Half-year Results

B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, announces its unaudited Group Half-Year Results for the six months to 31 July 2023 (the "Period").

Highlights:

• Net Asset Value at 31 July 2023 £203.5m (31 January 2023: £189.5m; 31 July 2022 £179.8m)
• Net Asset Value per share 567.3p (31 January 2023: 526.2p; 31 July 2022: 499.0p)
• Consolidated profit before tax of £15.6m for the Period (six months to 31 July 2022: £17.0m; year ending 31 January 2023: £27.6m)
• Total Shareholder return of 7.9% for the Period including the aggregate dividends paid in February and July 2023 (13.7% for the 12 months since 31 July 2022, inclusive of the dividends paid in February and July 2023)
• Cash of £4.3m as at 31 July 2023
• Current cash of £51.0m, following receipt of the proceeds from the sale of Kentro

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

"I am pleased that we have delivered a strong set of results, both in terms of increasing the value of the portfolio and investment realisations. This gives the Company the ability to reinvest in a portfolio that is growing in value, and source new investment opportunities, alongside returning value to shareholders."

Analyst briefing:

An analyst presentation, hosted by the Company, will be held at 10:00am today. Please contact Tim Pearson at Tavistock Communications on 07983118502 or tim.pearson@tavistock.co.uk should any analyst wish to attend.

Investor presentation:

B.P. Marsh will also provide a presentation for all existing and potential shareholders via the Investor Meet Company platform on 18 October 2023 at 11:00am.

Investors can sign up to Investor Meet Company for free and add to meet B.P. Marsh via:

Note

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 2023.

Half-Year Results

During the Period the Group's Net Asset Value ("NAV") has grown by £14.0m from £189.5m (31 January 2023) to £203.5m which, together with the dividends paid in February 2023 and July 2023, represents an increase of 7.9%. NAV per share as at 31 July 2023 is 556.3p on a fully diluted basis, an increase of 39.4p from 31 January 2023.

As previously announced, the Group has completed two new investments during the Period. These were into the London-based Managing General Agency, Verve Risk Services Limited, and the newly incorporated holding company Pantheon Specialty Limited (since changed to Pantheon Specialty Group Limited) that concurrently acquired the Lloyd's Broker Denison And Partners Limited. The Group is pleased to have partnered with such strong management teams and is looking forward to watching these companies flourish.

The Group also announced the conditional sale of its shareholding in Kentro Capital Limited ("Kentro") in May 2023 for £51.5m net of all costs. As subsequently announced on 9 October 2023 all conditions were met and the Group received £51.5m in proceeds.

We believe the successful sale of Kentro underpins B.P. Marsh's approach to its valuation methodologies and demonstrates that our track record is both reliable and reasonable. The sale of Kentro for £51.5m represents an IRR of 24% inclusive of income and fees and a money multiple on the equity investment of 3.41x.

As the remainder of 2023 continues, the Group is in a strong position from a cash and new business perspective to capitalise on opportunities both within our current portfolio and outside of it. As supportive investors, we intend to ensure that the capital requirement needs of our portfolio can be met to aid further growth whilst also ensuring we are able to invest in attractive new business opportunities which fit the Group's criteria.

With the receipt of the proceeds of sale from Kentro, the Board has declared a special dividend of 2.78p per ordinary share to be paid on 24 November 2023 to all shareholders on the Register as at 27 October 2023. The Group also reminds its shareholders that the intention is to pay an aggregate dividend of £2.0m in 2024, via an interim dividend of £1.0m around February 2024 and a final dividend of £1.0m in July 2024 subject to Shareholder Approval, and to replicate this for the subsequent two financial years.

The Board of B.P. Marsh intends to continue to strike a balance between utilising sale proceeds for investment for long-term capital growth, whilst providing shareholders with a meaningful ongoing return. The Board continues to discuss its aim to return meaningful levels of capital to shareholders and will provide more information in due course.

The Group remains acutely aware of the ongoing difficulties faced by the wider economic environment. Given the fact that the Group remains debt free and has a two-pronged investment approach of both equity and loan funding that has been benchmarked against the base rate, we have managed to avoid being adversely impacted by the increasing interest rates. The Group has continuously monitored the impact of the rising cost of living on its employees and intervened when it felt appropriate.

On 6 September 2023, the Board, on the recommendation of the Remuneration Committee, adopted the B.P. Marsh & Partners plc 2023 Share Option Plan ("Option Plan"). It is the belief of the Chairman and Managing Director that the current Team at B.P. Marsh is the best suited to take it into the next stage of growth and proper incentivisation is key to retaining the talent within the employee base, and further aligning employees' interests with those of our shareholders. The Option Plan is a discretionary employee share plan under which selected employees and executive directors may be granted options, with a nil-cost, nominal value or market value exercise price, to acquire shares in the Company if certain pre-determined conditions are satisfied. It is envisaged that no options will be granted under the Option Plan which would cause the number of shares to be issued under the Option Plan to exceed 4.5% of the issued share capital of the Company. Further details of the Option grants awarded under the Option Plan will be announced in due course.

The Group is pleased with its performance to 31 July 2023, demonstrating once again the success of its track record and has positioned itself in a place to be able to utilise the proceeds of sale from Kentro effectively.

Chief Investment Officer's Portfolio Update, New Business and Outlook

As announced on 23 May 2023, the Group agreed to sell its 18.7% shareholding in Kentro to Brown & Brown, Inc for £51.5m. The sale completed on 9 October 2023 at which point the Group received £51.5m in cash.

The investment and subsequent sale of Kentro illustrates the Group's capability to source niche investment opportunities, back successful management teams and successfully realise value for our shareholders. This disposal delivered an Internal Rate of Return of 23.7% (inclusive of all income and fees) and a money multiple on the equity investment of 3.41x.

In the six month period to 31 July 2023 the underlying portfolio continued to perform well.

Over the Period, the valuation of the Group's equity portfolio has increased by 8.6% adjusting for additions and disposals, with NAV increasing by 7.3%.

Over the past 12 months, the equity portfolio has increased by 16.1% adjusting for additions and disposals, with NAV increasing by 13.2%.

The Group's cash balance of £51.0m will allow the Group to continue to:-

• identify businesses with strong management teams and good growth potential;
• help fund, support, and develop these companies so they can deliver on growth opportunities; and
• produce returns from investments made for our shareholders, via a blend of ongoing equity growth of the portfolio and regular returns of capital to shareholders via dividends.

The Group remains focussed on sourcing new business and has an active pipeline of new business opportunities which are currently being considered.

In the period, the Group completed two new investments, as follows:-

• Verve Risk Services Limited ("Verve") - a London-based Managing General Agency, which specialises in Professional and Management Liability business for the insurance industry in the USA, Canada, Bermuda, Cayman Islands and Barbados.
• Pantheon Specialty Limited ("Pantheon") - A London-based start-up broker, led by Rob Dowman, a recognised leading London Market Casualty broker, specialising in complex liability placements worldwide.

B.P. Marsh is well-known in the financial services (sub)sector in which it specialises, with a focus on Insurance Brokers and Managing General Agencies.

The Group continues to focus on investing in niche SME sectors backed by experienced and capable management teams, which will create long term growth and consequential value.

The Group continues to monitor trends in the insurance market, specifically when it comes to premium rates and M&A.

Across the global property and casualty market rates continue to rise, although the pace is slowing. In the second quarter of 2023, across the whole insurance industry, rates increased by 3%. Whilst this is the 23rd consecutive quarter of rate increases, the increase is down from the peak of 22% in the fourth quarter of 2020.

Rate increases were relatively consistent across all regions in which our portfolio operates; rate increases were highest in property classes (+10% in Q2 2023), more modest in casualty classes (+3% in Q2 2023) and declined across financial and professional lines (-8% in Q2 2023).

Property rates were mainly driven by costs of reinsurance, strong capacity demand, limited new entrants to the market and ongoing losses.

Overall, the Group does not anticipate the market returning to the pricing of the last soft market in the short to medium term.

Turning to the insurance M&A market, whilst the number of transactions are down from a recent peak in 2021, they are static with 2022 and there remains a strong demand for specialty MGAs and brokers. Given the niche businesses in which the Group invests, the business is well positioned to take advantage of the current M&A market, both on the buy and sale side.

Portfolio Update

New Investments

Within the six month period to 31 July 2023, the Group completed on two acquisitions:-

Pantheon Specialty Group Limited ("Pantheon")

+ 0.4 pence NAV per share change in the Period

In June 2023, B.P. Marsh subscribed for a 25% stake in Pantheon, a new holding company established in partnership with Robert Dowman.

Robert Dowman has over 30 years of experience in the insurance industry, starting his career in 1989 at the Lloyd's Broker Gallagher Plumer where he spent six years before joining Jardine Insurance Brokers in 1995. Robert then joined Besso's Casualty Division in 2000, becoming Managing Director of Besso Global Casualty in 2007 and Joint CEO of Besso Group and Besso Limited in 2015.

With the support of B.P. Marsh, Robert Dowman wants to build a market leading independent specialist broker across multiple markets.

Since investment, Robert Dowman has hired a number of key individuals. This team is recognised as leading London Market Casualty brokers, specialising in complex liability placements worldwide.

Pantheon provided B.P. Marsh with an excellent opportunity to invest in a business with a well-established and highly experienced leadership team and strong growth potential over the coming years.

In September 2023, post period end, the Company provided a loan facility of £3.0m to Pantheon for working capital purposes.

Date of initial investment: June 2023

31 July 2023 valuation: £0.1m

Cost of Equity: £25

Equity stake: 25%

Verve Risk Services Limited ("Verve")

0.0 pence NAV per share change in the Period

In April 2023, the Group announced that it had acquired a 35% Cumulative Preferred Ordinary shareholding in Verve, a London-based Managing General Agency.

Verve specialises in Professional and Management Liability business for the insurance industry in the USA, Canada, Bermuda, Cayman Islands and Barbados.

Since investment, Verve has performed well, outperforming its budget for the months following the involvement of B.P. Marsh.

The Group looks forward to continuing its support for Verve and its Management Team over the coming years, supporting the business to achieve its long term ambitions and goals.

Date of initial investment: April 2023

31 July 2023 valuation: £0.44m

Cost of Equity: £0.4m

Equity stake: 35%

Follow-on Investments and Funding

CBC UK Limited ("CBC") / Paladin Holdings Limited ("Paladin")

+ 30.3 pence NAV per share change in the Period

Paladin, the holding company for CBC, the London based Lloyd's insurance broker, continues to trade significantly ahead of budget in 2023.

At 31 July 2023 Paladin had achieved £7.5m of consolidated adjusted EBITDA for seven months' trading against a full year budget of £5.5m, up 183% over the prior year period (£2.7m).

The growth year-on-year has been achieved through a combination of new hires, new product lines and organic growth.

From the time of our original investment, through to 31 July 2023, the Group's valuation in CBC has risen significantly, with the Group's shareholding now valued at £30.5m.

This represents an equity value uplift of £11.3m or 59% over the prior valuation at 31 January 2023. Over the period from 31 July 2022, B.P. Marsh's equity value in CBC has increased by £20.6m or 209%.

The Group has also provided Paladin / CBC with further funding, as follows:-

• In July 2023, the Group lent Paladin £1.5m which, together with its own funds, enabled CBC to repay its £2.7m loan from Coutts & Co; and
• In August (post period end), the Group lent Paladin a further £0.8m. This enabled Paladin to exercise a Call Option with the Group over 5.9% of shares in Paladin which the Group owned. Once acquired, these shares were cancelled.

Date of initial investment: February 2017

31 July 2023 valuation: £30.5m

Cost of Equity: £0.8m

Equity stake: 47.1%

NAV breakdown by portfolio company

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

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

These insurance investments are budgeting to produce in the aggregate £1.75bn of insurance premium during 2023 (2022: £1.32bn), and a breakdown between brokers and MGAs can be found here:-

*The GWP figures shown are inclusive of Kentro's GWP numbers.

Insurance Brokers

Investments:

The Group's Broking investments are budgeting to place over £868.0m of GWP (*2022: £547.8m), producing over £76.0m (2022: £57.1m) of commission income in 2023, accessing specialty markets around the world.

Underwriting Agencies / Managing General Agents ("MGAs")

Investments:

The Group's MGAs are budgeting to place c.£880.0m of GWP (*2022: £755.6m), producing over £108.0m (2022: £94.1m) of commission income in 2022, across over 30 product areas, on behalf of more than 50 insurers.

IFA Investment

Investment:

LEBC Holdings Limited ("LEBC") - London, United Kingdom

0.0 pence NAV per share change in the Period

LEBC has two wholly owned subsidiaries, Aspira Corporate Solutions Limited ("Aspira") and LEBC Group Limited ("LEBC Group")

Post period end, in August 2023, Aspira acquired the trading assets and personnel of its sister company, LEBC Group.

This combination brings together the expertise of the two businesses under one brand and will result in an enhanced service for both its individual and corporate clients.

The combined entity will continue to provide pensions and investment advice to more than 1,600 corporate entities and over 15,000 individuals with circa £4bn of assets under advice.

This consolidation follows a Management-led restructuring process which has had the full support of B.P. Marsh, being in the best interest of all LEBC stakeholders.

The transfer of assets has received consent from the Financial Conduct Authority, following extensive consultation.

Date of initial investment: April 2007

31 July 2023 valuation: £15.9m

Cost of Equity: £12.4m

Equity stake: 59.3%

Portfolio Company Highlights:

Lilley Plummer Risks Limited ("Lilley Plummer")

+ 5.0 pence NAV per share change in the Period

The performance of Lilley Plummer continues to be impressive, which is due to the growth of its underlying marine portfolio and diversification into different classes of business, including North American Property.

The strong performance of Lilley Plummer has allowed the business to return £1.0m to the Group as follows:-

• The redemption of B.P. Marsh's £0.7m of Redeemable Shares; and
• The repayment of B.P. Marsh's £0.3m outstanding loan facility with Lilley Plummer.

This redemption and repayment demonstrates Lilley Plummer's ability to continually grow their business from a revenue and EBITDA standpoint, whilst accumulating strong cash balances. EBITDA has grown from c.£412k in 2020, to c.£1.95m in 2022, with this growth continuing into 2023.

Lilley Plummer's core Marine book has continued to perform well. The marine insurance market on the whole has enjoyed a positive 2023 with premium income increasing and insurer loss ratios tracking much lower than previous years. The situation with Ukraine and Russia continues to create uncertainty with war risk premiums remaining high.

Lilley Plummer's new North American Property team have also performed well since joining the business, significantly outperforming both their revenue and EBITDA budget.

Lilley Plummer remains actively looking at new opportunities, within and outside of its core marine offering and the Group is confident regarding its performance over the course of the current financial year and beyond.

Stewart Specialty Risk Underwriting Ltd ("SSRU")

+ 2.3 pence NAV per share change in the Period

Performance of the Group's Canadian investment, SSRU, remains strong:

• In SSRU's year to 31 December 2022, Gross Written Premium exceeded CA$ 75m, with the budget of c. CA$ 83m for 2023;
• Given historic growth, the Group expect SSRU to surpass Gross Written Premium of CA$ 100m in 2024; and
• EBITDA has more than doubled since 2020, from c. CA$ 3.5m to CA$ 7.8m, with further growth expected into 2024.

SSRU is focusing on organic growth of existing, highly profitable business lines, via the increased line sizes afforded by new capacity relationships. SSRU also continue to pursue M&A opportunities, new business lines and alternative sources of capacity.

Date of initial investment: January 2017

31 July 2023 valuation: £11.9m

Cost of Equity: £19

Equity stake: 30.0%

XPT Group LLC ("XPT Group")

1.8 pence NAV per share change in the Period

XPT Group's performance since its inception continues to be impressive, with the business expecting to produce Gross Written Premium of c. US$ 700m in its current financial year to 31 December 2023 (2022: US$ 500m).

XPT's two most recent acquisitions, Cal Inspection Bureau, a premier underwriting survey and audit business, and Craig and Leicht, a Texas-based wholesale agency, have both performed well since joining XPT in the first quarter of 2023.

XPT Group continues to grow via its acquisition strategy, producer hires and underlying organic growth.

The Group remains positive regarding the ongoing performance of XPT and its next stage of growth over the years to come.

Date of investment: June 2017

31 July 2023 valuation: £33.4m

Cost of Equity: £10.1m

Equity stake: 27.3%

Dan Topping

Chief Investment Officer

Group Finance Director Update

The Group's equity investment portfolio continued to increase in value, rising by 8.6% to £185.8m (31 Jan 2023 £171.5m) adjusting for £0.8m of net investment realisations. Overall, the NAV of the Group increased by £14.0m (7.3%) to £203.5m, compared with an increase of £13.2m (7.9%) in the same period in 2022. Including the dividends paid in February 2023 and July 2023 of £1.0m in aggregate, this represented an overall return of 7.9% for the Period.

The lower increase compared with the same period in 2022 was due to foreign exchange movements.

The Group's results for the Period were impacted by the strengthening of Pound Sterling in its overseas investments with an overall £3.8m decrease in NAV attributed to foreign exchange movement, compared with a £5.8m gain in the same period in 2022. Adjusting for this, the increase for the Period would have been £17.8m (9.4%) compared with an increase of £7.4m (4.4%) in the prior period.

Over the year to 31 July 2023 the NAV has increased by £23.7m or 13.2%. Including the £1.0m aggregate dividend paid in February 2023 and July 2023 this represents an overall return of 13.7%.

The NAV of £203.5m at 31 July 2023 represents a total increase in NAV of £174.3m 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 8.9% in Group NAV after running costs, realisations, losses, distributions and corporation tax since flotation and 11.8% since 1990.

Income from the portfolio for the Period increased significantly from £2.5m in H1 2022 to £4.0m. Dividend income was £0.6m higher due to strong investment portfolio performance, whilst loan interest increased by £0.5m as a result of new loans granted and higher interest rates charged due to UK base rate increases. Fee income also increased by £0.3m due to one off transaction and loan arrangement fees charged.

A significant proportion of the increase in operating expenses to £2.8m in the Period from £2.1m in H1 2022 related to increased staff costs of £0.5m in line with the Company's financial performance, together with increased legal and professional fees of £0.2m in relation to the various new investment and follow-on transactions (although these costs were covered by one-off fees charged to the relevant investee company).

The Group's strategy is to cover expenses from the portfolio yield. On an underlying basis, excluding investment activity (unrealised gains on equity revaluation), this was achieved with a pre-tax profit of £0.8m for the Period (H1 2022: £0.7m).

Current Assets - Investment assets held for sale

The balance of £52.3m at 31 July 2023 represents £51.5m for the investment in Kentro which completed on 9 October 2023, and £0.8m for Paladin in relation to shares held under an Option agreement which were exercised on 14 August 2023. At 31 January 2023 these amounts were included within Equity Portfolio investments as non-current assets.

Loan Portfolio

In addition to the provision of equity to the investment portfolio, the Group often provides loan financing either as part of the original investment structure, or for follow-on funding to enable further growth through acquisitions or working capital for recruitment and product development.

The loan portfolio increased by £6.3m during the Period to £17.8m at 31 July 2023 (31 July 2022: £9.2m, 31 January 2023: £11.5m). The Group provided £8.2m in new loans - £4.9m to XPT, £2.0m to Paladin, £0.7m to Denison and £0.6m to Verve. £1.6m was received in loan repayments - £0.8m from XPT, £0.5m from Fiducia and £0.3m from Lilley Plummer. In addition there was a £0.3m reduction due to foreign exchange movements.

Since 31 July 2023 the Group has provided £4.6m in further loans, including £3.0m to Pantheon and £0.8m to Paladin, and the loan portfolio balance is currently £22.4m.

Liquidity

As at the Period-end, the Group had total available cash and treasury funds of £4.3m (31 Jan 2023: £12.1m). Between 31 January 2023 and 31 July 2023 the Group provided loans to the investment portfolio of £8.2m, In addition, the Group paid dividends totalling £1.0m and bought back £0.7m in shares.

During the Period the Group also received £0.7m of proceeds from the redemption of preferred shares held in Lilley Plummer and £1.6m in loan repayments.

Since 31 July 2023 the Group has provided a further £4.6m in loans as follow-on funding into the existing portfolio and received £0.8m in net realisations relating to shares in Paladin held by the Group under a call option arrangement, which were bought back by Paladin.

On 9 October 2023 the Group completed the sale of its 18.7% shareholding in Kentro for £51.5m. Post a loan granted on 9 October 2023 the Group's current available cash is £51.0m.

The Group is debt free.

Diluted NAV per share

The NAV per share at 31 July 2023 is 567.3p (31 July 2022: 499.0p, 31 January 2023: 526.2p). 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") the performance criteria were met for 1,206,888 of 1,443,147 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 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 in the future in excess of 281 pence per share, the Group would be entitled to receive £4,055,243 and these shares would become entitled to voting and dividend rights and therefore would become dilutive. Overall, this would therefore dilute the NAV per share as at 31 July 2023 to 556.3p (31 July 2022: 490.8p, 31 January 2023: 516.9p).

Jon Newman

Group Finance Director

Investments

As at 31 July 2023 the Group's equity interests were as follows:

Ag Guard PTY Limited

(www.agguard.com.au)

Date of investment: July 2019

Equity stake: 41.0%

31 July 2023 valuation: £5,390,000

Asia Reinsurance Brokers (Pte) Limited

(www.arbrokers.asia)

Date of investment: April 2016

Equity stake: 25.0%

31 July 2023 valuation: £0

ATC Insurance Solutions PTY Limited

(www.atcis.com.au)

Date of investment: July 2018

Equity stake: 25.6%

31 July 2023 valuation: £18,261,000

CBC UK Limited

(www.cbcinsurance.co.uk)

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 holds its investment in CBC through CBC's parent company, Paladin Holdings Limited.

Date of investment: February 2017

Equity stake: 41.2%

31 July 2023 valuation: £30,530,000

Criterion Underwriting (Pte) Limited

Date of investment: July 2018

Equity stake: 29.4%

31 July 2023 valuation: £0

The Fiducia MGA Company Limited

(www.fiduciamga.co.uk)

Date of investment: November 2016

Equity stake: 35.2%

31 July 2023 valuation: £4,301,000

LEBC Holdings Limited

(www.lebc-group.com)

Date of investment: April 2007

Equity stake: 59.3%

31 July 2023 valuation: £15,947,000

Lilley Plummer Risks Ltd

(www.lprisks.co.uk)

Lilley Plummer Risks is a specialist marine Lloyd's broker that provides products across the marine insurance market. The Group holds its investment in Lilley Plummer Risks through its holding company Lilley Plummer Holdings Limited.

Date of investment: October 2019

Equity stake: 30.0%

31 July 2023 valuation: £8,861,000

Kentro Capital Limited

(www.kentrocapital.com)

Kentro is an independent Managing General Agency and Broker specialising 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: 18.7%

31 July 2023 valuation: £51,522,000

Pantheon Specialty Group Limited

(www.pantheonspecialty.com)

Date of investment: June 2023

Equity stake: 25.0%

31 July 2023 valuation: £132,000

Sage Program Underwriters, Inc.

(www.sageuw.com)

Date of Investment: June 2020

Equity Stake: 30.0%

31 July 2023 Valuation: £1,599,000

Stewart Specialty Risk Underwriting Ltd

(www.ssru.ca)

Date of investment: January 2017

Equity stake: 30.0%

31 July 2023 valuation: £11,870,000

Sterling Insurance PTY Limited

(www.sterlinginsurance.com.au)

Date of investment: June 2013

Equity stake: 49.9%

31 July 2023 valuation: £3,527,000

Verve Risk Services Limited

Date of investment: April 2023

Equity stake: 35.0%

31 July 2023 valuation: £431,000

XPT Group LLC

(www.xptspecialty.com)

Date of investment: June 2017

Equity stake: 27.3%

31 July 2023 valuation: £33,444,000

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

Half Year Consolidated Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31ST JULY 2023

Notes Unaudited Unaudited Audited 6 months to 6 months to Year to 31 st July 2023 31 st July 2022 31 st January 2023 £'000 £'000 £'000 £'000 £'000 £'000 GAINS ON INVESTMENT Realised (losses) / gains on disposal of equity investments (net of costs) (41) 155 155 Release of provision made against equity investments and loans 12 7 30 Unrealised gains on equity investment revaluation 4 14,755 16,212 27,275 14,726 16,374 27,460 INCOME Dividends 2,280 1,636 3,119 Income from loans and receivables 815 326 749 Fees receivable 860 580 1,051 3,955 2,542 4,919 OPERATING INCOME 18,681 18,916 32,379 Operating expenses (2,844) (2,066) (4,889) OPERATING PROFIT 15,837 16,850 27,490 Financial income 95 77 130 Financial expenses (25) (42) (88) Exchange movements (349) 122 58 (279) 157 100 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 15,558 17,007 27,590 Income taxes (6) (2,910) (3,747) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ATTRIBUTABLE TO EQUITY HOLDERS 7 £15,552 £14,097 £23,843 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 7 £15,552 £14,097 £23,843 Earnings per share - basic (pence) 3 43.3p 39.1p 66.2p Earnings per share - diluted (pence) 3 41.6p 37.6p 63.6p

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31ST JULY 2023

(Company Number: 05674962)

The Half Year Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 16th October 2023

and signed on its behalf by:

B.P. Marsh & J.S. Newman

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31ST JULY 2023

Unaudited Unaudited Audited 31 st July 2023 31 st July 2022 31 st January 2023 £'000 £'000 £'000 Cash (used by) / from operating activities Income from loans to investee companies 815 326 749 Dividends 2,280 1,636 3,119 Fees received 860 580 1,051 Operating expenses (2,844) (2,066) (4,889) Net corporation tax paid (33) (17) (14) Purchase of equity investments (Note 4) (431) (2,941) (2,941) Net proceeds from sale of equity investments 791 8,259 8,259 Net loan (payments to) / repayments from investee companies (6,592) 1,300 (1,039) Adjustment for non-cash share incentive plan 58 62 104 Exchange movement (49) 40 (36) (Increase) / decrease in receivables (447) 126 (35) (Decrease) / increase in payables (603) (851) 160 Depreciation and amortisation 94 96 193 Net cash (used by) / from operating activities (6,101) 6,550 4,681 Net cash from / (used by) investing activities Purchase of property, plant and equipment (7) (9) (11) Purchase of treasury investments net of cash and cash equivalents (Note 5) - (2,506) (8,371) Net proceeds from the sale of treasury investments net of cash and cash equivalents (Note 5) 600 - 7,867 Net cash from / (used by) investing activities 593 (2,515) (515) Net cash used by financing activities Financial income - 2 2 Financial expenses (20) (23) (47) Net decrease in lease liabilities (87) (83) (168) Dividends paid (1,000) (1,001) (1,001) Payments made to repurchase company shares (692) - (16) Net cash used by financing activities (1,799) (1,105) (1,230) Change in cash and cash equivalents (7,307) 2,930 2,936 Cash and cash equivalents at beginning of the period 11,564 8,628 8,628 Cash and cash equivalents at end of period £4,257 £11,558 £11,564

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31ST JULY 2023

Refer to Note 7 for detailed analysis of the changes in the components of equity.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31ST JULY 2023

ACCOUNTING POLICIES

Basis of preparation of financial statements

Assessment as an investment entity

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

The Board has also concluded that the Company meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of equities and similar securities; it has more than one investor and its investors are not related parties. The Board has concluded that B.P. Marsh & Partners Plc and its two trading subsidiaries, B.P. Marsh & Company 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 and B.P. Marsh (North America) Limited continue to be consolidated into its Group financial statements for the period.

These half year consolidated financial statements were approved by the Board on 16th October 2023. They have not been audited nor reviewed by the Group's Auditors, as is the case with the comparatives to 31st July 2022, 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 2023. 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

• Subsidiaries
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect its returns.
• rights arising from other contractual arrangements; and
• the Group's voting rights and potential voting rights.

B.P. Marsh & Partners Plc ("the Company"), an investment entity, has two subsidiary investment entities, B.P. Marsh & Company Limited and B.P. Marsh (North America) Limited, that provide services that relate to the Company's investment activities. The results of these two subsidiaries, together with other subsidiaries (except for 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 LEBC. Instead the investment in LEBC is valued at fair value through profit or loss.

Associates

Business Combinations

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.

Employee services settled in equity instruments

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 within the Employee Benefit Trust, after which the members of the scheme became joint beneficial owners of the shares and 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.

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.

Investments - equity portfolio

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:

by reference to underlying funds under management;

Income from equity portfolio investments

Income from equity portfolio investments comprises:

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 period. In the Consolidated Statement of Financial Position the recognised gains and losses arising from changes in fair value are shown within the retained earnings 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

Property, plant and equipment

Furniture & equipment - 5 years

Leasehold fixtures and fittings and other costs - over the life of the lease

Right-of-use asset

Foreign currencies

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

Income taxes

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.

1There are no disclosures for XPT Group LLC, ATC Insurance Solutions PTY Limited, Stewart Specialty Risk Underwriting Limited and Agri Services Company PTY Limited in the current period 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 Paladin Holdings Limited and Lilley Plummer Holdings Limited in the prior period as the income derived from these investee companies did not exceed the 10% threshold prescribed by IFRS 8 in that period.

During the period the Company paid a total of £691,820, including commission, in order to repurchase 190,008 ordinary shares at an average price of 363 pence per share (6 months to 31st July 2022: no share repurchases undertaken and 12 months to 31st January 2023: the Company paid £16,191, including commission, to repurchase 4,850 ordinary shares at an average price of 330 pence per share).

Ordinary shares 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 and basic Net Asset Value per share.

The repurchase of the ordinary shares is borne from the Group's commitment to reduce share price discount to Net Asset Value. As outlined in the Group's Share Buy-Back Policy announcement on 16th January 2023, its policy has been throughout the period, subject to ordinary shares in the Company being available to purchase, to be able to buy small parcels of shares (for up to a maximum aggregate consideration of £1,000,000) at a price representing a discount of at least 20% to the most recently announced Net Asset Value per share and place them into Treasury. Prior to 16th January 2023, and in accordance with its Share Buy-Back Policy announcement on 17th July 2019, the Group's policy was to buy back shares when the share price was below 15% of its published Net Asset Value.

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 10) 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 had been forfeited by departing employees and which remained unallocated within the Employee Benefit Trust as at 31st January 2022.

During the 6 months to 31st July 2022, 18,155 of the 254,414 unallocated shares within the Employee Benefit Trust were transferred to the B.P. Marsh SIP Trust ("SIP Trust") to be used as part of the 22-23 SIP awards made in April 2022. Following this transfer and as at 31st July 2023 there were 1,443,147 shares held within the Employee Benefit Trust, of which there were 236,259 shares where the performance criteria was not met on the vesting date and which remained unallocated. The Employee Benefit Trust remains the owner of these unallocated shares.

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 1,443,147 shares currently held within the Employee Benefit Trust as these shares do not have voting rights or dividend rights whilst they are held within this Employee Benefit Trust. The Group net asset value has also excluded the economic right the Group has to the first 281 pence per share (£4,055,243) on the 1,443,147 shares held within the Employee Benefit Trust for the same reasons. On this basis the current undiluted net asset value per share is 567.3 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 £4,055,243. The diluted net asset value per share is therefore 556.3 pence.

The diluted weighted average number of ordinary shares at 31st July 2023 has been calculated by proportioning the 1,443,147 shares held under joint share ownership arrangements from the vesting date over the period.

The decrease to the weighted average number of ordinary shares between the 2022 and 2023 half year periods is mainly attributable to the 190,008 ordinary shares repurchased into Treasury during the period, offset by the 32,780 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.

32,780 ordinary shares (comprising 32,780 ordinary shares transferred from Treasury to the SIP Trust in April 2023) were allocated to the participating employees as Free, Matching and Partnership shares under the share incentive plan arrangement on 14th April 2023 (Note 10).

NON-CURRENT INVESTMENTS - EQUITY PORTFOLIO

The additions relate to the following transactions in the period:

On 28th April 2023 the Group acquired a 35% cumulative preferred ordinary equity stake in Verve Risk Services Limited ("Verve") for consideration of £430,791. Verve is a London-based Managing General Agency which specialises in Professional and Management Liability business for the insurance industry in the USA, Canada Bermuda, Cayman Islands and Barbados. The Group also provided Verve with a loan facility of £569,209 which was drawn down in full on completion. The aggregate funding of £1,000,000 was utilised as part of a management buy-out of Verve Risk Partners LLP, an underwriting cell within Castel Underwriting Agencies Limited.

On 21st June 2023 the Group acquired a 25% cumulative preferred ordinary equity stake in Pantheon Specialty Limited ("Pantheon") for consideration of £25. Pantheon is a new holding company, established in Partnership with Robert Dowman, a leading London Market Casualty broker specialising in the larger, more complex liability placements across the world.

The disposals relate to the following transactions in the period:

On 19th June 2023 the Group received £700,000 in respect of the 700,000 redeemable preferred shares it held in Lilley Plummer Holdings Limited ("Lilley Plummer"), following their redemption by Lilley Plummer as part of a capital restructure. As at 31st July 2023 the Group's equity holding in Lilley Plummer was 30%, which remained unchanged following this redemption.

On 21st June 2023, and upon the establishment of Pantheon noted under the additions above, Pantheon acquired a 100% shareholding in the existing Lloyd's Broker, Denison and Partners Limited ("Denison and Partners"), including the Group's entire 40% equity holding. No cash consideration was received by the Group for the disposal, which represented a net loss of £132,000 (Note 6) based upon the Group's carrying value of the investment of £132,000 as at 31st January 2023. However, as part of the transaction, the Group received a 40% equity holding in New Denison Limited ("New Denison"). New Denison was incorporated on 20th June 2023 and is currently a dormant company until such time that it receives its own regulatory approvals.

The amounts included under 'Current Assets - Investments held for sale' in respect of the current period relate to two equity investment disposals that have completed since 31st July 2023.

On 11th August 2023 Paladin Holdings Limited ("Paladin") exercised a Call Option arrangement with the Group over 5.88% of shares in Paladin which the Group held. The Group received £804,000, which was in line with the carrying value of the shares included within the fair value of the Group's investment of Paladin as at 31st July 2023 and represented an overall gain of £4,000 above the original cost of the shares of £800,000. Pursuant to the share transfer, Paladin cancelled the shares and as a consequence of the transaction the Group's shareholding in Paladin reduced from 47.06% to 43.75%. The transaction was funded through the Group lending Paladin a further £804,000. As at 31st July 2023 total loans to Paladin amounted to £5,096,500 and following the aforementioned transaction stood at £5,900,500 at the date of this report.

On 9th October 2023 the Group completed the disposal of its entire 18.7% shareholding in Kentro Capital Limited ("Kentro"), pursuant to an agreement dated 22nd May 2023 by which Brown & Brown, Inc ("Brown & Brown"), one of the largest US-based insurance intermediaries, agreed to acquire the entire issued share capital of Kentro. On completion, the Group received proceeds of £51,522,000 (net of all transaction costs) which was in line with the carrying value of the Group's investment in Kentro of £51,522,000 as at 31st January 2023 and represented an overall gain of £36,395,446 above the cost of investment. As part of the agreement, on completion the Group provided a loan facility of £524,254 to Brown & Brown Holdco UK Limited, alongside other major selling shareholders, in respect of certain identified indemnities under the Sale and Purchase Agreement. Whilst the loan capital could reduce due to potential claims, at this time the Group expects full repayment.

The unquoted investee companies, which are registered in England except Asia Reinsurance Brokers Pte Limited (Singapore), Stewart Specialty Risk Underwriting Ltd (Canada), XPT Group LLC (USA), ATC Insurance Solutions PTY Limited (Australia), Criterion Underwriting Pte Limited (Singapore), Agri Services Company PTY Limited (Australia) and Sage Program Underwriters, Inc (USA) are as follows:

2New Denison Limited is a newly incorporated company that is not currently trading. Statutory accounts are not available as these are not yet due.

3The Group's 47.06% equity investment in Paladin Holdings Limited ("Paladin") includes 5.88% relating to shares held under option that can be bought back and cancelled. Since 31st July 2023 this option has been fully exercised by Paladin and the shares cancelled. Following the cancellation, the Group's shareholding has reduced to 43.75%.

4Pantheon Specialty Limited is a newly incorporated company. Statutory accounts are not available as these are not yet due. On 8th September 2023 Pantheon Specialty Limited changed its name to Pantheon Specialty Group Limited.

5Sage Program Underwriters, Inc. is a newly incorporated company. Statutory accounts are not available as these are not yet due.

6Verve Risk Services Limited is a newly incorporated company. Statutory accounts are not available as these are not yet due.

CURRENT INVESTMENTS - TREASURY PORTFOLIO

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 initial investment into the funds was made following the realisation of the Group's investment in Summa Insurance Brokerage, S.L. during the prior period.

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

As at 31st July 2023, of the total £2,419,764 held within the funds (as at 31st July 2022: £10,057,461 and as at 31st January 2023: £11,336,879), only £79,992 (31st July 2022: £2,563,188 and 31st January 2023: £590,897) was risk bearing, with the remaining funds of £2,339,772 (31st July 2022: £7,494,273 and 31st January 2023: £10,745,982) being non-risk interest bearing deposits.

Investment management costs of £5,667 (6 months to 31st July 2022: £18,031 and 12 months to 31st January 2023: £40,737) were charged to the Consolidated Statement of Comprehensive Income during the period.

REALISED (LOSSES) / GAINS ON DISPOSAL OF EQUITY INVESTMENTS

The realised (losses) / gains on disposal of investments for the period comprises of a net loss of £(40,689) (6 months to 31st July 2022 and 12 months to 31st January 2023: £155,121 net gains on disposal of investments).

£132,000 of this net loss is in respect of the Group's disposal of its entire 40% equity investment in Denison and Partners Limited ("Denison and Partners") for nil cash consideration, compared to the fair value of £132,000 at 1st February 2023 (Note 4). There were no releases of previously unrealised gains or losses to Retained Earnings from the Fair Value Reserve as a result of the this disposal as the investment had been held at cost.

The above realised loss arising from the disposal of Denison and Partners has been offset by a realised gain of £91,311 relating to an additional capital distribution recognised during the period from the Group's former investment in Summa Insurance Brokerage, S.L. ("Summa") which was sold during the year to 31st January 2022.

The amount included in realised gains on disposal of investments for the 6 months to 31st July 2022 and 12 months to 31st January 2023 comprised of a net gain of £155,121.

£135,283 of this net gain related to an additional capital distribution received during the 6 months to 31st July 2022 from the Group's former investment in MB Prestige Holdings PTY Limited which was sold during the year to 31st January 2022.

£19,838 of this net gain was in respect of the Group's disposal of its entire 77.25% investment in Summa for consideration of £8,123,838, compared to the fair value of £8,104,000 at 1st February 2022. The disposal of Summa resulted in a net release of previously unrealised gains to Retained Earnings from the Fair Value Reserve of £2,007,857 in that period/year.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

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 2023 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.

DEFERRED TAX AND CONTINGENT LIABILITIES

Having assessed the current US portfolio, the directors anticipate that there is a requirement to provide for deferred tax in respect of the recognised gains on investments under the current requirements of UK-adopted international accounting standards as the US LLC investments currently show a net gain. As such, a provision of £5,604,000 has been made as at 31st July 2023 (6 months to 31st July 2022: £4,791,000 and full year to 31st January 2023: £5,631,000).

The deferred tax provision of £5,604,000 as at 31st July 2023 has been calculated based upon an assessment of the US tax liability arising from the valuations of the Group's holdings within US LLCs at 31st July 2023, using the US Federal rate of 21% together with US State Tax rates prevailing in the states where the Group's US LLCs operate, which range between 0% and 12%. Adjustments were then made based upon available allowances and taxable losses. Given the complexity, the Group utilised the services of a specialist US tax advisory firm.

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 2023 and for future periods as the directors do not consider there is any deferred tax due at the period end in respect of its non-US LLC investments due to the SSE rules.

SHARE BASED PAYMENT ARRANGEMENTS

Joint Share Ownership Plan

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 to the date of vesting. The Employee Benefit Trust retains the carrying cost, with 281 pence per share due back to the Company.

Alternatively, on or 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 to the date of vesting.

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.

On 12th June 2021 (the "vesting date") the performance criteria were 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 £4,055,243 in total. These shares would then, post-sale, have voting and dividend rights attached, such that they would become fully dilutive for the Group.

There were 254,414 shares where the performance criteria was not met on the vesting date that had been forfeited by departing employees and which remained unallocated within the Employee Benefit Trust as at 31st January 2022.

During the 6 months to 31st July 2022, 18,155 of the 254,414 unallocated shares within the Employee Benefit Trust were transferred to the B.P. Marsh SIP Trust ("SIP Trust") to be used as part of the 22-23 SIP awards made in April 2022. Following this transfer and as at 31st July 2023 there were 1,443,147 shares held within the Employee Benefit Trust, of which there were 236,259 shares where the performance criteria was not met on the vesting date and which remained unallocated. The Employee Benefit Trust remains the owner of these unallocated shares.

Share Incentive Plan

During the period a total of 32,780 ordinary shares in the Company, of which 4,850 were held in Treasury as at 31st January 2023 and 27,930 were from shares bought back into Treasury during the current period (6 months to 31st July 2022 and also 12 months to 31st January 2023, 9,542 ordinary shares in the Company, which were held in Treasury as at 31st January 2022), were transferred to the B.P. Marsh SIP Trust ("SIP Trust"). As a result, a total of 32,780 ordinary shares in the Company were available for allocation to the participants of the SIP (6 months to 31st July 2022 and also 12 months to 31st January 2023: 31,801 ordinary shares were available for allocation, including 4,104 unallocated ordinary shares already held within the SIP Trust as at 31st January 2022 and 18,155 unallocated ordinary shares transferred from the Employee Benefit Trust to the SIP Trust in April 2022).

On 14th April 2023, a total of 11 eligible employees (including 3 executive directors of the Company) applied for the 23-24 SIP and were each granted 1,192 ordinary shares ("23-24 Free Shares"), representing approximately £3,600 at the price of issue.

Additionally, on the same date, 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 11 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 23-24 Free and Matching Shares are subject to a 1 year forfeiture period.

A total of 32,780 (6 months to 31st July 2022 and also 12 months to 31st January 2023: 31,801) Free, Matching and Partnership Shares were granted to the 11 (6 months to 31st July 2022 and also 12 months to 31st January 2023: 11) eligible employees during the period, including 8,940 (6 months to 31st July 2022 and also 12 months to 31st January 2023: 8,673) granted to 3 (6 months to 31st July 2022 and also 12 months to 31st January 2023: 3) executive directors of the Company.

No ordinary shares were withdrawn from the SIP Trust during the period (6 months to 31st July 2022 and 12 months to 31st January 2023: No withdrawals).

As at 31st July 2023, 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 295,609 Free, Matching and Partnership Shares had been granted to 11 eligible employees under the SIP, including 96,192 granted to 3 executive directors of the Company.

£38,427 of the IFRS 2 charges (6 months to 31st July 2022: £42,009 and 12 months to 31st January 2023: £84,714) associated with the award of the SIP shares to the 11 (6 months to 31st July 2022 and also 12 months to 31st January 2023: 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.