Ambac Financial (AMBC) 8-KBeat Capital Partners Limited

Company registration number 10198821 (England and Wales)

BEAT CAPITAL PARTNERS LIMITED

UNAUDITED INTERIM REPORT AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2024 AND 30 JUNE 2023

Churchill Place London

Tower Bridge House St Katharine's Way London

CONTENTS

    

UNAUDITED GROUP STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024 AND AS AT 31 DECEMBER 2023

The financial statements were approved by the board of directors and authorised for issue on 4 September 2024 and are signed on its behalf by:

UNAUDITED GROUP STATEMENT OF CASH FLOWS

Company information

Beat Capital Partners Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 5th Floor 6 Bevis Marks, London, EC3A 7BA.

The group consists of Beat Capital Partners Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”), The Financial Reporting Standard for interim reporting (“FRS 104”) and the requirements of the Companies Act 2006. The 2022 financial statements were prepared in accordance with FRS103 Insurance Contracts and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the Company and Group. Monetary amounts in these financial statements are rounded to the nearest £'000.

The Group financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The condensed consolidated financial statements should be read in conjunction with Beat Capital Partners Limited 2023 consolidated financial statements. The accounting policies are the same as those applied in the consolidated financial statements.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

The consolidated group financial statements consist of the financial statements of the parent company Beat Capital Partners Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 30 June 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post- acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

The same accounting policies and methods of computation have been followed in the interim financial statements as compared with the annual financial statements for the year ended 31 December 2023.

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The Company and the Group have adequate resource to continue trading for the foreseeable future and the directors intend for it to do so. The Company has a bank overdraft facility of up to £4m to support liquidity, a facility with its shareholder of £6m to further support working capital and future investment. There has been no loan covenant breaches. Accordingly, the directors continue to adopt the going concern basis for accounting in preparing the Group Financial Statements.

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The Group provides for profit commission receivable based on the financial performance of the related lines of business. The Group re-assesses the amount of profit commission receivable, on all underwriting years of account that have been open during the financial period, at each balance sheet date.

5     Related party transactions

Certain directors of the Company are also directors of other group companies. In all cases, transactions between the Company and other entities within the group are carried out on normal arm’s length commercial terms.

J Cavanagh, T Milligan and P Rayner are Lloyd’s Names and participate on Syndicate 4242 which the Group underwrite (re)insurance business on behalf of.

J Cavanagh is a non-Executive director of Hampden Capital Plc. They provide services to members of Syndicate 4242. All business is conducted on normal arm’s length commercial terms.

T Milligan and P Rayner are de minimis shareholders of Previse, a partner of Peterborough Agency Limited that the Company wholly owns. All business is conducted on normal arm’s length commercial terms.

P Rayner is a director of Cadenza Re Limited. They are an associated company of Beat Capital Partners Limited.

B Schnitzer and P Rayner are shareholders in, and B Schnitzer is a director of, Paraline Group Ltd which is a shareholder in the Company.

Transactions with Related Parties

The group has discontinued operations relating to Three areas, transactions relating to Beat CCM Nine Limited, Peterborough Agency Limited and Marcato Marine Insurance Services LLC. The results included in the group statement of comprehensive income above are shown by entity below:

The condensed consolidated financial statements of the Group have been prepared in accordance with generally accepted accounting practice in the United Kingdom (UK GAAP), which differ in certain significant respects from generally accepted accounting principles in the United States (US GAAP). A description of the differences and their effects on total comprehensive income and shareholders’ equity are set out below:

This adjustment converts revenue from UK GAAP to US GAAP. Under UK GAAP, revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. Under US GAAP, revenue is recognised when or as performance obligations are satisfied by transferring of the service to the insureds, as the customer. Control either transfers over time or at a point in time, which affects when revenue is recorded. The difference in the timing of revenue recognition results in a £1,681k increase and £2,856k increase to accrued commissions for the six month periods ended 30 June 2024 and 30 June 2023 respectively, and an increase of £7,179k increase and £7,975k to consolidated shareholders’ equity for the six month periods ended 30 June 2024 and 30 June 2023, and affected the following line items in the financial statements:

8     Summary of significant differences between UK GAAP and US GAAP    (continued)

Under UK GAAP, the Group recognises bonuses once they are determined as the group operates a fully discretionary bonus scheme. Therefore, outside of non-discretionary bonuses, the bonus is recognised in April each year after the service year it relates to. Under US GAAP, bonuses are generally accrued throughout the year in the year of service. Bonuses have been adjusted for the six month periods ended 30 June 2024 and 30 June 2023 amounting to £1,310k and £231k for the six month periods ended 30 June 2024 and 30 June 2023 respectively. The following line items were adjusted for in the financial statements:

c.    Leases

Under UK GAAP, a lessee classifies a lease as either finance or operating. Finance leases are capitalised as assets, with the concurrent recognition of an obligation. Operating leases are treated as annual rental expenses on a straight-line basis taking into consideration rent free periods. The Group only has operating leases and was not required to capitalise lease balances.

Under US GAAP, a lessee classifies a lease as either finance or operating. All leases were classified as operating leases under US GAAP. A lease liability and right of use asset are recognised on the balance sheet. The lease liability is measured at the present value of lease payments that are not paid at commencement and discounted using the interest rate implicit in the lease, if that rate can be readily determined, otherwise using the incremental borrowing rate. The right-of-use asset is recognised on the balance sheet and is measured as the initial amount of the lease liability, plus any lease payments and initial direct costs incurred, minus any lease incentives received. Operating leases are typically expensed on a straight-line basis. The difference in the models resulted in a decrease of profit of £40k to consolidated shareholder’s equity in both six month periods ended 30 June 2023 and 2024. The following line items in the financial statements were adjusted:

d.    Income taxes

e.    Non-controlling interests

The significant adjustments to total comprehensive income for the six month periods ended 30 June 2024 and 2023 which would be required if US GAAP had been applied, instead of UK GAAP in the consolidated financial statements are set out below.

The significant adjustments to shareholders equity for the periods ended 30 June 2024 and 2023 which would be required if US GAAP had been applied, instead of UK GAAP in the consolidated financial statements are set out below.

No significant adjustments were required to the consolidated statement of cash flow if US GAAP had been applied instead of UK GAAP, with the exception of interest paid being classified as a financing activity under UK GAAP and as operating activity under US GAAP, amounting to £18k and £110k for the six month periods ended 30 June 2024 and 2023 respectively.