Interim Results, 19 Oct 2021 07:00

19 October 2021, 07:00

Source - LSE Regulatory

RNS Number : 4508P

B.P. Marsh & Partners PLC

19 October 2021

B.P. Marsh & Partners Plc

("B.P. Marsh", "the Company" or "the Group")

Interim Results

B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, announces its unaudited Group Interim Results for the six months to 31 July 2021 (the "Period").

Highlights:

· Net Asset Value at 31 July 2021 £155.0m (31 July 2020: £142.6m; 31 January 2021: £149.9m)

· Net Asset Value per share 430.4p* (31 July 2020 396.2p; 31 January 2021: 416.4p)

· Consolidated profit before tax of £6.2m (31 July 2020: £6.5m; 31 January 2021: £13.7m)

· Total Shareholder return of 4.0% for the Period including the dividend paid in July 2021 (9.3% for the 12 months since 31 July 2020, inclusive of the July 2021 dividend paid)

· Group cash availability of £3.1m (including undrawn loan facility of £2.0m) as at 31 July 2021

· Current cash £3.5m (including £2.6m loan facility)

· Cash availability (including loan facility) will increase to £5.5m following a £2.0m loan repayment from an investee company

*The diluted Net Asset Value per share is 424.6p including shares held within an Employee Benefit Trust which met certain performance criteria during the Period

Commenting on the results, Brian Marsh OBE, Chairman, said:

"This is a good set of results for the Company, and the continuation of a long trend of strong portfolio growth.

"We continue to believe in our strategy of investing in people with ambition, and a track record of delivering within their sectors, and this again has been borne out by these results. The Group has also demonstrated its flexibility with our most recent exit from MB Prestige Holdings PTY Limited, highlighting the agile nature of the business and its ability to extract value from its investments.

"Looking forward, we continue to seek investment opportunities into new businesses, to diversify our portfolio further, and increase investor returns."

Analyst briefing:

An analyst presentation, hosted by the Company, will be held on Tuesday 19^th October 2021 at 10:00 a.m. BST.

Please contact Tim Pearson at Tavistock Communications on 07983118502 or tim.pearson@tavistock.co.uk should any analyst wish to attend.

Note

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

For further information, please visit www.bpmarsh.co.uk or contact:

B.P. Marsh & Partners Plc

Brian Marsh OBE / Alice Foulk

+44 (0)20 7233 3112

Panmure Gordon (UK) Limited

Atholl Tweedie / Charles Leigh Pemberton / Ailsa MacMaster

+44 (0)20 78862500

Tavistock

Simon Hudson / Tim Pearson

bpmarsh@tavistock.co.uk

+44 (0)20 7920 3150

Notes to Editors:

B.P. Marsh's current portfolio contains seventeen companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk.

Since formation over 30 years ago, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Several of the Directors have worked with each other in previous roles, and all have worked with each other for over ten years.

Statement by the Chairman and Managing Director

We are pleased to present the unaudited Consolidated Financial Statements of B.P. Marsh & Partners Plc for the six-month period to 31 July 2021 (the "Period").

Interim Results

Over the last eighteen months, the seventeen companies in which we participate have, in their various Countries, been forced to work on a daily basis through the problems thrown up by the Global Coronavirus Pandemic.

This they have done with a determination and commitment which we applaud and which we, in London, have endeavoured to do likewise.

As a result, during the six months period to 31 July 2021, as is set out more fully below, our Net Asset Value increased overall by 3.4%. In the previous year and within that same period, the six months to 31 July 2020, that increase was 4.2%.

The Group is reassured by the promising signs of economic recovery that the United Kingdom has shown since the start of the Covid-19 vaccine rollout, but is aware that the potential hardships are not over.

Throughout the past year and a half, as announced previously, our team have been in regular contact with our Portfolio of Investments to assist when possible and help them navigate the difficulties posed by the situation facing us all now.

As an organisation we have recently enjoyed the ability to begin meeting face to face again, both internally and with our Portfolio partners and external parties. As a 'people' business, this is a significant aspect of our modus operandi and whilst we have proved we can function well remotely, our experience tells us that transformative ideas and deals often originate from meeting others in person.

As at the end of the Period, the Company had available cash of £3.1m including the available Loan Facility. Currently the total available cash including the Loan Facility is £3.5m for new and follow-on investments.

In July 2021, the Company paid a dividend of 2.44p per share (prior year 2.22p per share) to all shareholders on the Register as at 25 June 2021. This constituted the total of our £0.88m trading profit for the year. The Board believes this distribution struck the right balance between rewarding its shareholders whilst also retaining capital within the business to continue portfolio growth. The Group has always aimed to make distributions upon cash realisations, so we were pleased to be able to pay the modest dividend during the year without one.

Brian Marsh OBE	Alice Foulk
Chairman	Managing Director
18 October 2021	18 October 2021

Chief Investment Officer's Portfolio Update and Outlook

The Group's portfolio of investments has continued to show resilience during our interim period to 31 July 2021, notwithstanding the ongoing challenges posed by the Covid-19 Pandemic.

Over the six month period, the valuation of the Group's equity portfolio has increased by 4.1%, with NAV increasing by 3.4%.

This growth has emanated from c.70% of the Portfolio, notably from Nexus Underwriting Management Limited, XPT Group LLC, and Walsingham Motor Insurance Limited.

The previously announced acquisition of MB Prestige Holdings Pty Limited by ATC Insurance Solutions Pty Limited has also produced an uplift to NAV over the Period. This disposal once more demonstrates that our long term, minority investment approach produces unique opportunities.

As the world's economy recovers, the Group's underlying portfolio continues to see further opportunities for growth and greater emphasis is now being placed on assisting our investee companies in taking advantage of these new prospects.

The Group itself has a healthy pipeline of new business opportunities having received 31 in the Period (for the six months to 31 July 2020 the Group received 22 proposals). As we have stated previously, Covid-19 had somewhat curtailed our appetite for new investments, with our focus being on protecting the current portfolio. However, as we now appear to be returning to more normal operations across the industry, the Group is in discussions with a number of interested parties regarding new investments.

Continued M&A activity at the larger end of the insurance market tends to lend itself to creation of opportunities at the smaller end of the market. These opportunities fit in the Company's investment model, and we therefore remain prepared to take advantage of this phase in the insurance cycle.

Turning to the insurance market itself, for insurers rate adequacy remains a key focus, with the underlying profitability of Lloyd's and Company markets being a central consideration. The Group's portfolio itself does not involve direct balance sheet exposure, with our Managing General Agency ("MGA") investments effectively borrowing capacity from insurers. Therefore, they are particularly mindful of the importance of writing business that is profitable for their insurance partners.

The Group's insurance intermediary investments continue to see rate increases across the sectors in which they operate. Whilst there are signs that rates in short tail lines of business are levelling out, rate increases continue to be strong where lines of business are exposed to long tail risk.

Portfolio Update

Follow-on Investments and Funding

Investee Company Disposal - MB Prestige Holdings PTY Limited ("MB") - Post Period-end

As previously reported, ATC Insurance Solutions PTY Limited ("ATC") acquired 100% of MB for a consideration of AU$17.0m (c.£9.0m) on 31 August 2021, with consideration being paid to all shareholders in a combination of cash or equity in ATC.

B.P. Marsh sold its 40% equity stake in MB for AU$6.8m (c.£3.6m), for which the Group received newly issued shares in ATC.

The Group previously had a 20% shareholding in ATC, which increased to 25.5% following ATC's acquisition of MB.

This acquisition valued ATC at AU$76.0m (c.£40.0m), resulting in a post transaction valuation for the combined business of AU$93.0m (c.£49.0m). This has resulted in an AU$5.8m (c.£3.0m) increase to the Group's aggregate valuation of ATC and MB, as at 31 July 2021.

The Group believes that this transaction demonstrates our unique flexible approach to investing and realising investments within the financial services sector, in terms of both size and structure.

Refinancing Exercise & Further Investment - Nexus Underwriting Management Limited ("Nexus") - Post Period-end

+ 8.5 pence NAV per share uplift in Period

On 8 October 2021, Nexus secured a new £70.0m banking facility from Barings LLC ("Barings").

This facility has been utilised in two ways, with £50.0m being used to refinance existing debt and meet upcoming deferred consideration payments, with the remainder being available for new acquisitions.

As part of securing this new facility with Barings, Nexus repaid in full the £40.0m loan facility with HPS Investment Partners LLC and also the £4.0m loan facility with the Group. The loan to the Group was repaid over 2 years earlier than originally expected.

Alongside the fundraise, B.P. Marsh acquired a further 100,000 shares in Nexus for £4m, from Ian Whistondale, a founding non-management shareholder. This was an opportunity to allow a founding shareholder to partially realise the value of their equity in Nexus, without the need to exit in full, whilst enabling B.P. Marsh to acquire a further 2.49% shareholding in Nexus.

The Group currently has a shareholding in Nexus of 19.18%.

Since B.P. Marsh first invested in Nexus in August 2014, it has grown from a Gross Written Premium ("GWP") of £55.0m to a projected figure of over £400m in 2021. Over the same period, Nexus has grown its EBITDA by over 7x.

Date of initial investment: August 2014

31 July 2021 valuation: £43,981,000

Equity stake: 17.42% (subsequently 19.18% post Period-end)

NAV breakdown by portfolio company

The composition of B.P. Marsh's underlying portfolio company exposure can be found here:

http://www.rns-pdf.londonstockexchange.com/rns/4508P_1-2021-10-18.pdf

The Group's current investments are in the Insurance Intermediary sector, with the exception of the independent financial adviser LEBC.

Our insurance investments are budgeting to produce in aggregate £1.4bn (c. US$1.9bn) of insurance premium during 2021, and a breakdown between brokers and MGAs can be found here:-

http://www.rns-pdf.londonstockexchange.com/rns/4508P_2-2021-10-18.pdf

Insurance Brokers

Investments:

http://www.rns-pdf.londonstockexchange.com/rns/4508P_3-2021-10-18.pdf

The Group's Broking investments are budgeting to place over £659m of GWP, producing over £41m of commission income in 2021, accessing specialty markets around the world.

Underwriting Agencies / Managing General Agents ("MGAs")

Investments:

http://www.rns-pdf.londonstockexchange.com/rns/4508P_4-2021-10-18.pdf

The Group's MGAs are budgeting to place over £749m of GWP, producing over £78.0m of commission income in 2021, across over 30 product areas, on behalf of more than 50 insurers.

IFA Investment

Investment:

http://www.rns-pdf.londonstockexchange.com/rns/4508P_5-2021-10-18.pdf

LEBC Holdings Limited ("LEBC")

+ 0 pence NAV per share uplift in Period

B.P. Marsh has been invested in LEBC, the Independent Financial Advisory company providing expert financial advice to individuals, since April 2007. LEBC remains the Group's only non-insurance related investment.

Whilst LEBC has been through a period of change over the past 24 months, as has previously been announced to the market, underlying performance is on track to return to acceptable levels. LEBC have produced an adjusted EBITDA of £2.8m for the 11-month period to 31 August 2021.

LEBC continues to develop its platform for accelerated growth through a number of avenues, being the increased penetration of its existing client base, the development of technology and the recruitment of new advisers.

Date of initial investment: April 2007

31 July 2021 valuation: £25,000,000

Equity stake: 59.34%

Portfolio Company Highlights:

Ag Guard PTY Limited ("Ag Guard")

+ 4.7 pence NAV per share uplift in Period

Ag Guard recently entered into a new strategic partnership with Elders Insurance (Underwriting Agency) Pty Limited ("Elders Insurance"), which in turn is owned by QBE Insurance Group Limited ("QBE"), one of Australia's largest general insurers.

Elders Insurance is one of the largest providers of goods and services to the agricultural industry in Australia, ranging from wool, grain and livestock trading to financing, banking, real estate services, and insurance.

As part of this arrangement, Ag Guard provide a specialised crop underwriting system and claims management service to the Elders Insurance branch network across Australia with insurance capacity provided by QBE Insurance (Australia).

Broadacre is the first product on which Ag Guard and Elders Insurance have collaborated, which will be followed shortly by cotton. With seasonal conditions being optimal and commodity prices continuing to rally in Australia, Ag Guard is likely to outperform its ambitious targets for FY22. Ag Guard and Elders Insurance will continue to work together to develop this relationship, with there being significant opportunity to develop new innovative products together to assist rural producers across Australia.

This new partnership can be seen as transformational for Ag Guard, setting in motion the beginning of a successful relationship with a renowned carrier and a leading Australian agribusiness company.

Date of initial investment: July 2019

31 July 2021 valuation: £3,196,000

Equity stake: 41.00%

Walsingham Motor Insurance Limited ("Walsingham")

+ 4.1 pence NAV per share uplift in Period

Walsingham is a London-based MGA which specialises in UK Courier and Taxi fleet motor insurance. Since the Group's investment in WMIL in 2015, the business has grown GWP from start-up to c.£26m. Walsingham have subsequently repaid £1.2m in loans provided by the Group as working capital to develop the business, and are on course to achieve EBITDA of c.£1.0m in their current financial year. The increase in the valuation of Walsingham at 31 July 2021 reflects the significant growth the business has achieved to date and the repayment of all loans.

Date of initial investment: December 2013

31 July 2021 valuation: £3,745,000

Equity stake: 40.5%

XPT Group LLC ("XPT")

+ 2.8 pence NAV per share uplift in Period

In October 2021 XPT completed its ninth acquisition when it bought S&H Underwriters, Inc ("S&H"), an MGA and surplus lines broker based in Barre, Vermont.

S&H works with retail clients in Personal and Commercial Excess, Surplus and Speciality lines throughout New England and the Mid-Atlantic States. S&H are budgeting to place GWP approaching $15.0m in 2021.

This acquisition provides XPT with several benefits. The acquisition has expanded XPT's geographic footprint to include New England. It has added expertise in product lines that intersect with XPT's current business and increased access to key markets, especially in the Lloyd's of London market.

With S&H having joined XPT, the business now has the opportunity to expand its product offerings to existing clients, including in Bars and Taverns and General Binding Authority business.

The acquisition is a continuation of XPT's strategy of acquiring specialist wholesale brokers that place hard to insure risks through wholesale distribution channels.

Following the acquisition of S&H, B.P. Marsh have a revised fully diluted shareholding (including warrants) of 28.6% in XPT.

Additionally, XPT has secured an additional $30.25m in financing from Madison Capital Funding LLC ("Madison"), over and above XPT's existing banking facilities with Madison of $39.795m.

XPT drew down $15.25m from this facility upon completion, with the remaining available via a draw down facility.

The initial drawdown was used to finance the acquisition of S&H, alongside the payment of previously agreed successful earn out arrangements from acquired businesses.

Date of initial investment: June 2017

31 July 2021 valuation: £13,841,000

Equity stake: 29.80% (subsequently 28.6% post Period-end)

Stewart Specialty Risk Underwriting Ltd ("SSRU")

+ 0 pence NAV per share uplift in Period

In July 2021, SSRU repaid in full the original loan facility provided by B.P. Marsh at investment, amounting to £0.3m (CA$0.5m). The repayment of this loan comes 18 months earlier than originally envisaged.

SSRU remains on track to achieve its current year budget for GWP of £31.0m (CA$55m) and EBITDA of £2.6m (CA$4.6m).

Since investment SSRU has grown exponentially, and this is expected to continue into 2022.

Date of initial investment: January 2017

31 July 2021 valuation: £5,671,000

Equity stake: 30%

Lilley Plummer Risks Limited ("Lilley Plummer")

+ 0 pence NAV per share uplift in Period

During the Period, Lilley Plummer established a company in Cyprus named LPR Insurance Brokers Limited, which is an approved Lloyd's Broker. This entity has allowed Lilley Plummer to expand its presence in providing solutions to EU clients operating in the European shipping market.

Additionally, in August 2021, Lilley Plummer became FCA regulated, having previously traded as an Appointed Representative since formation.

Date of initial investment: October 2019

31 July 2021 valuation: £2,258,000

Equity stake: 30%

CBC UK Limited ("CBC")

-2.2 pence NAV per share decrease in Period

During the Period, CBC UK Limited ("CBC") sold its Jersey Operation, CBC Insurance (Jersey) Limited ("CBCJ"), to PIB Group Limited. This sale of CBCJ has enabled CBC to focus on its specialty London Markets. It also provided liquidity to be able to buy back 1.7% of its shares from an existing shareholder as well as trigger a Call Option with the Group to buy back 0.3% at a fixed price of £0.3m.

Post Period-end, CBC secured £3.0m in new loan financing from Coutts & Co. Of this, £2.0m will be used to repay part of the £5.1m loan funding from the Group, with the remaining £1.0m being used to fund further growth. In addition, CBC has agreed to acquire a new experienced financial lines team that are expected to add significant revenue and profit going forwards.

Date of initial investment: February 2017

31 July 2021 valuation: £7,747,000

Equity stake: 47.06%

Daniel Topping

Chief Investment Officer

18 October 2021

Group Finance Director Update

The Group's equity investment portfolio has continued to increase in value, rising by 4.1% to £136.2m (31 Jan 2021 £131.0m). Overall, the Net Asset Value of the Group increased by £5.1m (3.4%) to £155.0m despite the ongoing disruption from the Covid-19 pandemic. Including the dividend paid in July 2021 of £0.9m, this represented an overall return of 4.0% for the Period.

Over the year to 31 July 2021 the Net Asset Value has increased by £12.3m or 8.7%. Including the £0.9m dividend paid in July 2021 this represents an overall return of 9.3%.

The Net Asset Value of £155.0m at 31 July 2021 represents a total increase in Net Asset Value of £125.8m since the Group was originally formed in 1990 having adjusted for the original capital investment of £2.5m, the £10.1m net proceeds raised on AIM in 2006 and the £16.6m net proceeds raised through the Share Placing and Open Offer in July 2018. The Directors note that the Group has delivered an annual compound growth rate of 8.1% in Group Net Asset Value after running costs, realisations, losses, distributions and corporation tax since flotation and 11.5% since 1990.

The Group's strategy is to cover expenses from the portfolio yield. On an underlying basis, excluding investment activity (unrealised gains on equity revaluation and provision against loans receivable from investee companies), this was achieved with a pre-tax profit of £0.9m for the Period (H1 2020 £0.6m). The c.50% increase in underlying profit relates to the earlier receipt of dividend income from certain investee companies in H1 2021, whereas these dividends were received in H2 in 2020. Overall, on a like-for-like basis, the underlying profit for this Period was c.10% higher.

Liquidity

As at the Period-end, the Group had available cash of £3.1m comprised of a free cash balance of £1.1m together with access to a further £2.0m by way of a Loan Facility with Brian Marsh Enterprises Limited.

Since the Period-end, the Group repaid £0.6m of the Loan Facility drawn down, has lent £0.2m in loans to finance working capital for one of its investee companies and received £0.6m in net income. The current free cash balance is £0.9m, with an additional £2.6m of available Loan Facility, and therefore total liquidity available for new and follow-on investments is £3.5m. In addition, pursuant to the new fundraising at CBC, the Group is due to receive £2.0m in loan repayment which will increase total liquidity to £5.5m.

Diluted Net Asset Value per share

The Net Asset Value per share at 31 July 2021 is 430.4p (31 July 2020: 396.2p, 31 January 2021: 416.4p). As part of a long-term share incentive plan for certain directors and employees of the Group, in June 2018 1,461,302 shares were issued to an Employee Benefit Trust at 281 pence per share.

On 12 June 2021 (the "vesting date") certain performance criteria were met for 1,206,888 of 1,461,302 shares held under joint share ownership arrangements within the Employee Benefit Trust, after which the members of the scheme became joint beneficial owners of the shares and therefore became entitled to any gain on sale of the shares in excess of 312.6 pence per share. There were 254,414 shares where the performance criteria were not met on the vesting date that remain unallocated within the Employee Benefit Trust. Whilst these shares remain within the Employee Benefit Trust, they do not have voting or dividend rights. However, if the shares are sold in the future in excess of 281 pence per share, the Group would be entitled to receive £4,106,259 and these shares would become entitled to voting and dividend rights and therefore would become dilutive. Overall this would therefore dilute the Net Asset Value per share as at 31 July 2021 to 424.6p.

Share Buy-Backs

As has been stated previously, the Group has an overarching strategy for undertaking select market buy-backs of its shares at times when the discount to Net Asset Value, based upon the most recently announced NAV, is greater than 15%.

Notwithstanding that the discount to NAV at which the Group's shares are currently trading is greater than 15%, the Group remains restricted in its ability to buy back shares since, given that Brian Marsh, together with persons acting in concert with Brian Marsh for the purposes of the City Code on Takeovers and Mergers (the "City Code"), has an interest in approximately [41.85%] of the Group's voting rights, any such purchase of shares would result in an obligation for Brian Marsh to make a general offer for the Group in accordance with Rule 9 of the City Code.

Jonathan Newman

Group Finance Director

18 October 2021

Portfolio Valuation

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

Ag Guard PTY Limited

(www.agguard.com.au)

In July 2019 the Group invested in Agri Services Company PTY Limited, which in turn acquired 100% of the equity in Ag Guard PTY Limited ("Ag Guard"). Ag Guard is a Managing General Agency, which provides insurance to the Agricultural Sector, based in Sydney, Australia.

Date of investment: July 2019

Equity stake: 41%

31 July 2021 valuation: £3,196,000

Asia Reinsurance Brokers Pte Limited

(www.arbrokers.asia)

In April 2016 the Group invested in Asia Reinsurance Brokers Pte Limited ("ARB"), the Singapore headquartered independent specialist reinsurance and insurance risk solutions provider. ARB was established in 2008, following a management buy-out of the business from AJ Gallagher, led by the CEO, Richard Austen.

Date of investment: April 2016

Equity stake: 25%

31 July 2021 valuation: £808,000

ATC Insurance Solutions PTY Limited

(www.atcis.com.au)

In July 2018, the Group invested in ATC, an Australian-based MGA and Lloyd's Coverholder, specialising in Accident & Health, Construction & Engineering, Trade Pack and Sports insurance.

Date of investment: July 2018

Equity stake: 20%

31 July 2021 valuation: £8,036,000

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: February 2017

Equity stake: 47.1%

31 July 2021 valuation: £7,747,000

Criterion Underwriting Pte Limited

The Group helped establish Criterion alongside its Partners in Asiare Holdings Pte Limited and Asia Reinsurance Brokers Pte Limited in July 2018. Criterion is a start-up Singapore-based Managing General Agency providing specialist insurance products to a variety of clients in the Cyber, Financial Lines and Marine sectors in Far East Asia.

Date of investment: July 2018

Equity stake: 29.4%

31 July 2021 valuation: £0

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: December 2017

Equity Stake: 35%

31 July 2021 valuation: £3,072,000

The Fiducia MGA Company Limited

(www.fiduciamga.co.uk)

Fiducia, founded in November 2016, is a 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: November 2016

Equity stake: 35.2%

31 July 2021 valuation: £3,406,000

LEBC Holdings Limited

(www.lebc-group.com)

In April 2007 the Group invested in LEBC, an Independent Financial Advisory company providing services to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas.

Date of investment: April 2007

Equity stake: 59.3%

31 July 2021 valuation: £25,000,000

Lilley Plummer Risks Limited

In October 2019, the Group invested into the newly formed specialist marine Lloyd's broker, Lilley Plummer Risks Limited ("Lilley Plummer"). Established by Stuart Lilley and Dan Plummer in 2019, Lilley Plummer provides products across the marine Insurance market.

Date of investment: October 2019

Equity stake: 30%

31 July 2021 valuation: £2,258,000

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: October 2017

Equity stake: 30%

31 July 2021 valuation: £0

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 Ltd, a Managing General Agent, headquartered in Sydney, Australia. MB Group is recognised as a market leader in respect of prestige motor vehicle insurance in all mainland states of Australia.

Date of investment: December 2013

Equity stake: 40%

31 July 2021 valuation: £3,595,000

Nexus Underwriting Management Limited

(www.nexusunderwriting.com)

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

Date of investment: August 2014

Equity stake: 17.4%

31 July 2021 valuation: £43,981,000

SAGE Program Underwriters, Inc

(www.sageuw.com)

Based in Bend, Oregon, Sage provides specialist insurance products to niche industries, initially in the inland delivery and field sport sectors, established in 2019 by CEO Chuck Holdren. Mr. Holdren has three decades of experience in the industry and has prior experience of establishing and managing two national underwriting agencies from start-up to successful trade sale.

Date of Investment: June 2020

Equity Stake: 30%

31 July 2021 Valuation: £1,031,000

Stewart Specialty Risk Underwriting Ltd

(www.ssru.ca)

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

Date of investment: January 2017

Equity stake: 30%

31 July 2021 valuation: £5,671,000

Sterling Insurance PTY Limited

(www.sterlinginsurance.com.au)

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

Date of investment: June 2013

Equity stake: 19.7%

31 July 2021 valuation: £2,675,000

Summa Insurance Brokerage, S. L.

(www.grupo-summa.com)

In January 2005 the Group provided finance to a Madrid-based Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Spain. Through acquisition Summa is able to achieve synergistic savings, economies of scale and greater collective bargaining thereby increasing overall value.

Date of investment: January 2005

Equity stake: 77.3%

31 July 2021 valuation: £7,984,000

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: December 2013

Equity stake: 40.5%

31 July 2021 valuation: £3,745,000

Walsingham Holdings Limited

(www.walsinghamunderwriting.com)

In May 2018, the Group acquired a 20% shareholding in Walsingham Holdings Limited, a previously dormant company, which in turn purchased an 11.7% equity holding in Walsingham Motor Insurance Limited from an exiting shareholder.

Date of investment: May 2018

Equity stake: 20%

31 July 2021 valuation: £159,000

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: June 2017

Equity stake: 29.8%

31 July 2021 valuation: £13,841,000

Interim Consolidated Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31ST JULY 2021

	Notes	Unaudited		Unaudited		Audited
		6 months to		6 months to		Year to
		31^st July 2021		31^st July 2020		31^st January 2021
		£'000	£'000	£'000	£'000	£'000	£'000
GAINS ON INVESTMENT
Realised gains on disposal of equity investments (net of costs)		1		-		-
Release of provision made against equity investments and loans		-		-		37
Unrealised gains on equity investment revaluation	4	5,314		5,922		12,877
			5,315		5,922		12,914
INCOME
Dividends		1,562		835		1,999
Income from loans and receivables		575		657		1,271
Fees receivable		521		642		1,234
			2,658		2,134		4,504
OPERATING INCOME			7,973		8,056		17,418

Operating expenses			(1,633)		(1,604)		(3,595)

OPERATING PROFIT			6,340		6,452		13,823

Financial income		-		1		3
Financial expenses		(40)		(36)		(67)
Exchange movements		(64)		80		(24)
			(104)		45		(88)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION			6,236		6,497		13,735

Income taxes			(344)		-		(14)

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS	5		£5,892		£6,497		£13,721


TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	5		£5,892		£6,497		£13,721

Earnings per share - basic (pence)	3		16.4p		18.1p		38.2p
Earnings per share - diluted (pence)	3		16.2p		18.1p		38.2p

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31ST JULY 2021

(Company Number: 05674962)

		Unaudited		Unaudited		Audited
	Notes	31^st July 2021		31^st July 2020		31^st January 2021
		£'000	£'000	£'000	£'000	£'000	£'000
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment		107		137		123
Right-of-use asset		919		1,084		1,001
Investments - equity portfolio	4	136,205		122,051		130,951
Loans and receivables		15,584		16,483		15,833
			152,815		139,755		147,908
CURRENT ASSETS
Trade and other receivables		3,938		3,370		4,398
Cash and cash equivalents		1,057		1,171		709
			4,995		4,541		5,107
LIABILITIES

NON-CURRENT LIABILITIES
Lease liabilities		(856)		(1,019)		(939)
Deferred tax liabilities	7	(338)		-		-
			(1,194)		(1,019)		(939)
CURRENT LIABILITIES
Trade and other payables		(473)		(486)		(1,010)
Lease liabilities		(163)		(157)		(159)
Loans and other payables		(1,000)		-		(1,000)
			(1,636)		(643)		(2,169)

NET ASSETS			£154,980		£142,634		£149,907

CAPITAL AND RESERVES - EQUITY

Called up share capital			3,747		3,747		3,747
Share premium account			29,346		29,358		29,349
Fair value reserve			75,549		63,618		70,573
Reverse acquisition reserve			393		393		393
Capital redemption reserve			7		7		7
Capital contribution reserve			71		53		64
Retained earnings			45,867		45,458		45,774

SHAREHOLDERS' FUNDS - EQUITY	5		£154,980		£142,634		£149,907

Net Asset Value per share - undiluted (pence)	3		430.4p		396.2p		416.4p
Net Asset Value per share - diluted (pence)	3		424.6p		396.2p		416.4p

The Interim Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 18th October 2021

and signed on its behalf by:

J.S. Newman & D.J. Topping

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31ST JULY 2021

	Unaudited	Unaudited	Audited
	31^st July 2021	31^st July 2020	31^st January 2021
	£'000	£'000	£'000
Cash from / (used by) operating activities
Income from loans to investees	575	657	1,271
Dividends	1,562	835	1,999
Fees received	521	642	1,234
Operating expenses	(1,633)	(1,604)	(3,595)
Net corporation tax (paid) / repaid	(6)	238	234
Purchase of equity investments (Note 4)	(200)	(463)	(2,408)
Net proceeds from sale of equity investments	261	-	-
Net loan repayments from investee companies	418	1,877	1,796
Adjustment for non-cash share incentive plan	59	65	114
Exchange movement	(2)	(6)	(81)
Decrease / (increase) in receivables	229	(655)	(954)
(Decrease) / increase in payables	(536)	(390)	134
Depreciation and amortisation	97	105	205
Net cash from / (used by) operating activities	1,345	1,301	(51)

Net cash used by investing activities
Purchase of property, plant and equipment	-	(2)	(5)
Net cash used by investing activities	-	(2)	(5)

Net cash used by financing activities
Advances of borrowings	-	-	1,000
Financial income	-	1	3
Financial expenses	(40)	(36)	(67)
Net decrease in lease liabilities	(79)	(82)	(160)
Dividends paid	(878)	(798)	(798)
Net cash used by financing activities	(997)	(915)	(22)

Change in cash and cash equivalents	348	384	(78)
Cash and cash equivalents at beginning of the period	709	787	787

Cash and cash equivalents at end of period	£1,057	£1,171	£709

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.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31ST JULY 2021

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	31^st July 2021	31^st July 2020	31^st January 2021
	£'000	£'000	£'000

Opening total equity	149,907	136,870	136,870
Comprehensive income for the period	5,892	6,497	13,721
Dividends paid	(878)	(798)	(798)
Share incentive plan	59	65	114
Total equity	£154,980	£142,634	£149,907

Refer to Note 5 for detailed analysis of the changes in the components of equity.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31ST JULY 2021

1. ACCOUNTING POLICIES

Basis of preparation of financial statements

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use by the United Kingdom ("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.

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, 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, the 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, Marsh Insurance Holdings Limited and B.P. Marsh (North America) Limited continue to be consolidated into its Group financial statements for the period.

The most significant estimates relate to the fair valuation of the equity investment portfolio as detailed in Note 4 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.

These interim consolidated financial statements were approved by the Board on 18th October 2021. They have not been audited nor reviewed by the Group's Auditors, as is the case with the comparatives to 31st July 2020, and do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial statements have been prepared using the accounting policies and presentation that were applied in the audited financial statements for the year ended 31st January 2021. Those accounts, upon which the Group's Auditor issued an unqualified opinion, have been filed with the Registrar of Companies and do not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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

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.

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.

Employee services settled in equity instruments

The Group has entered into a joint share ownership plan ("JSOP") with certain employees and directors. A fair value for the cash settled share awards was measured at the date of grant. The Group measured the fair value using the Expected Return Methodology which was considered to be the most appropriate valuation technique to value the awards.

The fair value of the award has been recognised as an expense over the vesting period on a straight-line basis. The level of vesting was assumed to be 100% and has been reviewed annually and the charge has been adjusted to reflect actual or estimated levels of vesting with the corresponding entry to capital contribution.

On 12th June 2021 (the "vesting date") the performance criteria was met, after which the members of the scheme became joint beneficial owners of the shares and therefore became entitled to any gain on sale of the shares in excess of 312.6 pence per share. Whilst these shares remain within the Employee Benefit Trust, they do not have voting or dividend rights. However, if the shares are sold from the Employee Benefit Trust in the future in excess of 281 pence per share, the Group would be entitled to receive £4,106,259 in total. These shares would then, post-sale, have voting and dividend rights attached, such that they would become fully dilutive for the Group. Whilst 254,414 shares out of 1,461,302 held within the Employee Benefit Trust have been forfeited by departing employees, the trust remains the owner of these shares.

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. In addition, new shares were issued and allocated to the SIP Trust during the period.

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 ("IPEVCV Guidelines"). The following valuation methodologies have been used in reaching 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 period. In the Consolidated Statement of Financial Position the unrealised gains and losses arising from changes in fair value are shown within a "fair value reserve" separate from retained earnings. Transaction costs on acquisition or disposal of equity portfolio investments are expensed in the Consolidated Statement of Comprehensive Income.

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

Income from equity portfolio investments

Income from equity portfolio investments comprises:

a) gross interest from loans, which is taken to the Consolidated Statement of Comprehensive Income on an accruals basis;

b) dividends from equity investments are recognised in the Consolidated Statement of Comprehensive Income when the shareholders rights to receive payment have been established; and

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

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

Right-of-use asset

IFRS 16 requires lessees to recognise a lease liability, representing the present value of the obligation to make lease payments, and a related right of use ("ROU") asset. The lease liability is calculated based on expected future lease payments, discounted using the relevant incremental borrowing rate. An incremental borrowing rate of 5% was used to discount the future lease payments when measuring the lease liability on adoption of IFRS 16.

The ROU asset is recognised at cost less accumulated depreciation and impairment losses, with depreciation charged on a straight-line basis over the life of the lease. In determining the value of the ROU asset and lease liabilities, the Group considers whether any leases contain lease extensions or termination options that the Group is reasonably certain to exercise.

Foreign currencies

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

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 credit or expense represents the sum of the tax currently recoverable or payable and any deferred tax. The tax currently recoverable or 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 receivable or liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the date of the Consolidated Statement of Financial Position.

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

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

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

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

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

2. SEGMENTAL REPORTING

The Group operates in one business segment; the 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.

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 unrealised gains and losses on the Group's current and non-current investments).

Each reportable segment derives its revenues from three main sources from equity portfolio investments as described in further detail in Note 1 under 'Income from equity portfolio investments' and also from treasury portfolio investments as described in Note 1 under 'Income from treasury portfolio investments'.

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

	Geographic segment 1: UK		Geographic segment 2: Non-UK		Group

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2021	2020	2021	2020	2021	2020

	£'000	£'000	£'000	£'000	£'000	£'000
Operating income	2,210	1,746	5,763	6,310	7,973	8,056
Operating expenses	(1,069)	(892)	(564)	(712)	(1,633)	(1,604)
Segment operating profit	1,141	854	5,199	5,598	6,340	6,452

Financial income	-	1	-	-	-	1
Financial expenses	(26)	(20)	(14)	(16)	(40)	(36)
Exchange movements	(27)	1	(37)	79	(64)	80
Profit before tax	1,088	836	5,148	5,661	6,236	6,497
Income taxes	-	-	(344)	-	(344)	-
Profit for the period	£1,088	£836	£4,804	£5,661	£5,892	£6,497

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 and unrealised income generated by the Group during the period:

	Total net operating income attributable to the investee company (£'000)		% of total realised and unrealised operating income		Reportable geographic segment

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2021	2020	2021	2020	2021	2020
Investee Company
Nexus Underwriting Management Limited¹	3,719	-	47	-	1	-
Agri Services Company PTY Limited¹	1,777	-	22	-	2	-
Walsingham Motor Insurance Limited¹	1,541	-	19	-	1	-
ATC Insurance Solutions PTY Limited	1,302	1,179	16	15	2	2
XPT Group LLC	1,301	2,105	16	26	2	2
Stewart Specialty Risk Underwriting Ltd¹	-	1,062	-	13	-	2
Summa Insurance Brokerage, S.L.¹	-	906	-	11	-	2

¹There are no disclosures for Stewart Specialty Risk Underwriting Ltd and Summa Insurance Brokerage, S.L. in the current year as the income derived from these investee companies did not exceed the 10% threshold prescribed by IFRS 8. There are also no disclosures shown for Nexus Underwriting Management Limited, Agri Services Company PTY Limited and Walsingham Motor Insurance Limited in the prior year as the income derived from these investee companies did not exceed the 10% threshold prescribed by IFRS 8 in that year.

	Geographic segment 1: UK		Geographic segment 2: Non-UK		Group

	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July	6 months to 31^st July
	2021	2020	2021	2020	2021	2020
	£'000	£'000	£'000	£'000	£'000	£'000

Non-current assets
Property, plant and equipment	70	94	37	43	107	137
Right-of-use asset	603	741	316	343	919	1,084
Investments - equity portfolio	89,368	83,413	46,837	38,638	136,205	122,051
Loans and receivables	12,777	13,091	2,807	3,392	15,584	16,483
	102,818	97,339	49,997	42,416	152,815	139,755
Current assets
Trade and other receivables	2,790	2,008	1,148	1,362	3,938	3,370
Cash and cash equivalents	1,057	1,171	-	-	1,057	1,171
	3,847	3,179	1,148	1,362	4,995	4,541

Total assets	106,665	100,518	51,145	43,778	157,810	144,296

Non-current liabilities
Lease liabilities	(562)	(696)	(294)	(323)	(856)	(1,019)
Deferred tax liabilities	-	-	(338)	-	(338)	-
	(562)	(696)	(632)	(323)	(1,194)	(1,019)
Current liabilities
Trade and other payables	(470)	(475)	(3)	(11)	(473)	(486)
Lease liabilities	(107)	(107)	(56)	(50)	(163)	(157)
Loans and other payables	(1,000)	-	-	-	(1,000)	-
	(1,577)	(582)	(59)	(61)	(1,636)	(643)

Total liabilities	(2,139)	(1,278)	(691)	(384)	(2,830)	(1,662)

Net assets	£104,526	£99,240	£50,454	£43,394	£154,980	£142,634


Additions to property, plant and equipment	-	1	-	1	-	2

Depreciation and amortisation of property, plant and equipment	(64)	(72)	(33)	(33)	(97)	(105)

Cash flow arising from:
Operating activities	50	1,001	1,295	300	1,345	1,301
Investing activities	-	(2)	-	-	-	(2)
Financing activities	(997)	(915)	-	-	(997)	(915)
Change in cash and cash equivalents	(947)	84	1,295	300	348	384

	Geographic segment 1: UK	Geographic segment 2: Non-UK	Group

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2021	2021	2021
	£'000	£'000	£'000

Operating income	6,892	10,526	17,418
Operating expenses	(2,122)	(1,473)	(3,595)
Segment operating profit	4,770	9,053	13,823

Financial income	2	1	3
Financial expenses	(40)	(27)	(67)
Exchange movements	(57)	33	(24)
Profit before tax	4,675	9,060	13,735
Income taxes	-	(14)	(14)
Profit for the year	£4,675	£9,046	£13,721

	Total net operating income attributable to the investee company (£'000)	% of total realised and unrealised operating income	Reportable geographic segment

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2021	2021	2021
Investee Company
Stewart Specialty Risk Underwriting Limited	3,227	19	2
XPT Group LLC	2,497	14	2
The Fiducia MGA Company Limited	1,824	10	1
Nexus Underwriting Management Limited	1,755	10	1

	Geographic segment 1: UK	Geographic segment 2: Non-UK	Group

	Audited	Audited	Audited
	31^st January	31^st January	31^st January
	2021	2021	2021
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	84	39	123
Right-of-use asset	680	321	1,001
Investments - equity portfolio	88,959	41,992	130,951
Loans and receivables	12,776	3,057	15,833
	102,499	45,409	147,908
Current assets
Trade and other receivables	2,528	1,870	4,398
Cash and cash equivalents	709	-	709
	3,237	1,870	5,107

Total assets	105,736	47,279	153,015

Non-current liabilities
Lease liabilities	(638)	(301)	(939)
	(638)	(301)	(939)

Current liabilities
Trade and other payables	(1,007)	(3)	(1,010)
Lease liabilities	(108)	(51)	(159)
Loans and other payables	(1,000)	-	(1,000)
	(2,115)	(54)	(2,169)

Total liabilities	(2,753)	(355)	(3,108)

Net assets	£102,983	£46,924	£149,907


Additions to property, plant and equipment	3	2	5

Depreciation and amortisation of property, plant and equipment	(138)	(66)	(204)

Release of provision against investments and loans	37	-	37

Cash flow arising from:
Operating activities	(4)	(47)	(51)
Investing activities	(5)	-	(5)
Financing activities	(22)	-	(22)
Change in cash and cash equivalents	(31)	(47)	(78)

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 2021 and 2020 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:

	Unaudited	Unaudited	Audited
	31^st July 2021	31^st July 2020	31^st January 2021
	%	%	%

UK	43	47	42
Non-UK	57	53	58
Total	100	100	100

3. EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

	Unaudited	Unaudited	Audited
	31^st July 2021	31^st July 2020	31^st January 2021
	£'000	£'000	£'000
Earnings
Earnings for the period	5,892	6,497	13,721
Earnings for the purposes of basic and diluted earnings per share being total comprehensive income attributable to equity shareholders	5,892	6,497	13,721
Earnings per share - basic	16.4p	18.1p	38.2p
Earnings per share - diluted	16.2p	18.1p	38.2p

Number of shares	Number	Number	Number
Weighted average number of ordinary shares for the purposes of basic earnings per share	35,982,270	35,935,192	35,948,587

Number of dilutive shares under option	1,461,302	Nil	Nil

Weighted average number of ordinary shares for the purposes of dilutive earnings per share	36,385,944	35,935,192	35,948,587

No share repurchases were undertaken during both the current and prior period and full year to 31st January 2021.

Ordinary shares held by the Company in Treasury

Movement of ordinary shares held in Treasury:	Unaudited	Unaudited	Audited
	31^st July 2021	31^st July 2020	31^st January 2021
	Number	Number	Number

Opening total ordinary shares held in Treasury	42,862	85,058	85,058

Ordinary shares transferred to the B.P. Marsh SIP Trust during the period	(33,320)	(42,196)	(42,196)

Total ordinary shares held in Treasury at period end	9,542	42,862	42,862

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

On 12th June 2021 (the "vesting date") the performance criteria was met for 1,206,888 of 1,461,302 shares held under joint share ownership arrangements (Note 8) within an Employee Benefit Trust, after which the members of the scheme became joint beneficial owners of the shares and therefore became entitled to any gain on sale of the shares in excess of 312.6 pence per share. There were 254,414 shares where the performance criteria was not met on the vesting date that remain unallocated within the Employee Benefit Trust.

The weighted average number of shares used for the purposes of calculating the basic earnings per share, net asset value and net asset value per share of the Group excludes the 1,461,302 shares held within the Employee Benefit Trust as these shares do not have voting rights or dividend rights whilst they are held within this trust. The Group net asset value has therefore also excluded the economic right the Group has to the first 281 pence per share (£4,106,259) on vesting for the same reasons. On this basis the current undiluted net asset value per share is 430.4 pence for the Group. When the joint share ownership arrangements are eventually exercised, although this would increase the number of shares in issue entitled to voting and dividend rights, this would also increase the Group's net asset value by £4,106,259. The diluted net asset value per share is therefore 424.6 pence.

The diluted weighted average number of ordinary shares at 31st July 2021 has been calculated by proportioning the 1,461,302 shares held under joint share ownership arrangements from the vesting date over the period.

The increase to the weighted average number of ordinary shares between the 2020 and 2021 interim periods is mainly attributable to the inclusion of the 33,320 ordinary shares transferred from Treasury to the SIP Trust during the period that have been treated as re-issued for the purposes of calculating earnings per share.

13,330 ordinary shares (comprising 11,336 of the 33,320 ordinary shares transferred from Treasury to the SIP Trust in April 2021 together with 1,994 of unallocated ordinary shares forfeited by a departing employee during the 12 months to 31st January 2021) were allocated to the participating employees as Free shares under the share incentive plan arrangement on 12th April 2021 (Note 8).

A further 17,880 ordinary shares (also part of the 33,320 ordinary shares transferred from Treasury to the SIP Trust in April 2021) were allocated to the participating employees as Matching and Partnership shares under the share incentive plan arrangement on 21st June 2021 (Note 8).

4. NON-CURRENT INVESTMENTS - EQUITY PORTFOLIO

Group Investments
	Unaudited	Unaudited	Audited
	31^st July 2021	31^st July 2020	31^st January 2021
	Shares in investee companies	Shares in investee companies	Shares in investee companies
	£'000	£'000	£'000
At valuation
At 1^st February	130,951	115,666	115,666
Additions	200	463	2,408
Disposals	(260)	-	-
Movement in valuation	5,314	5,922	12,877

At period end	£136,205	£122,051	£130,951

At cost
At 1^st February	60,378	57,970	57,970
Additions	200	463	2,408
Disposals	(260)	-	-

At period end	£60,318	£58,433	£60,378

The addition relates to the following transaction in the period:

On 8th March 2021 the Group paid £200,000 in respect of deferred consideration due to a former minority shareholder in Paladin Holdings Limited ("Paladin"). The payment represented the second tranche of consideration due in respect of 250,000 ordinary shares in Paladin acquired from the minority shareholder in August 2020 for initial consideration of £400,000, which 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 from the Group at an amount equivalent to the total amount paid for the shares at the date of exercise of the option, plus £4,000 (maximum of £804,000). These shares were originally acquired as 50,000 ordinary shares, however the Group's holding increased to 250,000 ordinary shares by way of a 5:1 share restructure which Paladin undertook on 15th April 2021. As at 31st July 2021 total consideration paid by the Group in respect of these shares amounted to £600,000. Further consideration of £200,000 is due to be paid in September 2021, subject to certain employment conditions being met by the former minority shareholder.

The disposal relates to the following transaction in the period:

On 12th May 2021 the Group received an Option Notice in relation to 25,000 of its 250,000 ordinary shares in Paladin which were being held by the Group under a three-year call option arrangement that Paladin could call at any time. These shares were previously acquired in March 2020 as 50,000 ordinary shares from a minority shareholder and exiting employee for a total cost of £260,000, however following the 5:1 share restructure in April 2021 noted above, the Group's holding increased to 250,000 ordinary shares. The terms of the call option arrangement allowed Paladin to buy-back the 250,000 shares from the Group at a fixed price of £1.0452 per share (£261,300). On 24th May 2021, pursuant to the Option Notice being served, the Group received £26,130 as consideration for the part disposal of 25,000 shares, after which the shares were cancelled. On 17th June 2021 a further Option Notice was received in relation to the remaining 225,000 shares held under the aforementioned call option arrangement and on 1st July 2021 the Group received £235,170 as consideration for these shares, after which the shares were cancelled. Following the exercise of the call option and the subsequent cancellation of the shares, the Group's equity holding in Paladin decreased from 49.2% as at 31st January 2021 to 47.1% as at 31st July 2021.

The unquoted investee companies, which are registered in England except Summa Insurance Brokerage, S.L. (Spain), MB Prestige Holdings PTY Limited (Australia), Asia Reinsurance Brokers Pte Limited (Singapore), Stewart Specialty Risk Underwriting Ltd (Canada), XPT Group LLC (USA), Mark Edward Partners LLC (USA), ATC Insurance Solutions PTY Limited (Australia), Criterion Underwriting Pte Limited (Singapore), Agri Services Company PTY Limited (Australia), Sage Program Underwriters Inc (USA) and LPR Insurance Brokers Limited (Cyprus) are as follows:

	% holding	Date	Aggregate	Post tax
	of share	information	capital and	profit/(loss)
Name of company	Capital	available to	reserves	for the year	Principal activity
			£	£

Agri Services Company PTY Limited	41.00	30.06.20	1,446,314	9,356	Holding company for specialist Australian agricultural Managing General Agency

Asia Reinsurance Brokers Pte Limited	25.00	31.05.20	2,319,017	161,779	Specialist reinsurance broker

ATC Insurance Solutions PTY Limited	20.00	30.06.20	3,814,041	1,455,299	Specialist Australian Managing General Agency

Criterion Underwriting Pte Limited¹	29.40	-	-	-	Specialist Singaporean Managing General Agency

EC3 Brokers Group Limited	35.00	31.12.19	(3,219,895)	(2,380,450)	Investment holding company

LEBC Holdings Limited	59.34	30.09.20	4,208,686	(422,360)	Independent financial advisor company

LPR Insurance Brokers Limited^2,3	30.00	-	-	-	Cyprus domiciled Specialist Marine broker

Lilley Plummer Holdings Limited^2,3	30.00	-	-	-	Holding company for a Specialist Marine broker

MB Prestige Holdings PTY Limited	40.00	31.12.20	2,998,663	1,210,433	Specialist Australian Motor Managing General Agency

Mark Edward Partners LLC	30.00	31.12.18	6,285,211	920,026	Specialty insurance broker

Neutral Bay Investments Limited	49.90	31.03.20	3,930,133	184,306	Investment holding company

Nexus Underwriting Management Limited	17.42	31.12.20	22,185,426	(2,791,028)	Specialist Managing General Agency

Paladin Holdings Limited⁴	47.06	31.12.20	96,641	374,939	Investment holding company

Sage Program Underwriters Inc³	30.00	-	-	-	Specialist Managing General Agency

Stewart Specialty Risk Underwriting Ltd	30.00	31.12.19	239,094	303,632	Specialist Canadian Casualty Underwriting Agency

Summa Insurance Brokerage, S.L.	77.25	31.12.20	8,229,763	(46,385)	Consolidator of regional insurance brokers

The Fiducia MGA Company Limited	35.18	31.12.20	(1,481,102)	55,518	Specialist UK Marine Cargo Underwriting Agency

Walsingham Holdings Limited	20.00	30.09.20	1,985	489	Investment holding company

Walsingham Motor Insurance Limited	40.50	30.09.20	554,016	777,749	Specialist UK Motor Managing General Agency

XPT Group LLC	29.80	31.12.20	2,042,789	(7,514,408)	USA Specialty lines insurance distribution company

¹Statutory financial information is not available for Criterion Underwriting Pte Limited as the company is not currently trading.

²On 28th July 2021 the Group's 30% investment in Lilley Plummer Risks Limited was rolled up into a newly incorporated holding company, Lilley Plummer Holdings Limited, via a share-for-share exchange. Since 31st July 2021 the Group's 30% investment in LPR Insurance Brokers Limited has also been rolled up into Lilley Plummer Holdings Limited through a share-for-share exchange, however this had not formally completed as at 31st July 2021 and is therefore shown above as a standalone investment. It is expected that the results of both Lilley Plummer Risks Limited and LPR Insurance Brokers Limited will be presented within the consolidated statutory accounts of Lilley Plummer Holdings Limited when these become due.

³Lilley Plummer Holdings Limited, LPR Insurance Brokers Limited and Sage Program Underwriters, Inc. are all newly incorporated companies. Statutory accounts are not available as these are not yet due.

⁴The Group's 47.06% equity investment in Paladin Holdings Limited includes 5.88% relating to shares held under option that can be bought back and cancelled. The Group envisages that this shareholding will reduce over time as the options are exercised.

The Group's 35% equity investments in Bastion Reinsurance Brokerage (PTY) Limited and Bulwark Investment Holdings (PTY) Limited and its 42.5% equity investment in Property and Liability Underwriting Managers (PTY) Limited, all of which are based in South Africa, have not been listed above as they were in the process of being wound up as at 31st July 2021 and no recent financial information is available.

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.

5. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS


		Share		Reverse	Capital	Capital
	Share	premium	Fair value	acquisition	redemption	contribution	Retained
	capital	account	reserve	reserve	reserve	reserve	earnings	Total
	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)	(£'000)

At 1^st February 2021	3,747	29,349	70,573	393	7	64	45,774	149,907

Profit for the period	-	-	4,976	-	-	-	916	5,892

Dividends paid	-	-	-	-	-	-	(878)	(878)

Share Incentive Plan (Note 8)	-	(3)	-	-	-	7	55	59

At 31^st July 2021	£3,747	£29,346	£75,549	£393	£7	£71	£45,867	£154,980

6. LOAN AND EQUITY COMMITMENTS

On 26th June 2020 the Group entered into an agreement to provide Sage Program Underwriters, Inc. with a loan facility of USD 250,000. As at 31st July 2021 USD 150,000 had been drawn down, leaving a remaining undrawn facility of USD 100,000. Any drawdown is subject to satisfying certain agreed criteria.

On 24th August 2020 the Group acquired 250,000 ordinary shares (5.5% equity stake) in Paladin Holdings Limited from a minority shareholder for an initial consideration of £400,000. Further consideration of £200,000 was paid on 8th March 2021. As at 31st July 2021 a total of £600,000 had been paid for these shares. Further consideration of up to £200,000 (up to a maximum total consideration of £800,000) is payable in September 2021 and is subject to certain employment conditions being met by the minority shareholder.

7. DEFERRED TAX AND CONTINGENT LIABILITIES

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, £338,000 tax on capital gains (interim 6 months to 31st July 2020: £Nil and full year to 31st January 2021: £Nil) would become payable by the Group.

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 on all non-US investments and, as a result, the directors anticipate that on a disposal of shares in the Group's current non-US 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 their disposal.

New tax legislation was introduced in the US in 2018 which taxes at source gains on disposal of any foreign partnership interests in US LLCs. As such, deferred tax will need to be assessed on any potential net gains from the Group's investment interests in the US.

Having assessed the current portfolio, the directors anticipate that there is a requirement to provide for deferred tax in respect of the unrealised gains on investments under the current requirements of IFRS as the US investments currently show a net gain. As such, a provision of £338,000 has been made as at 31st July 2021.

The non-US investments are expected to benefit from the SSE rules and no deferred tax provision has been made in respect of the unrealised gains on these investments as at 31st July 2021.

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.

The March 2021 Budget announced that the UK corporation tax would increase from 19% to 25% (effective 1st April 2023) and Finance Bill 2021 was considered substantively enacted in May 2021. This change in tax rate has had no material impact on the Group financial statements for the period ended 31st July 2021 as the directors do not consider there is any deferred tax due at the period end in respect of its non-US investments due to the SSE rules.

8. SHARE BASED PAYMENT ARRANGEMENTS

Joint Share Ownership Plan

During the year to 31st January 2019, 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	Share appreciation rights (joint beneficial ownership)
Date of grant	12th June 2018
Number of instruments granted	1,461,302
Exercise price (pence)	N/A
Share price (market value) at grant (pence)	281.00
Hurdle rate	3.75% p.a. (simple)
Vesting period (years)	3 years
Vesting conditions	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, or persons acting together, obtaining control of the Company either (i) as a result of a making a Takeover Offer; (ii) pursuant to court sanctioned 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 0.01p
Expected volatility	N/A
Risk free rate	1%
Expected dividends expressed as a dividend yield	1.9%
Settlement	Cash settled on sale of shares
% expected to vest (based upon leavers)	100%
Number expected to vest	1,461,302
Valuation model	Expected Return Methodology (ERM)
ERM value (pence)	36.00
Deduction for carry charge (pence)	31.60
Fair value per granted instrument (pence)	4.40
Charge for period ended 31st July 2021	£7,685

On 12th June 2018 1,461,302 new 10p Ordinary shares in the Company were issued and transferred into joint beneficial ownership for 12 employees (including 4 directors) under the terms of joint share ownership agreements. No consideration was paid by the employees for their interests in the jointly-owned shares.

The new Ordinary shares have been issued into the name of RBC cees Trustee Limited ("the Trustee") as trustee of the B.P. Marsh Employees' Share Trust ("the Employee Benefit Trust") at a subscription price of 281 pence per share, being the mid-market closing price on 12th June 2018. Following the acquisition of the Trustee by JTC Plc on 10th December 2020, the Trustee has since been rebranded to JTC Employer Solutions Trustee Limited.

The jointly-owned shares are beneficially owned by (i) each of the 9 currently participating employees and (ii) the trustee of the Employee Benefit Trust upon and subject to the terms of the JSOAs entered into between the participating employee, the Company and the Trustee.

Under the terms of the JSOAs, the employees and directors are entitled to receive on vesting the growth in value of the shares above a threshold price of 281 pence per share (market value at the date of grant) plus an annual carrying charge of 3.75% per annum (simple interest) to the market value at the date of grant. The Employee Benefit Trust retains the carrying cost, with 281 pence per share due back to the Company.

Alternatively, after vesting, the participant and the Trustee may exchange their respective interests in the jointly-owned shares such that each becomes the sole owner of a number of Ordinary shares of equal value to their joint interests.

Participants will therefore receive value from the jointly-owned shares only if and to the extent that the share value grows above the initial market value plus the carrying cost.

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 the Expected Return Methodology.

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

Share Incentive Plan

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

During the period a total of 33,320 ordinary shares in the Company, which were held in Treasury as at 31st January 2021 (6 months to 31st July 2020 and also 12 months to 31st January 2021, 42,196 ordinary shares in the Company, which were held in Treasury as at 31st January 2020) were transferred to the B.P. Marsh SIP Trust ("SIP Trust"). As a result, together with 1,994 of unallocated ordinary shares forfeited by departing employees during the 12 months to 31st January 2021, a total of 35,314 ordinary shares in the Company were available for allocation to the participants of the SIP (6 months to 31st July 2020 and also 12 months to 31st January 2021: 47,044 were available for allocation, including 4,848 ordinary shares forfeited by departing employees).

On 12th April 2021, a total of 10 eligible employees (including 3 executive directors of the Company) applied for the 2021-22 SIP and were each granted 1,333 ordinary shares ("21-22 Free Shares"), representing approximately £3,600 at the price of issue.

Additionally, on 21st June 2021, 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 acquired, the SIP Trust offered two ordinary shares in the Company ("Matching Shares") up to a total of £3,600 worth of shares. All 10 eligible employees (including 3 executive directors of the Company) took up the offer and acquired the full £1,800 worth of Partnership Shares (596 ordinary shares) and were therefore awarded 1,192 Matching Shares.

The 21-22 Free and Matching Shares are subject to a 1 year forfeiture period.

A total of 31,210 (6 months to 31st July 2020 and also 12 months to 31st January 2021: 47,044) Free, Matching and Partnership Shares were granted to the 10 (6 months to 31st July 2020 and also 12 months to 31st January 2021: 11) eligible employees during the period, including 9,363 (6 months to 31st July 2020 and also 12 months to 31st January 2021: 13,515) granted to 3 (6 months to 31st July 2020 and also 12 months to 31st January 2021: 3) executive directors of the Company.

No ordinary shares were withdrawn from the SIP Trust during the period (6 months to 31st July 2020 and 12 months to 31st January 2021: 3,808 ordinary shares in the Company were withdrawn from the SIP Trust and transferred into the direct beneficial ownership of a departing employee).

As at 31st July 2021, and after adjusting for a total of 19,951 ordinary shares withdrawn from the SIP Trust by employees on departure and 6,842 ordinary shares forfeited on departure (since inception), a total of 231,028 Free, Matching and Partnership Shares had been granted to 10 eligible employees under the SIP, including 78,579 granted to 3 executive directors of the Company.

£33,755 of the IFRS 2 charges (6 months to 31st July 2020: £36,927 and 12 months to 31st January 2021: £74,467) associated with the award of the SIP shares to the 10 (6 months to 31st July 2020 and also 12 months to 31st January 2021: 11) eligible directors and employees of the Company have been recognised in the Statement of Comprehensive Income as employment expenses.

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.

-Ends-

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END

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