B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2015 Earnings Presentation
38 slides from B.p. Marsh & Partners's earnings presentation, June 2015
Slide 1: Year End Results for the year to 31 January 2015
B.P. Marsh & Partners Plc Year End Results For the year to 31 January 2015 Jonathan Newman, Group Finance Director Dan Topping, Investment Director Camilla Kenyon, Director & Head of Investor Relations June 2015
Slide 2: Overview
Overview Niche Venture Capital provider focused on minority investments in financial services businesses, typically taking an equity stake of between 15% and 45% Considers investment opportunities based in the United Kingdom, Australia, Europe, North America and occasionally elsewhere Established in
Slide 3: Overview Continued
Overview Continued = As at 31 January 2015 — twelve investments in portfolio with an equity valuation of £38.6m, with an average holding period of seven years = Equity Portfolio increase of 15.5% for the year (2014: 14.0% increase) = NAV of £63.0m (2014: £58.9m) = NAV per share of 216p (2014: 202p)
Slide 4: Investments
Investments Investment Sector Cost of equity investment (£000) Fair market value 31.01.15 (47000) Year of initial investment Movement in Year to 31.01.15 (47000) Movement in Year to 31.01.15 20,014 Besso Insurance Broking 2,828 10,899 37.94% 1995 3,709 51.6% Hyperion Insurance Broking 743 7,310 2.24
Slide 5: Geographic Expansion
Geographic Expansion Over the past two years the Group has built on its existing investment strategy by investing into two new geographic regions, Australia and South Africa: July 2013 — Sterling Insurance (PTY) Limited (Australia) December 2013 — MB Prestige Holdings (PTY) Limited (Australia) Decem
Slide 6: Investments by Location
Investments by Location Summa Insurance Brokerage S.L. ne ee Total - £4.33m eis: \ Approximately 75% of our investee companies’ revenue originates overseas w Bastion Reinsurance Brokerage (PTY) Limited & Sterling ae (PTY) oe & MB Bulwark Investment Holdings (PTY) Limited ee Holdings (PTY) Limited To
Slide 7: Case Study — Bastion Reinsurance Brokerage
Case Study — Bastion Reinsurance Brokerage (PTY) Limited (“Bastion’’) Overview and Deal Structure Bastion is a start-up Reinsurance Broker based in South Africa, which provides specialist reinsurance solutions to a number of insurance companies and managing general agents in Africa The Group acquire
Slide 8: Case Study — Continued
Case Study — Continued The Group’s Rationale for Investment: " The Group saw Bastion as an opportunity to gain a insurance foothold in the South African Reinsurance Market, whilst also backing a proven Management team. * Chairman with a strong track record in the insurance industry, both in South Af
Slide 9: Case Study — Continued
Case Study — Continued Bastion’s rationale for seeking Investment from the Group: * Bastion saw that the Group could add value in a number of ways: Minority investor with a flexible approach to exit Reputation within insurance market Representation on the Board Provision of follow-on funding to enab
Slide 10: Case Study — Continued
Case Study — Continued Bulwark Investment Holdings (PTY) Limited (“Bulwark”’) Following the year end, the Group worked with the Chairman and CEO of Bastion to establish a new venture Bulwark, of which the Group owns 35% This South African based holding company, funded via a £0.5m loan facility from
Slide 11: Investment in Period — Nexus Underwriting Management
Investment in Period — Nexus Underwriting Management Limited (“Nexus”) In August 2014 the Group subscribed for a 5% stake in Nexus, for a total consideration of £1.55m. The funds have been used to assist the company in its growth ambitions Nexus is one of the largest independent speciality managing
Slide 12: Portfolio Update (i)
Portfolio Update (i) Besso Insurance Group Limited (“Besso”) = Besso continues to experience strong growth across all areas of the company * Since 2012 total brokerage income has increased from £24.1m to circa £34.0m = This growth has been created by both: * International expansion, with investment
Slide 13: Portfolio Update (ii)
Portfolio Update (11) LEBC Holdings Limited (“LEBC”) LEBC continues to perform well in the post Retail Distribution Review environment LEBC’s trading subsidiary LEBC Group Limited published its 30 September 2014 year-end results declaring a pre-tax profit of £1.10m for the year, a 43% increase in pr
Slide 14: Portfolio Update (iii)
Portfolio Update (ii1) Summa Insurance Brokerage, S.L (“Summa”) In December 2014 the Group made a further investment into Summa, acquiring a 28.625% equity stake for a cash consideration €1.25m, increasing the Group’s stake in Summa to 77.25% The Group saw this investment as a commercially prudent o
Slide 15: Financial Highlights — Year Ended January 2015
Financial Highlights — Year Ended 31 January 2015 = Equity Portfolio increase of 15.5% for the year (2014: 14% increase) * NAV of £63.0m (31 July 2014: £59.8m, 31 January 2014: £58.9m) * = NAV per share of 216p (31 July 2014: 205p, 31 January 2014: 202p)* * Consolidated profit after tax 44.9m — due
Slide 16: Financial Highlights — Year Ended January 2015
Financial Highlights — Year Ended 31 January 2015 * Total shareholder return of 8.2% in year » Final Dividend of 2.75p per share declared (£0.8m), payable July 2015 = Average compound NAV growth of 11.3% p.a. since 1990 (excl. £10.1m raised on flotation)* * Current share price 141p, trading at a 34.
Slide 17: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 62.97 £0 55.50 50 44.17 40.61 40 30 & Millilons22.10 20 10 0 31st Jan 31st Jan 31st Jan 31st Jan 31st Jan 31st July 31st Jan 2005 2007* 2010 2013 2014 2014 2015 = YEAR ENDED 5 : YEAR ENDED = SIX MONTHS ENDED NET OF DEFERRED TAX * NB: The valuation at 31 January 200
Slide 18: Performance: Net Asset Value (NAV)
60 + 40 4 Performance: Net Asset Value (NAV) Price and|NAV comparators rebased to BPM share price 32% discount to NAV as at 31 Jan 2015 xe BPM share price BPM NAV ~ ee F STE AIM All Share Yo ¥ SNS Sas e===FTSE AIM Financials (all data to 31st January 2015) lyr 3yrs 5yrs BPM Share Price 2.95% 46.84%
Slide 19: Cash Position
Cash Position Cash at 1 Feb 2014 (inc. treasury funds) 414.8m Net proceeds received from sale of the PDGI businesses 41.0m Equity Investments: * Trireme (40.4m) (43.1m) * Nexus (41.6m) * Summa (£1.0m) * Bastion (40.1m) Net (loans) / repayments: * Walsingham (40.2m) * Trireme (40.6m) Ene, * Summa (40
Slide 20: Cash Position - continued
Cash Position - continued 47.9m cash and treasury funds at 31 January 2015 £6.8m currently available for new investments - after providing £0.9m further financial commitments to the portfolio and £0.8m for July 2015 dividend 47.3m further cash due from sale of remaining 1.61% of Hyperion by July 201
Slide 21: Investment Opportunities
Investment Opportunities 59 new investment enquiries received in the year to 31 January 2015 24% of the 59 investments continued to detailed investigations, 3% (2 investments) were completed Strong current pipeline, including opportunities in the insurance intermediary space and general financial se
Slide 22: Summary
Summary Equity Portfolio increase of 15.5% since 31 January 2014 Final Dividend of 2.75p per share declared for 2015 46.8m of cash and treasury funds currently available for investment Current share price discount to Net Asset Value of 34.7% Continue to seek new investment opportunities in high grow
Slide 23: Appendices
Appendices Management Team Board Members Current Portfolio Minority Investor Protections Adding Value Exit Strategy Financials Major Shareholders Contacts 23
Slide 24: Management Team
Management Team Executive Chairman Brian Marsh OBE Group Finance Director Jonathan Newman ACMA CGMA MCSI Investment Director Dan Topping ACIS MCSI 50 years’ experience in insurance broking and underwriting. 1979-1990 was chairman and major shareholder of the Nelson Hurst & Marsh Group, the internati
Slide 25: Management Team
Management Team Director, Head of IR. Camilla Kenyon Director Alice Foulk BA (Hons) Camilla Kenyon was appointed as Head of Investor Relations at B-P. Marsh in February 2009, having four years’ prior experience with the Company. Camilla has a number of non-executive appointments over two investee co
Slide 26: Board Members
Board Members Non-Executive Deputy Chairman Campbell Scoones Non-Executive Director Philip Mortlock MA, FCA Non-Executive Director Stephen Clarke FCA Campbell Scoones has over 45 years' experience in the Lloyd's and overseas insurance broking and underwriting markets. Having started his career in 19
Slide 27: Board Members Continued
Board Members Continued Non-Executive Director Pankaj Lakhani FCCA A Certified Accountant, Pankaj Lakhani has over 40 years’ of accounting experience within the Insurance Market and joined the Company as Non Executive Director on 21% May 2015. 27
Slide 28: Current Portfolio
Current Portfolio Bastion Reinsurance Brokerage PTY Limited — 35% Besso Insurance Group Limited- 37.94% The Broucour Group Limited — 49% Bulwark Investment Holdings (PTY) Limited — 35% Hyperion Insurance Group Limited — 1.61% The Group invested in December 2014 Bastion specialises in the provision o
Slide 29: Current Portfolio Continued
Current Portfolio Continued LEBC Holdings Limited- 34.91% MB Prestige Holdings Limited — 40% Nexus Underwriting Management Limited — 5% Randall & Quilter Investment Holdings Limited - 1.33% Sterling Insurance PTY Limited — 19.7% April 2007 invested in LEBC LEBC is a national Independent Financial Ad
Slide 30: Current Portfolio Continued
Current Portfolio Continued Summa Insurance Brokerage, S.L. — 77.25% Trireme Insuran Group Limited — 30.57% Walsingham Motor Insurance Limited — 30% January 2005 the Group provided finance to a Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Sp
Slide 31: Minority Investor Protections
Minority Investor Protections "The Group believes that day-to-day operational control of the business is the domain of the executive management team. However, the Group’s position is well protected and portfolio investments are actively monitored. "The Group outlines from investment the number of ma
Slide 32: Adding Value
Adding Value " We believe in building strong relationships with the businesses we partner and using our expertise and experience in assisting them to achieve their growth targets and maximise shareholder value. We do so as follows: « Representation at Board level « Provision of follow-on funding « G
Slide 33: Exit Strategy
Exit Strategy Exit considered on entry Patient development to achieve full earning potential Recognise and act on opportunistic situations 33
Slide 34: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position (IFRS) at 31 January 2015 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2015 31 July 2014 31 Jan 2014 £000 £000 £000 Tangible assets 18 21 18 Investments at fair value — Equity Portfolio 38,647 32,351 31,710 Treasury Funds 6,319 8,558 9,289
Slide 35: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehen Income (IFRS) at 31 January 2015 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2015 31 July 2014 31 Jan 2014 £000 £000 £000 Gains on Investments (Realised and Unrealised) 5,109 1,528 3,853 Impairment of investments and loans - - - Operating Income 2
Slide 36: Consolidated Statement of Cash Flows (IFRS)
Consolidated Statement of Cash Flows (IFRS) at 31 January 2015 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2015 31 July 2014 31 Jan 2014 sult £000 £000 Net cash from operating activities 230 (46) 705 Taxation (4,216) (1,900) (1,400) Purchase of Property, plant and equipment (7) (6)
Slide 37: Key Shareholders
Key Shareholders = Directors » Brian Marsh OBE - 63.32% = Major Shareholders (>3%) « James Sharp & Co : IS Partners AG » The Stephen Crowther Trust * Henderson Global Investors 37
Slide 38: Contacts
Contacts B. P. Marsh & Partners Plc 24 Floor 36 Broadway London SW1H 0BH Telephone: 020 7233 3112 Website: www.bpmarsh.co.uk Nominated Adviser & Broker Panmure Gordon & Co Telephone: 020 7886 2500 Financial PR Redleaf Communications Telephone: 020 7382 4730 38