 43 (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, having started
his career at Euler Trade Indemnity, 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
strategic financial advice to all companies
within the Group’s portfolio, evaluates new
investment opportunities and is a member of
the Investment and Valuation Committees.
Jonathan also has one nominee directorship
in one investee company. Jonathan has a
direct beneficial interest in 3,921 ordinary
shares in B.P. Marsh, together with a beneficial
interest in 12,335 ordinary shares in B.P. Marsh
which are held in the Company’s SIP Trust.

Alice Foulk BA (Hons), aged 31
(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 is a member of the Remuneration,
Investment, Valuation, Nominations and
Disclosure Committees. Alice has a direct
beneficial interest in 3,849 ordinary shares in
B.P. Marsh, together with a beneficial interest
in 12,335 ordinary shares in B.P. Marsh which
are held in the Company’s SIP Trust.

Daniel Topping MCSI, ACIS, aged 34
(Chief Investment Officer) (I) (V) (N)
Daniel was appointed as a director of
B.P. Marsh in March 2011 having joined the
Group in February 2007, firstly as Assistant
Company Secretary and subsequently as
executive assistant to the Chairman, following
two years at an independent London account
practice. Daniel graduated from the University
of Durham in 2005 and is a member of the
Securities and Investment Institute and the
Institute of Chartered Secretaries and
Administrators. In January 2016 Daniel was
appointed as Chief Investment Officer of the
Group and is a member of the Investment,
Valuation and Nominations Committees.
Daniel is the Senior Executive with overall
responsibility for the portfolio and investment
strategy for the Group, working alongside
the Board and Investment Directors to find,
structure, develop, support and monitor the
portfolio. Daniel currently has multiple

B.P. Marsh • 2018 Annual Report • Directors biographies

Pankaj Lakhani FCCA, aged 64
(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. Pankaj is Chairman
of both the Remuneration and Audit
Committees and is also a member of the
Valuation and Nominations Committees.
Pankaj owns 35,000 ordinary shares in
B.P. Marsh.

Nicholas Walker MSc, BA (Comb Hons)
aged 57, (Non-executive), (R) (A)
Nicholas joined B.P. Marsh in September
2017 and has over 30 years’ experience in
the Financial Services sector, beginning his
career at Bank of America International in
the European M&A Group where he was an
Analyst and later became appointed as
Vice President. In 1988 he moved to Citicorp
Investment Bank Limited as Vice President
and Country Head of its Spanish M&A
Team. Nicholas left Citicorp in 1991 to set
up Socios Financieros S.A, one of Spain’s
leading independent corporate finance
firms, based in Madrid. Upon joining the
Group, Nicholas was appointed a member
of the Remuneration Committee and the
Audit Committee and is also a nominee
director on the board of one of the Group’s
investee companies. Nicholas owns 19,608
ordinary shares in B.P. Marsh, of which
9,804 shares are held by his wife.

nominee appointments across the investment
portfolio. Daniel has a direct beneficial
interest in 66,127 ordinary shares in B.P. Marsh,
together with a beneficial interest in 12,335
ordinary shares in B.P. Marsh which are held
in the Company’s SIP Trust.

Camilla Kenyon, aged 45
(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 four
nominee directorships across two investee
companies 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 direct beneficial
interest in 5,709 ordinary shares in B.P. Marsh,
together with a beneficial interest in 12,335
ordinary shares in B.P. Marsh which are held
in the Company’s SIP Trust.

Campbell Scoones, aged 71
(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 served on the Remuneration
Committee until 24 April 2017. Campbell
owns 51,000 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 • 2018 Annual Report • Corporate governance

Corporate governance

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 Remuneration Committee,
the Audit Committee, the Investment
Committee, the Valuation Committee,
the Nominations Committee and the
Disclosure Committee.

Remuneration Committee
During the year the Remuneration
Committee was comprised of two of the
non-executive directors of the Company,
together with Brian Marsh and Alice Foulk
and was chaired by Pankaj Lakhani.
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.

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.

B.P. Marsh • 2018 Annual Report • Corporate governance

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. 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.

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, Alice Foulk,
Jonathan Newman, Daniel Topping and
Pankaj Lakhani and, in accordance with
its terms of reference, is responsible for
preparing investment valuations and
reviewing the suitability of the Company’s
investee company valuation policy.

Nominations Committee
The Nominations Committee is comprised
of at least three directors (including at
least one non-executive director) and during
the year 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 for Board positions
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
The Disclosure Committee (regarding
Market Abuse Regulation Disclosure) is
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 • 2018 Annual Report • Corporate governance

Corporate governance
continued

Relations with Shareholders

Updated AIM Rules for companies

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

Internal Controls and Risk Management

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

The London Stock Exchange has issued new
rules for AIM listed companies (effective
30 March 2018) and these are summarised
in AIM Notice 50. The new rules cover two main
areas; formalisation of the early notification
process as well as the implementation of
new corporate governance requirements in
AIM Rule 26. The new corporate governance
requirements include a new obligation for
an AIM company to disclose on its website
details of how it complies with or explains
against a recognised corporate governance
code (“the code”) chosen by the board of
directors, as well as a requirement to review
its corporate governance disclosure
annually (with the date that the adherence
to the code was last reviewed included on
the company’s website). The Group will
undertake its formal review of its adherence
to the code and update its website by the
compliance deadline of 28 September 2018.

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

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

By order of the Board

S.C. O’Haire
Company Secretary
11 June 2018

B.P. Marsh • 2018 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, Stephen Clarke (resigned
31 January 2018), Campbell Scoones
(resigned from the Committee on 24 April
2017), Pankaj Lakhani and Nicholas Walker
(appointed 6 September 2017), as well as
the Executive Chairman of the Group, Brian
Marsh, and Alice Foulk. The Committee is
responsible for setting the remuneration of
the executive directors and other members
of staff, as detailed in the Remuneration
policy below.

Remuneration Policy

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

The Committee’s terms of reference provide
that for as long as the Chairman 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.

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

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

Director

B.P. Marsh

J.S. Newman

D.J. Topping

C.S. Kenyon

A.H.D. Foulk

Date of service agreement

Term Notice period

30 January 2006

Continuous

30 January 2006

Continuous

1 March 2011

Continuous

1 March 2011

Continuous

16 February 2015

Continuous

6 months

B.P. Marsh • 2018 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

S.S. Clarke1

C.R. Scoones

P.B. Lakhani

N.G. Walker

Date of Office tenure

Initial period Notice period

30 January 2006

19 April 2013

21 May 2015

6 September 2017

12 months

3 months

1 S.S. Clarke resigned as a non-executive director of the Company on 31 January 2018.

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:

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). Alternatively, BPMM can
elect to offer to purchase the JSOP joint
interests from the employee participants at
the same rate.

The jointly-owned shares would vest if
the employee remained employed with the
B.P. Marsh group of companies for a minimum
period of three years. On 6 November 2017
all jointly-owned shares vested when all
performance criteria were met.

B.P. Marsh • 2018 Annual Report • Report of the Remuneration Committee

On 7 November 2017 BPMM purchased the
economic interests in all of the JSOP shares,
being 1,421,130 ordinary shares in the
Company, for 245 pence per share from
the joint beneficial ownership of the various
executive directors and senior employees of
the Company. The employee participants
received the balance of 90.3 pence per
jointly-owned share (after taking account
of the 154.7 pence per jointly-owned share
attributed to BPMM, representing the initial
threshold value of 140 pence plus the hurdle
amount of 3.5% simple interest per annum).
Pursuant to this acquisition, the JSOAs
were terminated.

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. The number of jointly-owned
shares expected to vest over the three-year
period was 1,207,960 (85%). However, as
all jointly-owned shares vested during the
year, the number of jointly-owned shares
expected to vest was adjusted, such that
the 15% forfeiture embedded within the
expected cost of the award was eliminated
and adjusted in the share-based payment
charge for the year.

Further details are given in Note 24 to the
financial statements.

Share Incentive Plan (“SIP”)
During the year to 31 January 2017 the
Group established an HMRC approved
Share Incentive Plan (“SIP”).

2017: 97,652 ordinary shares in the Company
were transferred to the SIP Trust). Following this
transfer, and together with 24,572 unallocated
shares already held by the SIP Trust at the
start of the year, a total of 37,935 ordinary
shares in the Company were available for
allocation to the participants of the SIP.

On 27 June 2017, a total of 9 eligible
employees (including 4 executive directors
of the Company) applied for the 2017-18
SIP and were each granted 1,686 ordinary
shares (“17-18 Free Shares”), representing
approximately £3,600 at the price of issue.

Additionally, on 27 June 2017, 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 (843 ordinary shares)
and were therefore awarded 1,686
Matching Shares.

The 17-18 Free and Matching Shares are
subject to a 1 year forfeiture period.

A total of 37,935 (2017: 73,080) Free, Matching
and Partnership Shares were granted to the
9 eligible employees during the year, including
16,860 (2017: 32,480) granted to 4 executive
directors of the Company (Note 6).

As at 31 January 2018 a total of 111,015 Free,
Matching and Partnership Shares had been
granted to 9 eligible employees under the
SIP, including 49,340 granted to 4 executive
directors of the Company.

B.P. Marsh • 2018 Annual Report • Report of the Remuneration Committee

Report of the
Remuneration Committee
continued

Following the SIP awards made during the
year to 31 January 2018 and the termination
of the JSOP, 4 executive directors have a
beneficial interest in the ordinary shares of
the Company (specifically held within its
share plans) as follows:

Aggregate Directors’ Remuneration

2018
£

2017
£

Emoluments

1,264,226

1,027,726

Fees

Pension contributions

74,872

55,700

21,000

46,000

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

–

12,335

49,340

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

Aggregate Directors’ Emoluments

B.P. Marsh

A.H.D. Foulk

J.S. Newman

D.J. Topping

C.S. Kenyon

S.S. Clarke1

C.R. Scoones

P.B. Lakhani

N.G. Walker

Salaries
and fees
£

115,000

100,002

175,002

180,002

102,251

33,500

47,083

51,000

68,015

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

B.P. Marsh

A.H.D. Foulk

J.S. Newman

D.J. Topping

C.S. Kenyon

Benefits
£

374

1,970

5,015

2,531

5,103

–

2018
£

–

10,700

17,500

18,000

9,500

Annual
bonuses
£

–

130,000

100,000

135,000

87,250

–

2018 Emoluments
excluding pension
contributions
£

115,374

231,972

280,017

317,533

194,604

33,500

47,083

51,000

68,015

1 S.S. Clarke resigned as a non-executive director of the Company on 31 January 2018.

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

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 11 June 2018.

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

B.P. Marsh • 2018 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)
(resigned 31 January 2018)
P.B. Lakhani FCCA (non-executive)
N.G. Walker MSc, BA (Comb Hons)
(non-executive)
(appointed 6 September 2017)

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 (North
America) 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 2018.

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 financial statements in accordance
with International Financial Reporting
Standards (“IFRS”) as adopted by the EU

and have elected to prepare the Company
financial statements on the same basis.
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 year.

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 • 2018 Annual Report • Group Report of the Directors

Group Report
of the Directors
continued

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.

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

Dividends

A dividend of 3.76p per share (£1,098,109)
was paid on 28 July 2017 (29 July 2016:
£999,335 or 3.42p per share). The directors
have recommended a final dividend of
4.76p per share which will be paid, subject
to Shareholder approval, on 31 July 2018
to Shareholders registered at the close of
business on 13 July 2018. Based upon the
current number of shares in issue, this
would total £1,391,160.

B.P. Marsh • 2018 Annual Report • Group Report of the Directors

Significant Interests

As at 30 May 2018 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

Hargreaves Lansdown Asset Management

IS Partners Investment Solutions

B.P. Marsh Management Limited

James Sharp & Co

No. of Ordinary
shares of 10p
each held

% of issued
Share capitall

15,565,271

1,411,023

1,175,937

1,166,310

1,082,263

53.3%

4.8%

4.0%

3.7%

1 In addition, the Marsh Christian Trust, of which Mr B.P. Marsh is a trustee and Settlor, held 998,000 ordinary shares (3.4%

of the issued share capital) in the Company.

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 2018
Ordinary shares of
10p each

31 January 2017
Ordinary shares of
10p each

17,984,401

65,442

12,335

14,122

12,335

46,000

30,000

18,184,401

405,374

363,403

249,712

136,021

46,000

18,800

1 Total interest includes 1,421,130 ordinary shares held by B.P. Marsh Management Limited (“BPMM”), a company wholly owned
by Mr B.P. Marsh, and 998,000 ordinary shares held by the Marsh Christian Trust of which Mr B.P. Marsh is Trustee and Settlor.
2 Total interest includes 12,335 ordinary shares held within the Company’s SIP Trust and 53,107 ordinary shares directly owned

by Mr D.J. Topping.

3 Total interest includes 12,335 ordinary shares held within the Company’s SIP Trust.
4 Total interest includes 12,335 ordinary shares held within the Company’s SIP Trust and 1,787 ordinary shares directly owned

by Ms C.S. Kenyon.

5 Total interest includes 12,335 ordinary shares held within the Company’s SIP Trust.

B.P. Marsh • 2018 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 21 February 2018 the Group agreed
to extend its loan facility to Property and
Liability Underwriting Managers (PTY)
Limited (“PLUM”) by £36,000 from £1,116,617
as at 31 January 2018 (Note 22) to £1,152,617,
with the increased facility drawn down
immediately. On 22 March 2018 the Group
then agreed to extend the facility by a
further £300,000 to £1,452,617. £140,000
was drawn down immediately and further
drawdowns of £70,000 were made on
23 April 2018 and 24 May 2018 respectively.
After the aforementioned drawdowns the
total loan outstanding increased from
£1,114,778 as at 31 January 2018 to £1,430,778,
with a remaining undrawn facility of £21,839
at the date of this report.

On 28 February 2018 The Fiducia MGA
Company Limited (“Fiducia”) drew down
the remaining £105,600 of its agreed total
loan facility of £1,725,000. In addition, on
9 April 2018 the Group agreed to provide
further loan funding of £470,000 to Fiducia,
taking the total amended loan facility to
£2,195,000. On 16 April 2018 Fiducia drew
down £220,000 from this extended facility.
As at 31 January 2018 the total loan
outstanding was £1,619,400 (Note 22) and
following the aforementioned drawdowns
stands at £1,945,000, leaving a remaining
undrawn facility of £250,000 at the date
of this report. On the same date the Group
also subscribed for a further 10% equity in
Fiducia for consideration of £30,000,

increasing the Group’s holding from 25%
as at 31 January 2018 to 35% at the date
of this report.

On 19 March 2018 LEBC Holdings Limited
(“LEBC”) repaid £600,000 of its loan.
As at 31 January 2018 the total loan
outstanding was £1,500,000 and following
the aforementioned repayment stands at
£900,000 at the date of this report.

On 18 April 2018 the Group provided a
further loan facility of £100,000 to Paladin
Holdings Limited (“Paladin”) which was
drawn down immediately and increased
both the total facility and total amount drawn
down from £3,996,500 as at 31 January 2018
to £4,096,500 at the date of this report.

On 18 April 2018 the Group also acquired
100,000 ordinary shares (10% equity stake)
in Paladin from a minority shareholder
and director for consideration of £400,000.
These shares are being held by the Group
under a call option arrangement which
Paladin can call at any time during the
next three years and buy-back at a fixed
option price of £4.02 per share (£402,000).
This acquisition increased the Group’s
equity holding in Paladin from 35% as
at 31 January 2018 to 45% at the date of
this report.

On 26 April 2018 Stewart Specialty Risk
Underwriting Limited (“SSRU”) drew down
a further CAD 100,000 (£56,812) from its
total agreed loan facility of CAD 850,000.
As at 31 January 2018 the total loan
outstanding was CAD 350,000 (Note 22)
and following the aforementioned
drawdown stands at CAD 450,000, leaving
a remaining undrawn facility of CAD
400,000 at the date of this report.

B.P. Marsh • 2018 Annual Report • Group Report of the Directors

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:
4 Matthew Parker Street
London
SW1H 9NP

By order of the Board
S.C. O’Haire
Company Secretary
11 June 2018

On 14 May 2018 the Group provided
a £300,000 loan facility to Walsingham
Holdings Limited (“Walsingham Holdings”)
which was drawn down immediately.
This loan funding was provided to allow
Walsingham Holdings, a previously dormant
company, to acquire an 11.7% equity holding
in Walsingham Motor Insurance Limited
(“Walsingham”) from an exiting shareholder.
The loan from the Group is secured on the
acquired Walsingham shares via a debenture
containing a cross guarantee with
Walsingham. On the same date the Group
also subscribed, alongside other
Walsingham shareholders, for 299 (of a total
1,498) new ordinary shares in Walsingham
Holdings for consideration of £299. Following
this share reorganisation, the Group’s equity
holding in Walsingham Holdings reduced
from 50% as at 31 January 2018 to 20% at
the date of this report, however the Group
retained its 40.5% holding in Walsingham.

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 2018 and remains in force
at the date of this report.

B.P. Marsh • 2018 Annual Report • Group Strategic Report

Group Strategic Report

Business Review

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

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 Holdings 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).
As at 31 January 2018 the Group’s equity
investment in Paladin remained at 35%.

On 17 February 2017 The Fiducia MGA
Company Limited (“Fiducia”) drew down
£194,400 of its agreed loan facility of
£1,725,000. Further drawdowns of
£275,000, £250,000, £275,000 and
£275,000 were made on 8 May 2017, 3 July
2017, 13 October 2017 and 13 December 2017
respectively. As at 31 January 2018 the total
loan outstanding was £1,619,400, leaving a
remaining undrawn facility of £105,600
(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 £21,566,158 (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
£22,007,796. The total consideration
received represents a realised gain of
£698,796 when compared to the carrying
value of the Group’s investment in Besso of
£21,309,000 as at 31 January 2017 (Note 14)
and a total overall gain of £18,617,346
above the cost of investment. 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 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 agreed loan facility of
£665,000 and on 31 January 2018 Bulwark
drew down the final £30,000 remaining of
its loan facility. As at 31 January 2018 the
total loan outstanding was £665,000.

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
further amounts of £125,000 and £118,500
were drawn down on 18 May 2017 and
11 July 2017 respectively bringing the total

B.P. Marsh • 2018 Annual Report • Group Strategic Report

drawn down to £372,500. On 23 August
2017 the Group extended the loan facility
by a further £300,000 to £700,000 and
PLUM subsequently drew down a further
£325,661 over the period August to October
2017, bringing the total loan drawn down to
£698,161 at that time. Further facility increases
of £394,802 and £21,815 were made on
19 December 2017 and 31 January 2018
respectively, which were drawn down
immediately in full. As at 31 January 2018
the total loan facility stood at £1,116,617
and the total amount drawn down at
£1,114,778, with a remaining undrawn
facility of £1,839 (Note 22).

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 (Note
14) and represents a total overall gain of
£1,059,046 above the cost of investment.
The outstanding loan of £2,155,113 was also
repaid on completion.

On 12 June 2017 Stewart Specialty Risk
Underwriting Limited (“SSRU”) drew down
CAD 100,000 (£59,920) of its agreed CAD
850,000 loan facility. As at 31 January
2018 the total loan outstanding was CAD
350,000 with a remaining undrawn facility
of CAD 500,000 (Note 22).

On 13 June 2017 the Group acquired,
through its wholly-owned subsidiary
company B.P. Marsh (North America)
Limited, a 35% shareholding in a newly

established New York based specialty lines
insurance distribution company, XPT Group
LLC (“XPT”). The Group provided $6,000,000
(£4,790,419) of funding for the 35% equity.

On 26 July 2017 the Group acquired
a further 17.84% equity stake in LEBC
Holdings Limited (“LEBC”) for consideration
of £7,137,563. The acquisition increased the
Group’s equity stake in LEBC to 60.88% at
the time of investment. The Group has also
provided for £148,960 of deferred
consideration due to certain LEBC
shareholders in respect of this transaction
which became due upon the Group’s 100%
equity valuation of LEBC exceeding
£43,000,000. This condition was met as at
31 January 2018 and therefore the Group’s
equity cost in LEBC has been increased to
include this deferred consideration which is
expected to be paid in 2018. Following this
additional investment, and pursuant to the
issue of shares as part of the consideration for
an acquisition made by LEBC in December
2017, the Group’s equity stake in LEBC
stood at 59.34% as at 31 January 2018.

On 31 July 2017 LEBC repaid its £1,005,000
loan outstanding with the Group. On
19 December 2017 the Group provided
a new loan facility of £1,500,000, which
was drawn down in full on completion, to
assist LEBC with an acquisition. As at
31 January 2018 total loans drawn down by
LEBC stood at £1,500,000.

On 10 July 2017 the Group agreed to
provide a loan facility of £4,000,000 to
Nexus Underwriting Management Limited
(“Nexus”). £2,000,000 was drawn down on
28 July 2017 and the remaining £2,000,000
was drawn down on 24 January 2018. As at
31 January 2018 total loans drawn down by
Nexus stood at £4,000,000.

B.P. Marsh • 2018 Annual Report • Group Strategic Report

Group Strategic Report
continued

On 12 October 2017 the Group acquired,
through its wholly-owned subsidiary
company B.P. Marsh (North America)
Limited, a 30% equity stake in Mark Edward
Partners LLC (“MEP”) for consideration of
$6,000,000 (£4,572,822). MEP is a specialty
insurance broker offering a wide range of
risk management services to both commercial
and private clients and has offices in
New York, Palm Beach and Los Angeles,
with licenses to operate in all 50 US states.
As at 31 January 2018 the Group’s equity
investment in MEP remained at 30%.

Financial Performance
At 31 January 2018, the net asset value of
the Group was £98.9m, or 339p per share
(2017: £79.7m, or 273p per share) including
a provision for deferred tax where relevant.
This equates to an increase in net asset
value of 24.1% (2017: 12.5%) for the year, or
19.5% excluding any deferred tax movement.

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

On 15 December 2017 the Group acquired
an effective 20% equity stake (comprising
a mixture of ordinary and preferred shares)
in EC3 Brokers Limited (“EC3”) through
a newly established company, EC3 Brokers
Group Limited, for total consideration
of £5,000,000. EC3 is an independent
specialist Lloyds broker and reinsurance
broker which provides services to a wide
array of clients across a number of
sectors, including construction, casualty,
entertainment and cyber and technology.

The Group increased its dividend payment
to £1.1m (or 3.76p per share) during the year,
as announced previously (2017: £1.0m or 3.42p
per share). Total shareholder return for the
year was therefore 25.5% (2017: 13.9%)
including the dividend payment and the
net asset value increase.

31 January
2017
valuation

63.6

Acquisitions
at cost

21.7

Disposal
proceeds

(25.0)

Adjusted
31 January
2017
valuation

60.3

31 January
2018
valuation

79.1

This equates to an increase in the portfolio
valuation of 31.3% (2017: 22.1%).

The net asset value of £98.9m at 31 January
2018 represented a total increase in net
asset value of £86.3m 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
12.0% in Group net asset value after running
costs, realisations, losses, distributions and
corporation tax since 1990.

B.P. Marsh • 2018 Annual Report • Group Strategic Report

the portfolio yield. On an underlying basis,
including treasury returns, but excluding
investment activity (unrealised gains on
equity, a provision against deferred
consideration receivable, a provision against
loans receivable from investee companies
and all underlying treasury portfolio
movement), this was achieved with a pre-tax
profit of £0.7m for the year (2017: £0.6m).

Overall, income from investments increased
by 30.1% to £3.9m (2017: £3.0m). Dividend
income increased by 95.4% over the year
due to the strengthening performance of
the portfolio companies, whilst income from
loans fell by 13.4%, which was largely the
result of the portfolio repaying debt in
accordance with agreed repayment
schedules. Fees were 41.4% higher mainly
due to a number of one-off transaction fees
received in 2018 as well as fees derived from
new investments.

Operating expenses, including costs of
making new investments, increased by 34.4%
during the year to £4.1m (2017: £3.1m). Of
this, £0.6m related to enhanced bonuses
awarded to directors and staff under a newly
created incentive scheme which is linked to
the Group’s growth in net asset value and
was also based upon the £19.7m realised gain
on successful sale of investments during
the year. £0.2m related to expenses directly
incurred in making new investments which,
under IFRS, are expensed and £0.1m related
to one-off costs incurred in the office move
(which mainly comprised of rent, rates and
service charge costs incurred for an
overlapping period during the year whilst
the Group’s leases on its old and new office
premises ran concurrently). Excluding these
atypical expenses, overall expenses rose by
£0.1m (3.2%) in proportion with managing
a growing portfolio.

Due to favourable market conditions, the
Group’s treasury funds increased by 4.1%
over the year (net of fund management
charges) (2017: 8.6%).

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

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

B.P. Marsh • 2018 Annual Report • Group Strategic Report

Group Strategic Report
continued

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 (deficit) / surplus

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 2018 the Group was debt
free (31 January 2017: debt free).

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

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

Year to/as at
31 January
2018

Year to/as at
31 January
2017

£98.9m

339p

31.3%

3.76p

£20.3m

25.5%

£(6.3)m

£21.7m

£15.6m

£5.4m

£25.0m

£19.7m

£8.9m

£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

Credit risk
The Group is exposed to the risk of default on
the loans it has made available to investee
companies. The Group manages the risk by
ensuring that there is a director appointed
to the board of each of its investee companies.
In this capacity, the appointed director can
advise the Group’s board of investee
companies’ activities and prompt action can
be taken to protect the value of the loan,
such that the directors believe the credit
risk to the Group is adequately managed.

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

Interest rate risk
At 31 January 2018, 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.

B.P. Marsh • 2018 Annual Report • Group Strategic Report

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 21 (2017: 42)
during the year.

Going Concern

The directors continue to adopt the going
concern basis in preparing the financial
statements. This is because the directors,
after making enquiries and following a
review of the Group’s budget for 2019 and
2020, 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
11 June 2018

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

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

Opinion

Our opinion on the financial statements
is unmodified

We have audited the Group financial
statements of B.P. Marsh & Partners Plc (“the
Parent Company” or “the Company”) and
its subsidiaries (“the Group”) for the year
ended 31 January 2018 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 European Union (“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 Company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the Company’s
members those matters we are required
to state to them in an auditor’s report and
for no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the Company and the Company’s members
as a body, for our audit work, for this
report, or for the opinions we have formed.

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
31st January 2018 and of the Group’s
profit for the year then ended;

• the Group 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

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

Basis for opinion

We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report.

We are independent of the Group and the
Parent Company in accordance with the
ethical requirements that are relevant to
our audit of the financial statements in the
UK, including the FRC’s Ethical Standard
as applied to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

Conclusions relating to Going Concern

We have nothing to report in respect of the
following matters in relation to which the
ISAs (UK) require us to report to you where:
• the directors’ use of the going concern basis
of accounting in the preparation of the
financial statements is not appropriate; or

• the directors have not disclosed in the
financial statements any identified
material uncertainties that may cast
significant doubt about the Group’s or
the Parent Company’s ability to continue
to adopt the going concern basis of
accounting for a period of at least twelve
months from the date when the financial
statements are authorised for issue.

Key Audit Matters

Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period and
include the most significant assessed risks
of material misstatement (whether or not
due to fraud) we identified, including those
which had the greatest effect on: the
overall audit strategy, the allocation of
resources in the audit and directing the
efforts of the engagement team.

These matters were addressed in the context
of our audit of the financial statements as
a whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.

Risk 1: Valuation of unquoted
equity investments
Refer to the significant accounting policies
(page 58); and Notes 1 and 12 of the
financial statements.

The equity investment portfolio comprises
Level 3 instruments in unquoted legal
entities. In both the Group and the Parent
Company’s Statements of Financial
Position these are shown under Non-
Current Assets.

The Group adopts various valuation
methodologies based on the International
Private Equity and Venture Capital Valuation
Guidelines (‘IPEV Guidelines’) – December
2015, in conformity with IFRS 13 – Fair Value
Measurement. Owing to the unquoted and
illiquid nature of these investments, the
assessment of fair valuation is subjective
and requires a number of significant and
complex judgments to be made by the
Valuation Committee. The exit value will
be determined by the market at the time
of realisation and therefore despite the
valuation policy adopted and judgments
made by the Valuation Committee, the
final sales value on realisation may differ
materially from the valuation at the year
end date.

There is the risk that inaccurate judgments
made in the assessment of fair value,
particularly in respect of earnings multiples,
the application of liquidity discounts,
calculation of discount rates and the
estimation of future maintainable earnings,
could lead to the incorrect valuation of the
unquoted equity investment portfolio. In
turn, this could materially misstate the

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

Independent
Auditor’s Report
continued

value of the investment portfolio in the
Consolidated Statement of Financial
Position, the gross investment return and
total return in the Consolidated Statement of
Comprehensive Income and the net asset
value per share.

There is also the risk that management
and the Valuation Committee may influence
the significant judgments and estimations
in respect of unquoted equity investment
valuations in order to meet market
expectations of the overall net asset value
of the Group.

How we address the Key Audit Matters
We performed the following procedures:

We obtained an understanding of the
Valuation Committee’s processes and
controls for determining the fair valuation of
unquoted equity investments by performing
walkthrough procedures. This included
discussing with management and the
Valuation Committee the valuation
governance structure and protocols around
their oversight of the valuation process
and corroborating our understanding by
obtaining the detailed minutes for the
Valuation Committee meetings. We have
identified key controls in the process,
assessed the design adequacy and tested
the operating effectiveness of those controls.
We relied on controls over portfolio company
and comparable company data used in the
valuation of unquoted investments.

We compared the Valuation Committee’s
valuation methodology to IFRS and the IPEV
Guidelines. We sought explanations from
management and the Valuation Committee
where there are judgments applied in their
application of the guidelines and assessed
their appropriateness.

With the assistance of our research work on
the private company valuation methodologies,
we formed an independent range for the
key assumptions used in the valuation of a
sample of unquoted investments within the
private equity business line, with reference
to relevant industry and market valuation
considerations. We derived a range of fair
values using our assumptions and other
qualitative risk factors. We compared
these ranges to management’s fair values
and discussed our results with the
Valuation Committee.

With respect to unquoted investments in the
private equity business line, on a sample
basis we corroborated key inputs in the
valuation models, such as earnings and
net debt to source data. We also performed
the following procedures on key judgments
made by the Valuation Committee in the
calculation of fair value:
• assessed the suitability of the comparable
companies used in the calculation of the
earnings multiples;

• challenged management on the

applicability of adjustments made to
earnings multiples and obtained
rationale and supporting evidence for
adjustments made;

• performed corroborative calculations to
assess the appropriateness of discount
rates; and

• discussed the adjustments made to

calculate future maintainable earnings
and corroborated this to supporting
documentation.

On a sample basis, we verified the valuation
of unquoted investments using market data
on acquisition multiples and other data
from third party pricing sources used by
the Valuation Committee in the calculation
of fair value.

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

We checked the mathematical accuracy
of the valuation models on a sample basis.
We reperformed the calculation of the
unrealised profits on the revaluation of
investments impacting the Consolidated
Statement of Comprehensive Income.

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

We discussed with the Valuation Committee
and understood the rationale for any
differences between the exit prices of
investments realised during the year and
the prior year fair value, to further assess
the reasonableness of the current year
valuation assumptions and methodology
adopted by the Valuation Committee.

Key observations communicated to
the Audit Committee:
The valuation of the unquoted equity
investment portfolio is determined to be
within a reasonable range of fair values.
All valuations tested have been recognised
in accordance with IFRS and the IPEV
Guidelines. Appropriate inputs to the
valuations were used and the valuations
calculated by the Valuation Committee are
within a reasonable range. Based on our
procedures and discussion of certain
matters with the Audit Committee, there
were no material outstanding matters.

Risk 2: Recognition of portfolio
income and of realised profits on
disposal of investments
Refer to the significant accounting policies
(pages 58 to 59); and Notes 1, 12 and 14 of
the financial statements

Portfolio income is directly attributable to
the return from investments. This includes:
dividends from investee companies which
are recognised when the Group’s rights to
receive payments have been established,
gross interest income from loans which is

Realised profits originate from disposals of
investments. Realised profits are calculated
as the difference between the net proceeds
and the investment’s fair value at the
beginning of the year.

Market expectations and revenue-based
targets may place pressure on management
to influence the recognition of portfolio
income or realised gains. This may result in
overstatement or deferral of revenues to
assist in meeting current or future targets
or expectations.

How we address the Key Audit Matters
We performed the following procedures:

We obtained an understanding of
management’s processes and controls
around accounting for portfolio income
and realised gains by discussing with the
management team and observations
during the audit fieldwork to substantiate
the processes and controls.

We performed detailed testing on a sample of
transactions to confirm whether they had been
appropriately recorded in the Consolidated
Statement of Comprehensive Income.

For portfolio income, on a sample basis, we:
• agreed dividends from the underlying

investment agreements and the dividend
notices where available;

• reperformed the calculation of interest

income based on the terms of the
underlying agreements;

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

Independent
Auditor’s Report
continued

• agreed advisory fees to the relevant
investment advisory agreements; and
• agreed the receipts of the income to the

our procedures and discussion of certain
matters with the Audit Committee, there
were no material outstanding matters.

bank statements, or, if not yet received at
the year end, agreed to the debtors or
accrued income schedule and assessed
the recoverability of these debtors or
accrued income.

For realised gains, on a sample basis, we:
• analysed the contract and terms of the

sale to determine whether the Group had
met the stipulated requirements, confirming
that the net proceeds and therefore the
realised profit over opening value could
be reliably measured;

• re-performed management’s calculations

to determine mathematical accuracy
and confirmed the collection of the net
proceeds by agreeing the cash receipt to
bank statements; and

• assessed the recoverability if the related
income had not been received by the
due date.

For all samples selected for testing we
verified that revenue is recognised when
the significant risks and rewards of
ownership have been transferred.

Our Application of Materiality

We apply the concept of materiality in
planning and performing the audit, in
evaluating the effect of identified
misstatements on the audit and in forming
our audit opinion.

Materiality
Materiality is the magnitude of an omission
or misstatement that, individually or in the
aggregate, could reasonably be expected to
influence the economic decisions of the users
of the financial statements. Materiality
provides a basis for determining the nature
and extent of our audit procedures.

We determined materiality for the Group
to be £980,000 (2017: £795,000) for
balance sheet items which is 1% of net
assets. We believe that net assets provide
us with a consistent year on year basis for
determining materiality and is the most
relevant measure to the stakeholders of
the entity.

We performed enquiries of management and
read minutes of meetings throughout the year
and subsequent to the year end in order to
address the risk of management override of
controls to defer revenue recognition.

Key observations communicated to the
Audit Committee
Our audit procedures did not identify any
material matters regarding the recognition
of portfolio income and of realised profits
on disposal of investments. All transactions
tested have been recognised in accordance
with contractual terms and IFRS. Based on

However due to the much lower
comprehensive income generated each
year in comparison with the level of net
assets, we have set a lower materiality of
£200,000 (2017: £195,000) for the Group
for realised profit and loss items which
represents approximately 1% of the net
comprehensive income.

We believe that the above basis provides
us with a consistent year on year basis for
determining materiality and is the most
relevant measure to the stakeholders of
the entity.

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

We calculated materiality during the
planning stage of the audit based on the
management accounts provided to us
which exclude the investment valuation
at the year end, and then reassessed it
based on the 31 January 2018 revised
management accounts updated with the
investment valuation at the year end on the
basis set out above and adjusted our audit
procedures accordingly.

Performance materiality
Performance materiality is the application
of materiality at the individual account
or balance level. It is set at an amount
to reduce to an appropriately low level
the probability that the aggregate of
uncorrected and undetected misstatements
exceeds materiality.

On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment, our judgment
was that performance materiality was 75%
(2017: 75%) of our planning materiality,
namely £735,000 (2017: £596,000) for
balance sheet items and £150,000 (2017:
£146,000) for realised profit and loss items.
This is at the top end of the range of 50%
and 75%. In arriving at the top range of 75%,
we considered the judgmental nature of the
valuations in the Consolidated Statement of
Financial Position and the relative value of
transactions recorded in the other primary
statements, to ensure that total uncorrected
and undetected audit differences in all
accounts did not exceed our materiality of
£980,000 for balance sheet items and
£200,000 if the differences are realised
and impact on profit and loss items.

Reporting threshold
Our reporting threshold is defined as an
amount below which identified misstatements
are considered as being clearly trivial.

We agreed with the Audit Committee that
we would report to them all uncorrected
audit differences in excess of £49,000
(2017: £39,750) for balance sheet items
and £10,000 (2017: £9,750) for realised
profit and loss items, which is set at 5% of
planning materiality, as well as differences
below that threshold that, in our view,
warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in light of
other relevant qualitative considerations in
forming our opinion.

An overview of the scope of our audit

Our Group audit was scoped by obtaining
an understanding of the Group and its
environment, including Group-wide
controls, and assessing the risks of material
misstatement at the Group level.

We performed an audit of the complete
financial information of 4 (2017: 3) full
scope components.

The Group comprises 3 consolidated
subsidiaries and 2 investment entity
subsidiaries. Monitoring and control over
the operations of these subsidiaries,
including those located overseas, is
centralised in London.

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

Independent
Auditor’s Report
continued

The full scope components accounted for
100% of the investment portfolio and 100%
of each of profit before tax, external revenue
and of total assets (all measures used to
calculate materiality).

Whilst materiality for the Group financial
statements as a whole was set out as
detailed in this report, each component
of the Group was audited to a lower level
of materiality.

Audits of the components were performed at
a materiality level calculated by reference
to a proportion of Group materiality
appropriate to the relative scale of the
business concerned.

misstatements, we are required to determine
whether there is a material misstatement in
the financial statements or a material
misstatement of the other information. If,
based on the work we have performed,
we conclude that there is a material
misstatement of this other information,
we are required to report that fact. We
have nothing to report in this regard.

Opinions on other matters prescribed
by The Companies Act 2006

In our opinion, based on the work
undertaken in the course of the audit:
• we have not identified material

misstatements in the Group Strategic Report
and the Group Report of the Directors;

Other information

• the information given in the Group

The directors are responsible for the
other information. The other information
comprises the information included in the
annual report, other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.

In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit or
otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material

Strategic Report and the Group Report
of the Directors for the financial year
for which the financial statements are
prepared is consistent with the financial
statements; and

• the Group 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 the Parent
Company and its environment obtained in
the course of the audit, we have not
identified material misstatements in the
Group Strategic Report or the Group
Report of the Directors.

B.P. Marsh • 2018 Annual Report • Independent Auditor’s Report

We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not
been kept by the Parent Company, or
returns adequate for our audit have not
been received from branches not visited
by us; or

• the Parent Company 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.

Responsibilities of Directors

As explained more fully in the directors’
responsibilities statement, the directors are
responsible for the preparation of the
financial statements and for being satisfied
that they give a true and fair view, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error.

In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the Parent Company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.

Auditor’s responsibilities for the audit
of the Financial Statements

Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of
assurance but is not a guarantee that
an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are
considered material if, individually or in
the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these financial statements.

A further description of our responsibilities
for the audit of the financial statements
is located on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.

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

11 June 2018

B.P. Marsh • 2018 Annual Report • Consolidated Statement of Comprehensive Income

Consolidated Statement
of Comprehensive Income
for the year ended 31 January 2018

Notes

£’000

2018

£’000

718

(2,122)

18,119

1,538

1,170

1,154

(4,147)

(341)

582

(111)

(42)

Gains on investments

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

Provision against equity investments and loans

12, 14

Unrealised gains on equity investment revaluation

Income

Dividends

Income from loans and receivables

Fees receivable

Operating income

Operating expenses

Provision against deferred consideration

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)

1, 25

2, 4

2, 3

2, 8

2017

£’000

248

–

11,243

16,715

11,491

787

1,351

816

(3,086)

–

467

(36)

402

2,954

14,445

(3,086)

11,359

833

12,192

(2,398)

9,794

33.5p

3,862

20,577

(4,488)

16,089

429

16,518

3,731

20,249

69.3p

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

The notes on pages 54 to 86 form
part of these financial statements.

B.P. Marsh • 2018 Annual Report • Consolidated and Parent Company Statements of Financial Position

Consolidated and Parent
Company Statements of
Financial Position
31 January 2018

Assets

Non-current assets

Property, plant and equipment

Investments – equity portfolio

Investments – subsidiaries

Investments – treasury portfolio

Loans and receivables

Deferred tax assets

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

2018
£’000

Group

2017
£’000

Company

2018
£’000

2017
£’000

167

79,122

–

2,756

14,421

39,350

–

5,230

7,157

–

88,540

10,320

–

69,442

10,239

–

96,498

51,752

98,860

79,681

–

2,393

2,648

5,041

101,539

24,217

5,062

7,327

36,606

88,358

–

98,868

79,682

–

(1,472)

(1,200)

(2,672)

(6,728)

(718)

(1,230)

(1,948)

(8,676)

–

(1)

–

(1)

–

£98,867

£79,682

£98,867

£79,682

2,923

9,398

32,022

393

54,118

98,867

339p

2,923

9,381

26,191

393

40,783

79,682

273p

2,923

9,398

86,397

–

143

2,923

9,381

67,299

–

98,867

339p

79,682

273p

The Financial Statements were approved by the Board of Directors and authorised for
issue on 11 June 2018 and signed on its behalf by:

B.P. Marsh & J.S. Newman

The notes on pages 54 to 86 form
part of these financial statements.

B.P. Marsh • 2018 Annual Report • Consolidated Statement of Cash Flows

Consolidated Statement
of Cash Flows
for the year ended 31 January 2018

Cash (used by)/from operating activities

Income from loans to investees

Dividends

Fees received

Operating expenses

Net corporation tax paid

Purchase of equity investments

Net proceeds from sale of equity investments

Net (payments to)/repayments of loans by investee companies

Adjustment for non-cash share incentive plan

Increase in receivables

Increase in payables

Depreciation and amortisation

Net cash (used by)/from operating activities

Net cash from/(used by) investing activities

Purchase of property, plant and equipment

Purchase of treasury investments

Net proceeds from sale of treasury investments

Net cash from/(used by) investing activities

Net cash used by financing activities

Financial income

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 year1

2018
£’000

1,170

1,538

1,154

(4,488)

(3,076)

(21,653)

24,935

(6,695)

(7)

752

2017
£’000

1,351

787

816

(3,086)

(102)

(8,278)

10,253

6,046

(160)

129

(6,255)

7,850

(179)

(35,858)

38,784

2,747

(1,098)

(54)

(1,133)

(4,641)

7,327

(38)

2,648

(8)

(11,976)

10,652

(1,332)

(999)

(9)

(1,001)

5,517

1,814

(4)

7,327

1 The above cash and cash equivalents balance excludes treasury portfolio funds which are referred to in Note 13. Including

treasury portfolio balances of £2,756k, total available cash and treasury portfolio funds as at 31 January 2018 was
£5,404k (as at 31 January 2017: £12,557k, including £5,230k 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 54 to 86 form
part of these financial statements.

B.P. Marsh • 2018 Annual Report • Parent Company Statement of Cash Flows

Parent Company Statement
of Cash Flows
for the year ended 31 January 2018

Cash from operating activities

Dividends received from subsidiary undertakings

Decrease in payables

Net cash from operating activities

Net cash used by financing activities

Increase in amounts owed to Group undertakings

Dividends paid

Payments made to repurchase company shares

Net cash used by financing activities

Change in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of year

Notes

19, 20

2018

£’000

1,154

–

1,154

(1,098)

(54)

(1,147)

2017

£’000

1,008

(15)

993

(999)

(9)

(993)

–

Consolidated and Parent
Company Statements of
Changes in Equity
for the year ended 31 January 2018

Opening total equity

Comprehensive income for the year

Dividends paid

Repurchase of company shares

Share incentive plan

Total equity

2018
£’000

79,682

20,249

(1,098)

(54)

Group

2017
£’000

70,812

9,794

(999)

(9)

2018
£’000

79,682

20,252

(1,098)

(54)

Company

2017
£’000

70,812

9,794

(999)

(9)

98,867

79,682

98,867

79,682

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

The notes on pages 54 to 86 form
part of these financial statements.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
for the year ended 31 January 2018

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 4 Matthew Parker Street, London SW1H 9NP.
The consolidated financial statements for the year ended 31 January 2018 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 • 2018 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 three
trading subsidiaries, B.P. Marsh & Company Limited, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited
(incorporated on 22 March 2017), 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 and the results of B.P. Marsh (North America)
Limited are consolidated for the first time 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.

New Accounting Standards
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 2018 include:
• 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 directors do not expect the adoption of the standards and interpretations to have a material impact on the Group’s financial
statements in the period of initial application, with the exception of IFRS 16: Leases (“IFRS 16”).

IFRS 16 was issued on 13 January 2016 and replaces IAS 17: Leases. The standard is effective for annual periods beginning on or
after 1 January 2019 with early adoption permitted.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

1. Accounting Policies continued

New Accounting Standards continued
IFRS 16 requires all operating leases in excess of one year, where the Group is the lessee, to be included on the Group’s Statement
of Financial Position and recognised as a right-to-use asset and a related lease liability representing the obligation to make
lease payments. The right-of-use asset will be amortised on a straight-line basis with the lease liability being amortised using
the effective interest method. Certain optional exemptions are available under IFRS 16 for short-term leases (lease term of less
than 12 months) and for low-value leases. Therefore IFRS 16 is expected to result in an increase in the Group’s total assets and
total liabilities but is not anticipated to have a material impact on net assets or total return.

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 three subsidiary investment entities, B.P. Marsh & Company
Limited, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited, that provide services that relate to the
Company’s investment activities. The results of these three subsidiaries, together with other subsidiaries (except for Summa
Insurance Brokerage, S.L. (“Summa”) and LEBC Holdings Limited (“LEBC”)), 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
and LEBC. Instead the investments in Summa and LEBC 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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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.

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 £20,251,651, prior to a dividend distribution of £1,098,109 (2017: profit of £9,794,327
prior to a dividend distribution of £999,335).

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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

1. Accounting Policies (continued)

Employee services settled in equity instruments continued
The Group has established an HMRC approved 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.

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 Committee (“IPEV Guidelines”). 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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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.

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 and other costs – 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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

1. Accounting Policies continued

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

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

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

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

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

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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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.

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.

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.

Under IFRS 8: Operating Segments (“IFRS 8”) 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 and Non-UK. The UK segment includes the 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), 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).

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

2. Segmental Reporting continued

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.

Operating income

Operating expenses

Segment operating profit/(loss)

Financial income

Financial expenses

Exchange movements

Profit/(loss) before tax

Income taxes

Profit/(loss) for the year

Geographic segment 1:
UK

Geographic segment 2:
Non UK

2018
£’000

25,650

(3,046)

22,604

395

(75)

(4)

22,920

2,515

25,435

2017
£’000

11,770

(2,198)

9,572

333

(26)

(1)

9,878

(1,935)

7,943

2018
£’000

(5,073)

(1,442)

(6,515)

187

(36)

(38)

(6,402)

1,216

(5,186)

2017
£’000

2,675

(888)

1,787

134

(10)

403

2,314

(463)

1,851

2018
£’000

20,577

(4,488)

16,089

582

(111)

(42)

16,518

3,731

20,249

Group

2017
£’000

14,445

(3,086)

11,359

467

(36)

402

12,192

(2,398)

9,794

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 Limited1

Besso Insurance Group Limited1

LEBC Holdings Limited

Trireme Insurance Group Limited1

Nexus Underwriting Management Limited

Total income attributable
to the investee company
£’000

2018

–

836

–

749

2017

453

450

432

377

353

% of total
realised operating income

Reportable
geographic segment

2018

2017

2018

2017

–

1&2

1 There are no disclosures shown for Besso Insurance Group Limited, Hyperion Insurance Group Limited and Trireme Insurance Group Limited in the current year as the Group
had disposed of these investments during the previous year and the early part of this financial year. This resulted in a reduced level of income and consequently the income
derived from these investee companies did not exceed the 10% threshold prescribed by IFRS 8.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Non-current assets

Property, plant and equipment

Investments – equity portfolio

Investments – treasury portfolio

Loans and receivables

Deferred tax assets

Current assets

Non-current assets as held for sale

Trade and other receivables

Cash and cash equivalents

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 and amortisation of property, plant and
equipment

Impairment of investments and loans

Cash flow arising from:

Operating activities

Investing activities

Financing activities

Change in cash and cash equivalents

Geographic segment 1:
UK

Geographic segment 2:
Non UK

2018
£’000

131

61,849

2,756

11,770

76,538

–

1,441

2,648

4,089

80,627

–

(1,472)

(1,200)

(2,672)

2018
£’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)

2018
£’000

17,273

–

2,651

–

19,960

–

952

–

952

2018
£’000

12,102

–

4,107

–

16,212

–

540

–

540

2018
£’000

167

79,122

2,756

14,421

96,498

–

2,393

2,648

5,041

20,912

16,752

101,539

–

(365)

–

(1,472)

(1,200)

(2,672)

Group

2018
£’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)

£77,955

£63,295

£20,912

£16,387

£98,867

£79,682

140

–

4,383

2,747

(1,133)

5,997

–

10,428

(1,332)

(1,001)

8,095

2,122

–

(10,638)

(2,578)

–

(10,638)

(2,578)

179

2,122

(6,255)

2,747

(1,133)

(4,641)

–

7,850

(1,332)

(1,001)

5,517

As outlined previously, under IFRS 8 the Group reports its operating segments (UK and Non-UK) and associated income, expenses,
assets and liabilities based upon the country of domicile of each of its investee companies.

In addition to the segmental analysis disclosure reported above, the Group has undertaken a further assessment of each of its
investee companies’ underlying revenues, specifically focusing on the geographical origin of this revenue. Geographical analysis
of each investee company’s 2018 and 2017 revenue budgets was carried out and, based upon this analysis, the directors have
determined that on a look-through basis, the Group’s portfolio of investee companies can also be analysed as follows:

Non-UK

Total

2018
%

100

2017
%

100

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

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)

5. Staff Costs

2018
£’000

111

2018
£’000

844

(281)

582

2017
£’000

382

467

The average number of employees, including all directors (executive and non-executive), employed by the Group during the year
was 19 (2017: 17); 6 of those are in a management role (2017: 6) and 13 of those are in a support role (2017: 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)

2018
£’000

2,308

298

105

2017
£’000

1,605

210

£2,783

£1,961

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. During the year B.P. Marsh Management Limited acquired the economic interests of all 1,421,130 ordinary shares
in the Company held under joint beneficial ownership. Refer to Note 24 for further details.

During the year to 31 January 2017 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 Note 24 for further details.

Charges of £69,315 (2017: £66,740) relating to the SIP and £2,576 (2017: £2,013) relating to the Joint Share Ownership Agreements
are included within ‘Other employment costs’ above.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

6. Directors’ Emoluments

The aggregate emoluments of the directors were:

Management services – remuneration

Fees

Pension contributions – remuneration

2018
£’000

1,264

1,395

2017
£’000

1,028

1,095

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. During the year all 1,080,059 shares in which joint interests were held by the directors were sold. Refer to
Note 24 for further details.

Of the total 37,935 (2017: 73,080) Free, Matching and Partnership Shares granted under the SIP during the year, 16,860
(2017: 32,480) were granted to directors of the Company.

Of the £2,576 (2017: £2,013) charge relating to the Joint Share Ownership Plan and the £69,315 (2017: £66,740) charge relating
to the SIP, £1,958 (2017: £1,529) and £30,807 (2017: £29,664) related to the directors respectively.

Refer to Note 24 for further details.

Highest paid director

Emoluments

Pension contribution

2018
£’000

318

336

2017
£’000

241

258

The highest paid director also has a beneficial interest in 12,335 shares held within the Company’s SIP. Refer to 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 (2017: 4) accrued benefits under these defined contribution pension schemes.

The key management personnel comprise of the directors.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

7. Dividends

Ordinary dividends

Dividend paid:

3.76 pence each on 29,226,040 Ordinary shares (2017: 3.42 pence each on 29,226,040 Ordinary shares)

2018
£’000

1,098

2017
£’000

999

In the current year a total dividend of £4,174 (2017: £3,340) was payable on the 111,015 (2017: 97,652) ordinary shares held by the
B.P. Marsh SIP Trust (“SIP Trust”).

8. Profit on Ordinary Activities Before Taxation

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

Depreciation and amortisation of owned tangible and intangible fixed assets

Auditor’s remuneration:

Audit fees for the Company

Other services:

Audit of subsidiaries’ accounts

Taxation

Other advisory1

Exchange loss/(gain)

Operating lease rentals of land and buildings

2018
£’000

2017
£’000

256

(402)

1 Including additional review work in relation to the change in the Substantial Shareholding Exemption regulations and the impact on the Group’s deferred tax position (Note 17).

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 (credited)/charged in the Consolidated Statement of Comprehensive Income

2018
£’000

3,047

(18)

3,029

(6,758)

(2)

–

(6,760)

(3,731)

2017
£’000

1,326

(31)

1,295

1,103

–

1,103

2,398

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

9. Income Tax Expense continued

The tax assessed for the year is lower (2017: lower) than the standard rate of corporation tax in the UK. The differences are
explained below:

Profit before tax

2018
£’000

16,518

2017
£’000

12,192

Profit on ordinary activities at the standard rate of corporation tax in the UK of 19.17% (2017: 20.00%)

3,166

2,438

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

Release of deferred tax provision on investment disposals and current equity investment valuation (Note 17)

Other adjustments

Other effects:

Deferred tax movement on unrealised loss on treasury portfolio

Non-taxable income (dividends received)

Total income taxes (credited)/charged in the Consolidated Statement of Comprehensive Income

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

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

145

(18)

(2)

(3,378)

3,449

(6,758)

–

(40)

(295)

(3,731)

2018
£’000

20,249

69.3p

(31)

–

(1,326)

1,318

–

104

–

(157)

2,398

2017
£’000

9,794

33.5p

Number

29,202,716

29,207,421

Nil

29,202,716

29,207,421

During the year the Company paid a total of £53,967 (2017: £8,805) in order to repurchase 28,646 (2017: 5,726) ordinary shares
at an average price of 188 pence per share (2017: 154 pence per share).

Distributable reserves have been reduced by £53,967 as a result (2017: reduction of £8,805).

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

10. Earnings per Share from Continuing Operations Attributable to the Equity Shareholders continued

Ordinary shares held by the Company in Treasury
Movement of ordinary shares held in Treasury:

Opening total ordinary shares held in Treasury at 1 February

Ordinary shares repurchased into Treasury during the year

Ordinary shares transferred to the B.P. Marsh SIP Trust during the year

Total ordinary shares held in Treasury at 31 January

2018
Number

5,726

28,646

(13,363)

21,009

2017
Number

97,652

5,726

(97,652)

5,726

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

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 be able to buy small parcels of shares when the share price is below
25% of its published Net Asset Value and place them into Treasury, as outlined in the Group’s Share Buy-Back Policy announcement
on 24 July 2017. Since 31 January 2018, and as announced on 6 March 2018, the Group has updated its Share Buy-Back Policy
such that it can buy back small parcels of shares and place them into Treasury when the share price is below 20% of its
published Net Asset Value.

The decrease to the weighted average number of ordinary shares between 2017 and 2018 is attributable to the buy-back of
28,646 ordinary shares in the Company during the year. 13,363 ordinary shares were also transferred from Treasury to the
SIP Trust during the year. These shares were therefore treated as re-issued for the purposes of calculating earnings per share.
37,935 ordinary shares (comprising the 13,363 ordinary shares transferred from Treasury to the SIP Trust during the year together
with 24,572 unallocated ordinary shares already held by the SIP Trust at the start of the year) were subsequently allocated to
the participating employees as Free, Matching and Partnership shares under the share incentive plan arrangement (Note 24).

In the prior year there was an increase to the weighted average number of shares due to the transfer of 97,652 ordinary shares
held by the Company in Treasury as at 31 January 2016 to the SIP Trust during that year. These shares were therefore 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 allocated to the participating employees as Free, Matching and Partnership shares under the share incentive plan
arrangement in that year.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

11. Property, Plant and Equipment

Group

Cost

At 1 February 2016

Additions

Disposals

At 31 January 2017

At 1 February 2017

Additions

Disposals

At 31 January 2018

Depreciation

At 1 February 2016

Eliminated on disposal

Charge for the year

At 31 January 2017

At 1 February 2017

Eliminated on disposal

Charge for the year

At 31 January 2018

Net book value

At 31 January 2018

At 31 January 2017

At 31 January 2016

Furniture &
Equipment
£’000

Leasehold
Fixtures &
Fittings &
Others
£’000

Total
£’000

(5)

–

104

(5)

–

147

(46)

152

–

(46)

133

–

120

(5)

123

179

(46)

256

105

(5)

108

(46)

167

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

12. Investments – Equity Portfolio

Group

At valuation

At 1 February 2016

Transfers between categories

Additions

Disposals

Provisions

Unrealised gains in this period

At 31 January 2017

At 1 February 2017

Additions

Disposals

Provisions

Unrealised gains in this period

At 31 January 2018

At cost

At 1 February 2016

Transfers between categories

Additions

Disposals

Provisions

At 31 January 2017

At 1 February 2017

Additions

Disposals

Provisions

At 31 January 2018

Shares in investee companies

Continuing
investments
£’000

Non-current
investments as
held for sale
£’000

54,051

(21,836)

8,278

(8,424)

–

7,281

39,350

21,653

–

18,119

79,122

25,951

(6,821)

8,278

(1,961)

–

25,447

21,653

–

47,100

–

21,836

–

(1,581)

–

3,962

24,217

–

(24,217)

–

6,821

–

(1,581)

–

5,240

–

(5,240)

–

Total
£’000

54,051

–

8,278

(10,005)

–

11,243

63,567

21,653

(24,217)

–

18,119

79,122

25,951

–

8,278

(3,542)

–

30,687

21,653

(5,240)

–

47,100

During the year, and as noted below, the Group disposed of its investments in both Besso Insurance Group Limited (“Besso”)
and Trireme Insurance Group Limited (“Trireme”). Although the completion of these disposals took place after 31 January 2017,
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 31 January 2017. In accordance with the provisions of IFRS 5:
Non-current Assets Held for Sale and Discontinued Operations (“IFRS 5”) these investments were moved from Non-current
Assets to Current Assets and as at 31 January 2017 were 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
were categorised separately within the Group’s investment movement table above.

The additions relate to the following transactions in the year:

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

On 17 February 2017 the Group acquired, through a newly established company Paladin Holdings Limited (previously known as
Paladin Newco Limited until 5 April 2017) (“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 13 June 2017 the Group acquired, through its wholly owned subsidiary company B.P. Marsh (North America) Limited, a 35%
shareholding in a newly established New York based specialty lines insurance distribution company, XPT Group LLC (“XPT”) for
consideration of $6,000,000 (£4,790,419).

On 26 July 2017 the Group acquired a further 17.84% equity stake in LEBC Holdings Limited (“LEBC”) for consideration of
£7,137,563. The acquisition increased the Group’s equity stake in LEBC to 60.88% at the time of investment. The Group has also
provided for £148,960 of deferred consideration due to certain LEBC shareholders in respect of this transaction which became
due upon the Group’s 100% equity valuation of LEBC exceeding £43,000,000. This condition was met as at 31 January 2018
and therefore the Group’s equity cost in LEBC has been increased to include this deferred consideration which is expected to
be paid in 2018. Following this additional investment, and after some dilution resulting from an acquisition made by LEBC in
December 2017, the Group’s equity stake in LEBC stood at 59.34% as at 31 January 2018.

On 12 October 2017 the Group acquired, through its wholly-owned subsidiary company B.P. Marsh (North America) Limited,
a 30% equity stake in Mark Edward Partners LLC (“MEP”) for consideration of $6,000,000 (£4,572,822). MEP is a specialty
insurance broker offering a wide range of risk management services to both commercial and private clients and has offices in
New York, Palm Beach and Los Angeles, with licenses to operate in all 50 US states.

On 15 December 2017 the Group acquired an effective 20% equity stake (comprising a mixture of ordinary and preferred shares)
in EC3 Brokers Limited (“EC3”) through a newly established company, EC3 Brokers Group Limited, for total consideration of
£5,000,000. EC3 is an independent specialist Lloyds broker and reinsurance broker which provides services to a wide array of
clients across a number of sectors, including construction, casualty, entertainment and cyber & technology.

The disposals relate to the following transactions in the year:

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 £21,566,158 (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 £22,007,796. The total consideration received represents a realised gain of £698,796 when
compared to the carrying value of the Group’s investment in Besso of £21,309,000 as at 31 January 2017 (Note 14) and a total
overall gain of £18,617,346 above the cost of investment. Outstanding loans of £4,907,500 were also repaid in full on completion.

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 net payment of £18,924. The consideration of £2,908,350 equates to the Group’s
31st January 2017 valuation of its investment in Trireme (Note 14) and represents a total overall gain of £1,059,046 above the
cost of investment. The outstanding loan of £2,155,113 as at 31 January 2017 was also repaid on completion.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

12. Investments – Equity Portfolio continued

Group continued

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), Stewart Specialty Risk Underwriting Limited (Canada), XPT Group LLC (USA) and Mark Edward Partners LLC
(USA) are as follows:

% holding
of share
capital

Date
information
available to

31.12.16

31.12.17

Aggregate
capital and
reserves
£

2,857,969

(618,839)

Post tax
profit/(loss)
for the year
£

263,358

(292,069)

31.12.16

(466,434)

(354,827)

–

Investment holding company

30.09.17

4,446,198

2,328,811

Independent financial advisor company

Name of company

Asia Reinsurance Brokers Pte Limited

Bastion Reinsurance Brokerage (PTY) Limited

Bulwark Investment Holdings (PTY) Limited

EC3 Brokers Group Limited1

LEBC Holdings Limited

MB Prestige Holdings PTY Limited

Neutral Bay Investments Limited

Nexus Underwriting Management Limited

Mark Edward Partners LLC

Paladin Holdings Limited1

Property and Liability Underwriting Managers
(PTY) Limited

Stewart Specialty Risk Underwriting Limited

20.00

35.00

20.00

59.34

40.00

49.90

17.08

30.00

35.00

42.50

30.00

31.12.17

31.03.17

31.12.17

–

1,664,120

3,928,552

20,664,585

5,046,643

–

508,503

225,337

3,715,665

3,470,754

–

31.12.17

(306,965)

(255,986)

31.12.17

(81,679)

(81,756)

Principal
activity

Specialist reinsurance broker

Reinsurance broker

Holding company for South African
Managing General Agents

Specialist Australian Motor Managing
General Agency

Investment holding company

Specialist Managing General Agency

Specialty insurance broker

Investment Holding Company

Specialist South African Property
Managing General Agency

Specialist Canadian Casualty
Underwriting Agency

Consolidator of
regional insurance brokers

Specialist UK Marine Cargo
Underwriting Agency

Specialist UK Motor Managing
General Agency

USA Specialty lines insurance
distribution company

Summa Insurance Brokerage, S.L.

77.25

31.12.16

9,092,533

(85,960)

The Fiducia MGA Company Limited

25.00

31.12.16

(97,497)

(397,498)

Walsingham Motor Insurance Limited

40.50

30.09.16

(1,704,245)

103,132

XPT Group LLC1

35.00

–

1 Financial data for Paladin Holdings Limited, XPT Group LLC and EC3 Brokers Group Limited is not yet available as these companies were incorporated and commenced

trading in 2017.

The Group also has a 50% equity holding, reduced to 20% on 14 May 2018 following a share reorganisation (Note 26), in
Walsingham Holdings Limited, a company incorporated in the year to 31 January 2016, and which remained dormant at the
year end.

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 • 2018 Annual Report • Notes to the consolidated financial statements

Company

At valuation

At 1 February 2016

Additions

Unrealised gains in this period

At 31 January 2017

At 1 February 2017

Additions

Unrealised gains in this period

At 31 January 2018

At cost

At 1 February 2016

Additions

At 31 January 2017

At 1 February 2017

Additions

At 31 January 2018

Shares
in group
undertakings
£’000

60,656

–

8,786

69,442

–

19,098

£88,540

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, Marsh Insurance Holdings Limited, B.P. Marsh
Asset Management Limited, B.P. Marsh (North America) 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 (North America) Limited1

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 2018
£

Profit/(loss)
for the year to
31 January 2018
£

100

98,859,438

6,557,256

23,485

(925,240)

1,000

20,249,105

588,847

–

(925,241)

–

Principal Activity

Consulting services and investment
holding company

Investment holding company

Consulting services

Investment holding company

Dormant

1 At the year end B.P. Marsh (North America) Limited held a 100% economic interest in RHS Midco I LLC, a US registered entity incorporated during the year for the purpose of

holding the Group’s equity investment in XPT Group LLC. In addition, at the year end, B.P. Marsh (North America) Limited also held a 100% economic interest in B.P. Marsh US LLC,
a US registered entity, which was incorporated during the year for the purpose of holding the Group’s equity investment in Mark Edward Partners LLC. There were no profit or
loss transactions in either of these two US registered entities during the year.

Loans to the subsidiaries of £10.320 million (2017: £10.239 million) are treated as capital contributions.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

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

Rathbone Investment Management Limited

Total

2018
£’000

5,230

35,858

(38,784)

452

2,756

1,517

1,239

2,756

2017
£’000

3,482

11,976

(10,652)

424

5,230

3,581

1,649

5,230

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

The purpose of the funds is to hold (and grow) a proportion of 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 appropriate action
is taken if there is a prolonged period of poor performance.

Investment management costs of £110,811 (2017: £35,832) were charged to the Consolidated Statement of Comprehensive
Income for the current year (Note 3).

14. Realised Gains on Disposal of Equity Investments

The realised gains on disposal of investments comprises of a net gain of £718,070. £698,796 of this net gain is in respect of the
Group’s disposal of its entire 37.94% investment in Besso Insurance Group Limited (“Besso”) at its carrying value of £21,309,000
for a consideration of £22,007,796. The remaining net gain of £19,274 is in respect of the Group’s disposal of its entire 29.94%
investment in Trireme Insurance Group Limited (“Trireme”) at its carrying value of £2,908,000 for a consideration of £2,908,350
as well as an additional net payment of £18,924.

In aggregate, the above disposals resulted in a net release to Retained Earnings from the Fair Value Reserve of £15,390,983,
comprising of an £18,977,245 release of fair value which has been reduced by estimated tax payable on disposal (gross of
management expenses available for tax relief) of £3,586,262 (see Note 20).

The amount included in realised gains on disposal of investments for the prior year ended 31 January 2017 was £247,568.
£246,992 of this net gain was 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 was
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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Additionally, during the year ended 31 January 2017 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. As a result of these disposals being made at carrying value,
no gain or loss was included in the Consolidated Statement of Comprehensive Income in that year.

In aggregate, the above disposals for the year ended 31 January 2017 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 was reduced by tax payable on disposal
(gross of management expenses available for tax relief) of £1,367,672.

15. Loans and Receivables – Non-Current

Loans to investee companies (Note 25)

Other receivables (Note 25)

Less provision for impairment of other receivables

2018
£’000

14,421

341

(341)

–

Group

2017
£’000

6,816

341

–

341

14,421

7,157

2018
£’000

Company

2017
£’000

–

Included within net other receivables is a gross amount of £341,000 (2017: £341,000) relating to deferred consideration owed to
the Group by a former investee company, against which a provision for bad debts of £341,000 has been made (2017: £Nil).

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

2018
£’000

359

(58)

301

1,136

921

2,393

Group

2017
£’000

451

(178)

273

4,170

–

603

5,062

2018
£’000

Company

2017
£’000

–

Included within net trade receivables is a gross amount of £353,071 (2017: £436,526) owed by the Group’s participating interests,
against which a provision for bad debts of £57,655 has been made (2017: £178,018).

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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

16. Trade and Other Receivables – Current continued

Movement in the allowance for doubtful debts:

Balance at 1 February

(Decrease)/increase in allowance recognised in the Statement of Comprehensive Income

Balance at 31 January

2018
£’000

178

(120)

Group

2017
£’000

–

178

2018
£’000

–

Company

2017
£’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 £300,931 (2017: £272,753), of which £185,671
(2017: £188,841) 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 £117,549 (2017: £73,308) 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

2018
£’000

115

–

152

301

Group

2017
£’000

137

273

2018
£’000

Company

2017
£’000

–

A provision of £2,121,609 was made against loans to investee companies in the current year (2017: no provisions were made).

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

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

17. Deferred Tax (Assets)/Liabilities – Non-Current

At 1 February 2016

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

At 31 January 2017

At 1 February 2017

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

Re-measurement upon change in tax rate

At 31 January 2018

Group
£’000

5,625

1,103

6,728

(6,758)

(2)

(32)

Company
£’000

–

The deferred tax asset of £32,000 (2017: £Nil) included within the Statement of Financial Position relates to the estimated tax credit
arising on the accumulated net unrealised losses within the Group’s Treasury Portfolio (Note 4).

The directors estimate that, under the current taxation rules and the current investment profile, if the Group were to dispose of all
its investments at the amount stated in the Consolidated Statement of Financial Position, no tax on capital gains (2017: £6,728,000)
would become payable by the Group at a corporation tax rate of 19% (2017: 20%).

Finance (No.2) Act 2017 introduced significant changes to the Substantial Shareholding Exemption (“SSE”) rules in Taxation of
Chargeable Gains Act 1992 Sch. 7AC which applied to share disposals on or after 1 April 2017. In general terms, the rule changes
relax the conditions for the Group to qualify for SSE on a share disposal.

Having reviewed the Group’s current investment portfolio, the directors consider that the Group should benefit from this reform to
the SSE rules and, as a result, the directors would anticipate that on a disposal of shares in the Group’s current investments, so long
as the shares have been held for 12 months, they should qualify for SSE and no corporation tax charge should arise on the disposal.

As such, and having assessed the current portfolio, the directors anticipate that there should currently be no requirement to provide
for deferred tax in respect of unrealised gains on those investments under the current requirements of the International Financial
Reporting Standards (“IFRS”). As such no deferred tax provision has been made as at 31 January 2018. The requirement for a
deferred tax provision is subject to continual assessment of each investment to test whether the SSE conditions continue to be met
based upon information that is available to the Group and that there is no change to the accounting treatment in this regard under
IFRS. It should also be noted that, until the date of the actual disposal, it will not be possible to ascertain if all the SSE conditions
are likely to have been met and, moreover, obtaining agreement of the tax position with HM Revenue & Customs may possibly not
be forthcoming until several years after the end of a period of accounts.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

18. Current Liabilities

Trade and other payables

Trade payables

Other taxation & social security costs

Accruals and deferred income

Corporation tax (Note 9)

2018
£’000

1,337

1,472

1,200

2,672

Group

2017
£’000

105

567

718

1,230

1,948

2018
£’000

Company

2017
£’000

–

The corporation tax as at 31 January 2018 of £1,200,482 relates to the estimated tax payable on the disposal of the Group’s
investments in Besso and Trireme during the year (Note 12) of £3,586,262, less £1,840,094 of quarterly instalment payments on
account already made during the year, £5,814 of foreign withholding tax deducted at source and £539,872 of estimated tax
credit arising from surplus management expenses which have exceeded the Group’s underlying taxable income for the year.

The corporation tax as at 31 January 2017 of £1,230,151 related to the estimated tax payable on the disposal of the Group’s
investments in Broucour, R&Q and Hyperion during that year of £1,367,672, less £90,000 of quarterly instalment payments on
account made during that year, £6,098 of foreign withholding tax deducted at source and £41,423 of estimated tax credit arising
from surplus management expenses which exceeded the Group’s underlying taxable income for that year.

All of the above liabilities are measured at amortised cost.

19. Called Up Share Capital

Allotted, called up and fully paid

29,226,040 Ordinary shares of 10p each (2017: 29,226,040)

2018
£’000

2,923

2017
£’000

2,923

Distributable reserves have been reduced by £53,967 as a result (2017: reduction of £8,805).

As at 31 January 2018 a total of 21,009 ordinary shares were held by the Company in Treasury (31 January 2017: 5,726 ordinary
shares were held by the Company in Treasury).

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

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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 be able to buy small parcels of shares when the share price is below
25% of its published Net Asset Value and place them into Treasury, as outlined in the Group’s Share Buy-Back Policy
announcement on 24 July 2017. Since 31 January 2018, and as announced on 6 March 2018, the Group has updated its Share
Buy-Back Policy such that it can buy back small parcels of shares and place them into Treasury when the share price is below
20% of its published Net Asset Value.

20. Reconciliation of Movements in Shareholders’ Funds

Group

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

At 1 February 2017

Comprehensive income for the year

Transfers on sale of investments (Note 14)

Dividends paid (Note 7)

Repurchase of Company shares (Note 19)

Share based payments (Note 24)

Share Incentive Plan

At 31 January 2018

Company

At 1 February 2016

Comprehensive income for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share Incentive Plan

At 31 January 2017

At 1 February 2017

Comprehensive income for the year

Dividends paid (Note 7)

Share repurchase (Note 19)

Share Incentive Plan

At 31 January 2018

Fair
value
reserve
£’000

Reverse
acquisition
reserve
£’000

Captial
redemption
reserve
£’000

Capital
contribution
reserve
£’000

Share
capital
£’000

2,923

Share
premium
account
£’000

9,370

–

2,923

9,381

–

22,524

8,870

(5,238)

–

26,191

21,222

(15,391)

–

393

–

393

–

2,923

9,398

32,022

393

Retained
earnings
£’000

35,593

924

5,238

(35)

(999)

(9)

(2)

40,783

(973)

15,391

(1,098)

(54)

(2)

Total
£’000

70,812

9,794

–

(999)

(9)

–

79,682

20,249

–

(1,098)

(54)

–

54,118

98,867

–

Share
capital
£’000

2,923

Share
premium
account
£’000

9,370

–

2,923

9,381

–

Fair
value
reserve
£’000

58,512

8,787

–

67,299

19,098

–

2,923

9,398

86,397

Captial
redemption
reserve
£’000

Capital
contribution
reserve
£’000

Retained
earnings
£’000

–

1,007

(999)

(9)

1,154

(1,098)

(54)

143

Total
£’000

70,812

9,794

(999)

(9)

79,682

20,252

(1,098)

(54)

98,867

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

21. Operating Lease Commitments

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

Earlier than one year

Between two and five years

More than five years

22. Loan and Equity Commitments

2018
Land and
buildings
£’000

236

945

963

2017
Land and
buildings
£’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 2018 £1,619,400 of
this facility had been drawn down, leaving a remaining undrawn facility of £105,600.

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 2018 CAD 350,000 (£200,619)
of this facility had been drawn down, leaving a remaining undrawn facility of CAD 500,000.

On 19 April 2017 (as varied on 23 August 2017, 19 December 2017 and 31 January 2018) the Group entered into an agreement to
provide a loan facility of £1,116,617 to Property and Liability Underwriting Managers (PTY) Limited (“PLUM”), an investee company.
As at 31 January 2018 £1,114,778 of this facility had been drawn down, leaving a remaining undrawn facility of £1,839.

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.

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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 £2,648,000 (2017: £7,327,000), 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 (2017: deposit rates of interest ranged up to 1.0% p.a.). During the period maturity periods ranged between
immediate access and 9 months (2017: maturity periods ranged between immediate access and 9 months).

Currency hedging
During the year the Group engaged in one currency hedging transaction amounting to €1,350,000 (2017: one currency hedging
transaction amounting to €1,000,000) to mitigate the exchange rate risk for certain foreign currency receivables. This was settled
before the year end. A net loss of £30,369 (2017: net gain of £94,778) relating to this hedging transaction was recognised under
Exchange Movements within the Consolidated Statement of Comprehensive Income when the transaction was settled. As at the
year end the Group had one currency hedging transaction amounting to €1,350,000 which was entered into on 30 January
2018. The fair value of this hedge is not materially different to the transaction cost.

Financial liabilities
The Company had no borrowings as at 31 January 2018 (2017: £Nil).

Fair values
The Group has adopted the amendment to IFRS 7 for financial instruments which are measured at fair value at the reporting
date. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
• Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, observed either

directly as prices or indirectly from prices; and

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

Unquoted equity instruments are measured in accordance with the IPEV Guidelines with reference to the most appropriate
information available at the time of measurement. Further information regarding the valuation of unquoted equity instruments
can be found in the section ‘Investments – equity portfolio’ under the Accounting Policies (Note 1).

The following presents the classification of the financial instruments at fair value into the valuation hierarchy at 31 January 2018:

Assets

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

Treasury portfolio investments

Level 1
£’000

–

2,756

Level 2
£’000

–

Level 3
£’000

79,122

–

79,122

Total
£’000

79,122

2,756

81,878

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

23. Financial Instruments continued

The Group’s classification of the financial instruments at fair value into the valuation hierarchy at 31 January 2017 are presented
as follows:

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

Treasury portfolio investments

Level 1
£’000

–

5,230

4,255

Level 2
£’000

–

Level 3
£’000

63,567

–

63,567

53,278

Total
£’000

63,567

5,230

68,797

57,533

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 (“JSOAs”) 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 2018

20%

Cash settled on sale of shares

85%

1,207,960

Black –Scholes

15.00

14.50

0.50

£2,576

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 JSOAs, 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).

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

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.

On 6 November 2017 all jointly-owned shares vested when all performance criteria were met.

On 7 November 2017 B.P. Marsh Management Limited (“BPMM”), a company wholly owned by Mr B.P. Marsh, the Executive Chairman
and majority shareholder of the Company, purchased the economic interests in all of the JSOP shares, being 1,421,130 ordinary
shares in the Company, for 245 pence per share from the joint beneficial ownership of the various executive directors and senior
employees of the Company. The employee participants received the balance of 90.3 pence per jointly-owned share (after taking
account of the 154.7 pence per jointly-owned share attributed to BPMM, representing the initial threshold value of 140 pence plus
the hurdle amount of 3.5% simple interest per annum). Pursuant to this acquisition, the JSOAs were terminated.

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. The number of jointly-owned shares expected to vest over the three-year
period was 1,207,960 (85%). However, as all jointly-owned shares vested during the year, the number of jointly-owned shares
expected to vest was adjusted, such that the 15% forfeiture embedded within the expected cost of the award was eliminated
and adjusted in the share-based payment charge for the year.

Share Incentive Plan
During the year to 31 January 2017 the Group established an HMRC approved Share Incentive Plan (“SIP”).

During the year a total of 13,363 ordinary shares in the Company, which were repurchased either during the current or prior year,
were transferred from Treasury to the B.P. Marsh SIP Trust (“SIP Trust”) (31 January 2017: 97,652 ordinary shares in the Company
were transferred to the SIP Trust). Following this transfer, and together with 24,572 unallocated shares already held by the SIP Trust at
the start of the year, a total of 37,935 ordinary shares in the Company were available for allocation to the participants of the SIP.

On 27 June 2017, a total of 9 eligible employees (including 4 executive directors of the Company) applied for the 2017-18 SIP
and were each granted 1,686 ordinary shares (“17-18 Free Shares”), representing approximately £3,600 at the price of issue.

Additionally, on 27 June 2017, 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 (843 ordinary
shares) and were therefore awarded 1,686 Matching Shares.

The 17-18 Free and Matching Shares are subject to a 1 year forfeiture period.

A total of 37,935 (2017: 73,080) Free, Matching and Partnership Shares were granted to the 9 eligible employees during the year,
including 16,860 (2017: 32,480) granted to 4 executive directors of the Company (Note 6).

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

24. Share Based Payment Arrangements continued

Share Incentive Plan continued
As at 31 January 2018 a total of 111,015 Free, Matching and Partnership Shares had been granted to 9 eligible employees under the
SIP, including 49,340 granted to 4 executive directors of the Company.

£69,315 of the IFRS 2 charges (2017: £66,740) 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.

25. Related Party Disclosures

The following loans owed by the investee 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

LEBC Holdings Limited

Nexus Underwriting Management Limited

Paladin Holdings Limited

Property and Liability Underwriting Managers (PTY) Limited

Trireme Insurance Group Limited

Walsingham Motor Insurance Limited

Summa Insurance Brokerage, S.L.

MB Prestige Holdings PTY Limited

Stewart Specialty Risk Underwriting Limited

2018
£

154,841

341,831

–

665,000

1,619,400

1,500,000

4,000,000

3,996,500

1,114,778

–

1,200,000

2017
£

254,837

341,831

1,807,500

615,000

350,000

1,005,000

–

2,155,113

1,200,000

€

2,606,133

2,731,434

AUD

1,058,649

1,257,740

CAD

350,000

CAD

250,000

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.

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:

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Asia Reinsurance Brokers Pte Limited

Bastion Reinsurance Brokerage (PTY) Limited

Besso Insurance Group Limited

The Broucour Group Limited

Bulwark Investment Holdings (PTY) Limited

EC3 Brokers Group Limited

The Fiducia MGA Company Limited

Hyperion Insurance Group Limited

LEBC Holdings Limited

Mark Edward Partners LLC

MB Prestige Holdings PTY Limited

Neutral Bay Investments Limited

Nexus Underwriting Management Limited

Paladin Holdings 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

XPT Group LLC

2018
£

39,504

56,448

76,350

8,078

83,359

43,134

141,200

74,433

835,693

192,156

176,991

124,987

749,021

342,164

36,509

52,220

211,892

41,122

213,283

309,100

2017
£

42,316

56,448

449,960

16,930

77,959

–

11,963

452,802

431,891

–

138,882

112,542

353,202

–

60,053

436

208,077

377,124

121,000

–

In addition, the Group made management charges of £34,000 (2017: £34,000) to the Marsh Christian Trust (“the 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 £20,300 (2017: £8,900) to Brian Marsh Enterprises Limited. 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 2017 Mr B.P. Marsh gifted 584,000 ordinary shares in the Company to the Marsh Christian Trust 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. Further share sales were
executed between 6 June 2017 and 23 October 2017 which resulted in a further 156,000 shares being sold at prices ranging
between 212.5p per share and 257.0p per share. The aforementioned sales reduced the Trust’s holding down to 998,000 ordinary
shares (3.4% of the Company) as at 31 January 2018 and at the date of this report.

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

Of the total dividend payments made during the year of £1,098,109, £682,667 was paid to the directors or parties related to them
(2017: total dividend payments of £999,335, of which £625,301 was paid to the directors or parties related to them).

B.P. Marsh • 2018 Annual Report • Notes to the consolidated financial statements

Notes to the consolidated
financial statements
continued

26. Events after the Reporting Date

On 21 February 2018 the Group agreed to extend its loan facility to Property and Liability Underwriting Managers (PTY) Limited
(“PLUM”) by £36,000 from £1,116,617 as at 31 January 2018 (Note 22) to £1,152,617, with the increased facility drawn down
immediately. On 22 March 2018 the Group then agreed to extend the facility by a further £300,000 to £1,452,617. £140,000 was
drawn down immediately and further drawdowns of £70,000 were made on 23 April 2018 and 24 May 2018 respectively. After
the aforementioned drawdowns the total loan outstanding increased from £1,114,778 as at 31 January 2018 to £1,430,778, with
a remaining undrawn facility of £21,839 at the date of this report.

On 28 February 2018 The Fiducia MGA Company Limited (“Fiducia”) drew down the remaining £105,600 of its agreed total loan
facility of £1,725,000. In addition, on 9 April 2018 the Group agreed to provide further loan funding of £470,000 to Fiducia, taking
the total amended loan facility to £2,195,000. On 16 April 2018 Fiducia drew down £220,000 from this extended facility. As at
31 January 2018 the total loan outstanding was £1,619,400 (Note 22) and following the aforementioned drawdowns stands at
£1,945,000, leaving a remaining undrawn facility of £250,000 at the date of this report. On the same date the Group also
subscribed for a further 10% equity in Fiducia for consideration of £30,000, increasing the Group’s holding from 25% as at
31st January 2018 to 35% at the date of this report.

On 19 March 2018 LEBC Holdings Limited (“LEBC”) repaid £600,000 of its loan. As at 31 January 2018 the total loan outstanding
was £1,500,000 and following the aforementioned repayment stands at £900,000 at the date of this report.

On 18 April 2018 the Group provided a further loan facility of £100,000 to Paladin Holdings Limited (“Paladin”) which was drawn
down immediately and increased both the total facility and total amount drawn down from £3,996,500 as at 31 January 2018
to £4,096,500 at the date of this report.

On 18 April 2018 the Group also acquired 100,000 ordinary shares (10% equity stake) in Paladin from a minority shareholder and
director for consideration of £400,000. These shares are being held by the Group under a call option arrangement which Paladin
can call at any time during the next three years and buy-back at a fixed option price of £4.02 per share (£402,000). This acquisition
increased the Group’s equity holding in Paladin from 35% as at 31 January 2018 to 45% at the date of this report.

On 26 April 2018 Stewart Specialty Risk Underwriting Limited (“SSRU”) drew down a further CAD 100,000 (£56,812) from its total agreed
loan facility of CAD 850,000. As at 31 January 2018 the total loan outstanding was CAD 350,000 (Note 22) and following the
aforementioned drawdown stands at CAD 450,000, leaving a remaining undrawn facility of CAD 400,000 at the date of this report.

On 14 May 2018 the Group provided a £300,000 loan facility to Walsingham Holdings Limited (“Walsingham Holdings”) which
was drawn down immediately. This loan funding was provided to allow Walsingham Holdings, a previously dormant company,
to acquire an 11.7% equity holding in Walsingham Motor Insurance Limited (“Walsingham”) from an exiting shareholder. The loan
from the Group is secured on the acquired Walsingham shares via a debenture containing a cross guarantee with Walsingham.
On the same date the Group also subscribed, alongside other Walsingham shareholders, for 299 (of a total 1,498) new ordinary
shares in Walsingham Holdings for consideration of £299. Following this share reorganisation, the Group’s equity holding in
Walsingham Holdings reduced from 50% as at 31 January 2018 to 20% at the date of this report, however the Group retained its
40.5% holding in Walsingham.

27. Ultimate Controlling Party

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

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 48 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.

We are farmers,
not hunters