B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — H1 2017 Earnings Presentation
38 slides from B.p. Marsh & Partners's earnings presentation, Oct 17, 2017
Slide 1: Interim Results
Interim Results For the period ending 31 July 2017 Dan Topping, Chief Investment Officer Camilla Kenyon, Director & Head of Investor Relations Jonathan Newman, Group Finance Director 17 October 2017 1
Slide 2: Overview
Overview 25+ Years strong Specialist Invested in 46 companies Robust balance sheet PE/VC investor in Financial Services intermediaries and realised 32 since 1990 £22.0 million cash as at 31 July 2017 Industry knowledge Up to £5m initial investment Long-term view Significant specialist experience and
Slide 3: 2017 Summary Period Ending 31 July 2017
2017 Summary Period Ending 31 July 2017 • As at 31 July 2017 – 14 investments in • Equity Portfolio increase of 24.6% portfolio with a NAV of £88.8m (31 July since 31 January 2017 (45.5% between • Dividend of 3.76p per share declared 2016 £73.8m), with an average holding 31 July 2016 to 31 July 2017
Slide 4: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 100 2.50 2.32 90 2.06 80 1.93 2.00 Year ended 1.47 70 Six months ended 1.40 Net Asset Value (£m) 60 1.42 1.36 1.50 Share Price (£) 1.25 50 0.93 40 1.00 30 20 0.50 40.61 44.17 55.46 58.92 62.97 70.81 73.85 79.68 88.80 10 * NB: The valuation at 31 January 2007 0 0.00
Slide 5: Dividends
Dividends • The Group’s historic dividend payments are shown below. Total shareholder return in the period to 31 July 2017 is 12.8% £1,200,000 £2.50 £1,100,000 £1,100,000 £1,100,000 £1,000,000 £2.06 £1,000,000 £2.00 Paid £800,000 £800,000 £800,000 £1.47 Intended £1.40 £1.50 £1.25 £1.35 Share Price £
Slide 6: Investments
Investments Fair market Cost of equity Movement in Movement in value Year of initial Investment Sector Jurisdiction investment Equity Period to 31 July Period to 31 July 31 July 2017 investment (£’000) 2017 (£’000) 2017 (£’000) Summa Insurance Broking Spain 6,096 5,972 77.2% 2005 1,132 23.4% ARB Ins
Slide 7: Specific Activity New Investments in Period
Specific Activity New Investments in Period • Subscription for a 35% shareholding in XPT Group LLC • Acquisition of 35% of CBC UK Limited (“CBC”), in February 2017 via a thinly completed in June 2017, through its wholly owned subsidiary capitalised holding company, Paladin Holdings Limited company,
Slide 8: Specific Activity within the Portfolio During the Period
Specific Activity within the Portfolio During the Period • Acquired a further 17.84% in LEBC Holdings Limited in July 2017 for a total cash consideration of £7.1m • Following the purchase, shareholding in LEBC now at 60.88%, with the balance held by Founder and CEO, Jack McVitie and LEBC Management
Slide 9: Specific Activity within the Portfolio During the Period
Specific Activity within the Portfolio During the Period • Provision to Nexus of a £4m Loan Facility, as part of a wider debt fundraising exercise, to undertake M&A activity • Nexus secured £30m in loan facilities in total, with £26m provided via HPS Investment Partners, the global investment firm •
Slide 10: Specific Activity New Investments Post Period
Specific Activity New Investments Post Period • Acquisition of 30% of Mark Edward Partners LLC (“MEP”), completed in October 2017 • A specialty insurance broker offering a wide range of risk management services to both commercial and personal clients • Provides core insurance products in Financial &
Slide 11: Specific Activity Disposals In the Period
Specific Activity Disposals In the Period • Sold holding in Besso to BGC Partners Inc for cash consideration of • Sold holding in Trireme back to fellow shareholder US Risk for a cash £22.01m (net of transaction costs and pre-tax) represents an enterprise consideration of £2.96m valuation of £70.5m.
Slide 12: International Strategy
International Strategy Summa Insurance Brokerage S.L. UK Based Investments: LEBC Holdings Ltd The Fiducia MGA Company Ltd Stewart Specialty Risk Nexus Underwriting Management Ltd Underwriting Ltd Walsingham Motor Insurance Ltd CBC UK Ltd XPT Group LLC Mark Edward Partners LLC Approximately 39% of ou
Slide 13: Market Overview 2017 Events
Market Overview 2017 Events North America Catastrophes • The impact caused by Hurricanes Harvey, Irma, Maria and Nate and the Pueblo earthquake in Mexico is still being measured, with latest estimates of industry-insured catastrophe losses for 2017 to date from $100bn - $130bn. • No investee company
Slide 14: Investment Model
Investment Model Specialist Investor Up To £5m Initial Investor in early stage and SME Relationship Driven Investment financial services businesses Investors in People 20–40 % minority equity stakes Operating in niche segment Scope for follow on funding where funding difficult to obtain Long-Term Vi
Slide 15: Investment Model New Opportunities
Investment Model New Opportunities What we look for Entrepreneurs who have identified a niche area to apply their expertise Ambitious capable management teams with strong, demonstrable business plans Companies with solid value propositions and potential to benefit from value add Insurance Intermedia
Slide 16: Investment Model: Change in Investment Criteria
Investment Model Change in Investment Criteria How we source opportunities Increase in top end first round funding to £5m from £3m • Opportunities sourced and delivered via network - reflects the increase in cash following disposals • Active sector-specific networking - widens opportunity pipeline •
Slide 17: Investment Process
Investment Process BUSINESS PLAN HEADS OF TERMS INVESTMENT DOCUMENTS Initial Assessment Due Diligence Completion Post Transaction Support • Strong network of industry • In-house comprehensive fact- • Final Negotiation • Business plans tested contacts brings new opportunities finding and due diligenc
Slide 18: Investment Opportunities
Investment Opportunities • 38 new investment enquiries in period to 31 July 2017 (84 in full year to Current Pipeline 31.01.17) • MGA start-ups a continuing trend • 2 completed; CBC (Lloyd’s broker) and XPT (U.S. insurance group) • Lloyd’s and regional UK brokers • 1 completed Post Period; MEP (U.S.
Slide 19: Investments Financial Highlights – Period Ended 31 July 2017
Investments Financial Highlights –Period Ended 31 July 2017 Equity Portfolio value increase of 24.6% for the period ending 31 July 2017 • NAV of £88.8m (31 July 2016: £73.8m, 31 January 2017: £79.7m) * • NAV per share of 304p (31 July 2016: 253p, 31 January 2017: 273p) * • Consolidated profit after
Slide 20: Investments Financial Highlights – Period Ended 31 July 2017
Investments Financial Highlights –Period Ended 31 July 2017 Average compound NAV growth of 11.7% p.a. since 1990 (excl. £10.1m raised on flotation)* Board intents to maintain a dividend of 3.76p per share (£1.1m) for 2018 and 2019 Share price of 260p trading at a 4.8% discount to NAV (at close 16 Oc
Slide 21: Cash Position
Cash Position Cash at 1 Feb 2017 (including Treasury Funds) £12.6m Equity Investments £(11.9)m Proceeds from disposal of Investments £25.0m Loans granted £(10.8)m Loans repaid £8.6m Tax payments £(0.1)m Dividend paid £(1.1)m Share repurchase £(0.1)m Working Capital movements £(0.2)m Cash at 31 July
Slide 22: Loan Portfolio
Loan Portfolio Investment 31 July 2017 (£’000) 31 January 2017 (£’000) Bastion 342 342 Besso - 1,808 Broucour 205 255 Bulwark 635 615 Fiducia 1,069 350 LEBC - 1,005 MB Group 762 759 Nexus 2,000 - Paladin (CBC) 3,997 - PLUM 372 - Stewart Specialty Risk 212 152 Summa 2,399 2,346 Trireme - 2,155 Walsin
Slide 23: Summary
Summary • Equity Portfolio increase of 45.5% since 31 July 2016 • Final Dividend of 3.76p per share paid for the year ended 31 January 2017 on 28 July 2017, and intend to maintain that level • £8.6m currently available for investment • Share price discount to Net Asset Value of 4.8% (at close on 16
Slide 24: Appendices
Appendices 1. Management Team 2. Board Members 3. Growth Strategy 4. Adding Value 5. Portfolio 6. Minority Investor Protections 7. Financials 8. Major Shareholders 9. Contacts 24
Slide 25: Management Team
Management Team Brian Marsh OBE Alice Foulk BA (Hons) Dan Topping ACIS MCSI Executive Chairman Managing Director Chief Investment Officer Brian Marsh has over 55 years’ experience in Alice Foulk joined B.P. Marsh in September 2011, Dan Topping is a Member of the Chartered insurance broking and under
Slide 26: Management Team
Management Team Camilla Kenyon Jonathan Newman ACMA CGMA MCSI Director, Head of IR Group Finance Director Camilla was appointed to the main Board in A Chartered Management Accountant with over 20 2011, following her appointment as Head of years’ experience in the financial services industry, Investo
Slide 27: Board Members
Board Members Campbell Scoones Stephen Clarke FCA Pankaj Lakhani FCCA Nicholas Walker MSc, (Comb Hons) Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Campbell Scoones has over 45 years' A Chartered Accountant, Stephen A Certified Accountant, Pankaj Nick h
Slide 28: Growth Strategy
Growth Strategy B.P. Marsh cash Our goal is to be the early stage capital Up to £5.0m provider of choice to the financial services sector. We apply our sector expertise to source attractive long-term Invest Take minority equity positions in promising early stage financial services companies with tal
Slide 29: Adding Value
Adding Value Value creation driven by partnering with ambitious entrepreneurs seeking a partnership to provide growth capital and access to a team with a deep knowledge base in mergers, acquisitions, business sales, business growth and transformation, as well as the financial and legal aspects inher
Slide 30: Portfolio as at 31 July 2017
Portfolio as at 31 July 2017 • Group invested in April 2016 Asia Reinsurance Brokers (PTE) • ARB is a Singapore-headquartered independent specialist reinsurance and insurance risk solutions provider Limited – 20% • ARB was established in 2008, following a management buy-out of the business from AJ G
Slide 31: Portfolio as at 31 July 2017 Continued
Portfolio as at 31 July 2017 Continued • April 2007 invested in LEBC LEBC Holdings Limited – • LEBC is a national Independent Financial Advisory company providing services to individuals, corporates and partnerships, principally in employee benefits, investment and 60.9% life product areas and 15 of
Slide 32: Portfolio as at 31 July 2017 Continued
Portfolio as at 31 July 2017 Continued • Invested in June 2013 through the investment vehicle Neutral Bay Investments Limited Sterling Insurance (PTY) • Sterling is a Sydney-based specialist underwriting agency offering a range of insurance solutions within the Liability sector, specialising in nich
Slide 33: 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 m
Slide 34: Consolidated Statement of Financial Position (IFRS) at 31 July 2017
Consolidated Statement of Financial Position (IFRS) at 31 July 2017 Unaudited 6 months to Unaudited 6 months to Audited Year to 31 July 2017 £’000 31 July 2016 £’000 31 January 2017 £’000 Tangible assets 177 12 15 Investments at fair value – Equity Portfolio 62,982 53,109 63,567 Treasury Funds 15,44
Slide 35: Consolidated Statement of Comprehensive Income (IFRS)
Consolidated Statement of Comprehensive Income (IFRS) at 31 July 2017 Unaudited 6 months to Unaudited 6 months to Audited Year to 31 July 2017 £’000 31 July 2016 £’000 31 January 2017 £’000 Gains on investments (realised and 12,419 4,251 11,491 unrealised) Impairment of investments and loans (650) -
Slide 36: Consolidated Statement of Cash Flows (IFRS)
Consolidated Statement of Cash Flows (IFRS) at 31 July 2017 Unaudited 6 months to Unaudited 6 months to Audited Year to 31 July 2017 £’000 31 July 2016 £’000 31 January 2017 £’000 Net cash from operating activities (213) (241) (69) Taxation (93) (37) (102) Purchase of property, plant and equipment (
Slide 37: Key Shareholders at 31 July 2017
Key Shareholders at 31 July 2017 DIRECTORS • Brian Marsh OBE - 56.8% • B.P. Marsh Management Limited – 4.86%* • Daniel Topping • Campbell Scoones Less than 0.5% each • Pankaj Lakhani * The Executive Directors hold the following beneficial joint interests in Ordinary Shares, held together with B.P. M
Slide 38: Contacts
Contacts B.P. Marsh & Partners PLC 4 Matthew Parker Street London SW1H 9NP 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
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