B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2011 Earnings Presentation
31 slides from B.p. Marsh & Partners's earnings presentation, June 2011
Slide 1: B.P. Marsh & Partners Plc Final Results
B.P. Marsh & Partners Plc Final Results For the year to 31 January 2011 Brian Marsh OBE, Chairman Jonathan Newman, Group Finance Director Camilla Kenyon, Investment Director Daniel Topping, Investment Director June 2011
Slide 2: Overview
Overview Niche Venture Capital provider Established in 1990 with funding of £2.5m – 31 investments made to date Focuses on minority investments in financial services businesses, typically taking an equity stake of between 15% and 45% Initially invests up to £2.5m with an average holding period of si
Slide 3: Financial Highlights – Year Ended 31 January 2011
Financial Highlights – Year Ended 31 January 2011 NAV of £46.5m (2010: £ 44.2 m) NAV per share 159p (2010: 151p)* Currently trading at a 44.2% discount to NAV Consolidated profit after tax: £2.3m (2010: £0.3m). Underlying profit before tax (excluding portfolio movement) was £0.15m (2010: £0.18m). Av
Slide 4: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 50 46.50 43.88 42.65 44.17 44.87 40.61 40 30 £ Millions 22.10 20 10 8.69 4.77 2.50 0 31st Jan 31st Jan 31st Jan 31st Jan 31st Jan 31st Jan 31st July 31st Jan 31st July 31st Jan 90 95 99 05 07* 09 09 10 10 11 YEAR ENDED Net of Deferred Tax YEAR ENDED SIX MONTHS ENDE
Slide 5: 2007-2011: Resilient Net Asset Value (NAV)
2007-2011: Resilient Net Asset Value (NAV) 150 Price/NAV comparators rebased to 100 100 42% discount at 31.01.11 50 0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 FTSE All Share Financials FTSE AIM All Share BPM Price BPM NAV 5
Slide 6: Investments During The Year
Investments During The Year US Risk (UK) Limited 22 July 2010 the Group acquired a 30% stake in Lloyds broker US Risk for £1.4m. See Case Study 2 in the attached Appendix. Hyperion Insurance Group Limited The Group provided a further €0.3m of an agreed €0.9m loan note facility to Hyperion Insurance
Slide 7: Investments During The Year (cont.) / Post Balance Sheet Investments
Investments During The Year (cont.) / Post Balance Sheet Investments Summa Insurance Brokerage, S. L. The Group provided a further €0.65m loan for general working capital requirements. Post Balance Sheet Investment In March 2011 an additional 11% in Besso was acquired for £0.74m and the Group also s
Slide 8: Portfolio Valuation Movements In Year
Portfolio Valuation Movements In Year Consolidated Balance Sheet January Acquisitions Disposal Impairment Adjusted January 2010 at cost proceeds Provisions January 2010 2011 Valuation Valuation Valuation £42.8m £1.4m £nil £nil £44.2m £47.1m 6.6% increase (2010: 0.7% increase) 8
Slide 9: Investments at January 2011
Investments at 31 January 2011 Consolidated Cash Flow Investment Activity Cost per Fair market Equity % Year of Movement accounts value initial in year (£’000) 31.01.11 investment (£’000) (£’000) Amberglobe Limited Business sales platform 98 98 49.00% 2008 - Besso Holdings Limited Insurance broker 3
Slide 10: Consolidated Statement of Financial Position (IFRS)
Consolidated Statement of Financial Position (IFRS) Consolidated at January 2011 Balance Sheet Audited Audited Year to Year to 31 Jan 2011 31 Jan 2010 £’000 £’000 Tangible assets 33 49 Investments at fair value 47,143 42,745 Debtors / Loans receivable 6,075 5,698 Cash 515 2,972 Creditors < 1 year (2
Slide 11: Consolidated Statement of Comprehensive Income (IFRS)
Consolidated Statement Consolidated of Comprehensive Income StatementIncome (IFRS) Income Statement (IFRS) to 31 January 2011 to 31 July 2007 Audited Audited Year to Year to 31 January 31 January 2011 2010 £’000 £’000 Gains on Investments (Realised and Unrealised) 3,321 122 Impairment of investments
Slide 12: Consolidated Statement of Cash Flows (IFRS)
Consolidated Statement of Cash Flows (IFRS) at 31 Consolidated January 2011 Cash Flow Audited Audited Year to Year to 31 Jan 2011 31 Jan 2010 £’000 £’000 Net cash (used by) / from operating activities 114 213 Taxation - - Purchase of Property, plant and equipment 6 - Investments made (1,437) (2,005)
Slide 13: Case Study 1 – Besso Holdings Ltd (“Besso”)
Case Study 1 – Besso Holdings Ltd (“Besso”) The Group originally invested in Besso in 1995; since then Besso has grown from a company that produced revenues of £2.2m (31 December 1995) to £26.8m (31 December 2009). Wells Fargo (through Union Hamilton Reinsurance) previously held a shareholding of 37
Slide 14: Investment Opportunities
Investment Opportunities 90 prospective new investments received in the year to 31 January 2011 Realignment of investment strategy resulted in increase of relevant enquiries applicable to our investment strategy of 25% Sourcing of new opportunities: – Long-term introducer relations – Active networki
Slide 15: Investment Opportunities cont.
Investment Opportunities cont. Focus on management and track record Assessment of earnings and growth potential Consideration of likely exit routes Due diligence on company and management Minority shareholder protections 15
Slide 16: Market Comment
Market Comment Insurance Sector Recent worldwide catastrophes (Japan, Australia, New Zealand, USA) increasingly effecting how insurers are pricing their premium rates. In the context of a multi-year soft market, these events are already having an upward impact on certain premium rates. Also the on-g
Slide 17: Outlook
Outlook Continue to seek investment opportunities in high growth businesses within niche sectors New opportunities driven by: Changes in tax regime and regulation Increase in M&A activity potentially resulting in fall out / potential opportunities for team lifts and start up enterprises Lack of cred
Slide 18: Summary
Summary Summary NAV proving to be resilient even in uncertain economic conditions 89% of portfolio by value in insurance broking or related activities BP Marsh is not subject to the limitations of a closed fund, such as asset redemption pressures The Board is confident about the future prospects and
Slide 19: Appendices
Appendices Management Team Board Members Minority Investor Protections Adding Value Exit Strategy Case Study 2 – US Risk (UK) Ltd Current Portfolio Major Shareholders Contacts 19
Slide 20: Management Team
Management Team 50 years’ experience in insurance broking and Executive Chairman underwriting. 1979-1990 was chairman of the Nelson Hurst & Marsh Group. More than 30 years’ experience Brian Marsh OBE building, buying and selling financial services businesses particularly in the insurance sector. Cha
Slide 21: Management Team
Management Team Daniel Topping is a Member of the Chartered Institute of Investment Director Securities and Investment and a Member of the Institute of Chartered Secretaries and Administrators. Daniel Daniel Topping ACIS MCSI joined the Company in February 2007 and currently holds four non-executive
Slide 22: Board Members
Board Members Over 15 years’ experience in the financial services Non-Executive Director industry. Having joined the Company in 1994 she was made Managing Director in March 2002. Natasha is Natasha Dunbar still involved in aspects of the operational side of the business and works closely with Brian
Slide 23: Minority Investor Protections
MinorityInvestor Minority InvestorProtections Protections BP Marsh’s position is well protected and portfolio investments are actively monitored. It has the following investor safeguards in place: Board meetings are held frequently and at least every three months; Timely management accounts informat
Slide 24: Adding Value
Adding Value Representation at Board level Guidance on strategy and development Market intelligence and contacts to develop customer base / strategic alliances Provision of follow-on funding Identify exit path and potential acquirers 24
Slide 25: Exit Strategy
Exit Strategy Exit considered on entry Patient development to achieve full earning potential Recognise and act on opportunistic situations Deal size favours acquisition by large financial services firms 25
Slide 26: Case Study 2 – US Risk (UK) Ltd
Case Study 2 – US Risk (UK) Ltd US Risk (UK) Limited is the parent company of Oxford Insurance Brokers Ltd Investment of £1.4m for a 30% equity stake via rights issue plus up to £1.95m additional loan funding In 2009 the company achieved Turnover of £5.6m and PAT £0.6m Majority shareholder is US Ris
Slide 27: Case Study 2 – US Risk (UK) Ltd (cont.)
Case Study 2 – US Risk (UK) Ltd (cont.) Oxford Insurance Brokers has six trading divisions: − UK & Ireland (Professional Indemnity and Commercial Combined MGA) − North American Specialty Lines − Global Special Risks − International − North American Property − Reinsurance Strategic Plan: − Organic gr
Slide 28: Current Portfolio
Current Portfolio Amberglobe Limited - 49% March 2008 invested in Amberglobe Ltd Start-up, financing ex-managing director of Dipford plc Company is a business sales platform, providing valuation and negotiation services for the sale of SME businesses in the sub £3m sector Besso Holdings Limited - 22
Slide 29: Current Portfolio cont.
Current Portfolio cont. Paterson Squared LLC - 22.5% Founded in September 2008 after its separation from Paterson Martin Limited The team use sophisticated modelling techniques to assess risk, with a view to providing counter-party risk and transaction advice Portfolio Design Group International The
Slide 30: Key Shareholders
Key Shareholders Directors – Brian Marsh OBE - 59.1% – Natasha Dunbar - 4.9% Major Shareholders (>3%) – SVM Asset Management Limited – Gartmore Investment Management – AXA Framlington – The Stephen Crowther Trust – Sanlam Asset Management (Ireland) 30
Slide 31: Contacts
Contacts Contacts B. P. Marsh & Partners Plc 2nd Floor 36 Broadway London SW1H 0BH Telephone: 020 7233 3112 Website: www.bpmarsh.co.uk Nominated Adviser & Broker Arbuthnot Securities Limited Telephone: 020 7012 2000 Financial PR Redleaf Polhill Communications Telephone: 020 7566 6700 31