B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — H1 2019 Earnings Presentation
37 slides from B.p. Marsh & Partners's earnings presentation, Oct 15, 2019
Slide 1: Interim Results for the six month period ending 31 July 2019
Interim Results For the six month period ending 31 July 2019 Dan Topping, Chief Investment Officer 15th October 2019 Jonathan Newman, Group Finance Director
Slide 2: Overview
Overview 25+ Specialist Years strong 16 Investments PE/VC investor in Financial Services intermediaries Invested in 51 companies Geographically diverse since 1990 within our specialist sector Long-term view Up to £5m investment Industry knowledge Partnership approach to investment and mutually Signi
Slide 3: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 140 130.00 130 126.17 † 120.03 † 120 110 Full Year 100 98.90 Half Year 88.80 £ Millions 90 79.68 80 70.81 70 62.97 58.92 60 55.46 *NB: The valuation at 31 July 2007 includes £10.1m net proceeds 50 44.17 40.61 raised on AIM 40 **NB: The valuations 30 22.10 from and
Slide 4: 2019 Summary – Period Ending July 2019
2019 Summary – Period Ending 31 July 2019 • As at 31 July 2019 – 16 investments in portfolio with a NAV of • Dividend of 4.76p per share declared for the year ended 31 January £130.0m (31 January 2019 £126.2m*) 2019, paid on 26 July 2019, the final dividend from a three-year distribution following t
Slide 5: Specific Activity During the Period – LEBC Update
Specific Activity During the Period – LEBC Update • The FCA has undertaken a sector-wide review of the Defined Benefit (“DB”) Transfer market • Mattioli Woods exited the DB Transfer business, with Sanlam recently announcing it is stopping network IFAs offering DB Transfer advice • In September 2019,
Slide 6: Specific Activity within the Portfolio During the Period (Nexus)
Specific Activity within the Portfolio During the Period • In October 2018, the Company purchased an additional 1.9% in Nexus for cash consideration of £2.6m • In April of this year, BP Marsh provided Nexus with a £2m revolving credit facility, as part of Nexus’ wider debt fundraising exercise in or
Slide 7: Specific Activity within the Portfolio During the Period (XPT)
Specific Activity within the Portfolio During the Period • In June 2017, B.P. Marsh subscribed for a 35% holding in XPT Group LLC – the U.S. based specialty lines insurance distribution company • During the period, XPT completed the acquisition of Klein & Costa, an MGA and surplus lines broker locat
Slide 8: Specific Activity - New Investment
Specific Activity - New Investment • This opportunity was initially introduced to B.P. Marsh by PSC Insurance Group Limited • Founding management team Alex Cohn, Martin Birch and Ben Ko wanted a strategic partner to assist in the development of a new MGA in the Australian agricultural sector • This
Slide 9: International Portfolio
International Portfolio Summa Insurance Brokerage S.L. UK Based Investments: CBC UK Ltd EC3 Brokers Ltd Stewart Specialty Risk The Fiducia MGA Company Ltd Underwriting Ltd LEBC Holdings Ltd Mark Edward Partners LLC Nexus Underwriting Management Ltd Walsingham Motor Insurance Ltd XPT Group LLC B.P. M
Slide 10: Equity Investments – Underwriting Agencies
Equity Investments – Underwriting Agencies Movement in Movement in Fair market value Equity Cost of equity Year of initial Investment Sector Jurisdiction Period to 31 July Period to 31 July 31 July 2019 (£’000) As at 31 July 2019 investment (£’000) investment 2019 (£’000) 2019 (%) Nexus MGA UK 40,29
Slide 11: Equity Investments - Brokers
Equity Investments - Brokers Movement in Movement in Fair market value Equity Cost of equity Year of initial Investment Sector Jurisdiction Period to 31 July Period to 31 July 31 July 2019 (£’000) As at 31 July 2019 investment (£’000) investment 2019 (£’000) 2019 (%) EC3 Brokers Insurance Broking UK
Slide 12: Equity Investments - Other
Equity Investments - Other Movement in Movement in Fair market value Equity Cost of equity Year of initial Investment Sector Jurisdiction Period to 31 July Period to 31 July 31 July 2019 (£’000) As at 31 July 2019 investment (£’000) investment 2019 (£’000) 2019 (%) LEBC IFA UK 23,859 59.3% 12,374 20
Slide 13: 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 added Insurance Intermed
Slide 14: Investment Opportunities
Investment Opportunities • 42 new investment enquiries in period to 31 July 2019, compared to 32 investment Current Pipeline enquiries in the period to 31 July 2018 • Overseas MGAs • 1 completed • UK broking businesses • 36% of new investment enquiries in period to 31 July 2019 emanated • Wealth man
Slide 15: Financial Highlights – Period End 31 July 2019
Financial Highlights –Period End 31 July 2019 NAV of £130.0m • 31 January 2019: £126.2m†, 31 July 2018: £120.0m† NAV per share of 361p • 31 January 2019: 350p, 31 July 2018: 333p Consolidated Profit after Tax: £5.6m • Year ended 31 January 2019: £12.4m†. Six months ended 31 July 2018: £6.2m† † resta
Slide 16: Financial Highlights – Period End 31 July 2019
Financial Highlights –Period End 31 July 2019 Average compound NAV growth of 11.7% p.a. since 1990* • Excl. £10.1m raised on flotation and £16.6m raised in the July 2018 Share Placing and Open Offer Final dividend of 4.76p per share paid on 26 July 2019 • The final dividend from a three-year distrib
Slide 17: Cash Position
Cash Position Cash at 1 February 2019 £7.9m Equity investments £(0.9)m Loans granted £(5.1)m Loans repaid £0.4m Tax repayments £0.3m Dividend paid £(1.7)m Net treasury gains and other investment income - Shares repurchased £(0.1)m Other operating movements £0.6m Cash at 31 July 2019 £1.4m Current un
Slide 18: Loan Portfolio
Loan Portfolio Investment 31 July 2019 (£’000) 31 January 2019 (£’000) 31 July 2018 (£’000) Bastion - - 61 Broucour - - 130 Fiducia 2,470 2,470 2,195 LEBC 1,000 - - MB Group 472 465 600 Nexus 6,000 4,000 4,000 Paladin (CBC) 4,596 4,096 4,096 PLUM - - 336 Stewart 280 261 263 Specialty Risk Summa 2,14
Slide 19: Dividends
Dividends The Group’s historic dividend payments are shown below, aggregate dividend per share of 20.7p since flotation £1,800,000 4.76p p/s 4.76p p/s £3.50 £1,600,000 February 2017: Realisation of Besso £3.00 Insurance Group Limited £1,400,000 July 2013: Realisation of Hyperion Paid £2.86 Insurance
Slide 20: Summary
Summary • A leading specialist investor in global financial intermediary companies for 25 years • Diversified in terms of company concentration, geography and forex, mitigating risk • A proven track record of creating superior value for shareholders: • Identifying future industry leaders through the
Slide 21: Appendices
Appendices 1. Management Team 2. Non-Executive Directors 3. Growth Strategy 4. Investment Model 5. Investment Process 6. Adding Value 7. Portfolio 8. Minority Investor Protections 9. Financials 10.Key Shareholders 11.Joint Share Ownership Plan 12.Contacts 21
Slide 22: Management Team
Management Team Brian Marsh Alice Foulk Jonathan Newman Daniel Topping Executive Chairman Managing Director Group Finance Director Chief Investment Officer Brian Marsh has over 55 years’ Alice Foulk joined B.P Marsh in A Chartered Management Dan Topping is a Member of the experience in insurance bro
Slide 23: Non-Executive Directors
Non-Executive Directors Pankaj Lakhani FCCA Nicholas Carter Non-Executive Director Non-Executive Director A Certified Accountant, Pankaj Lakhani has Nicholas Carter has over 50 years’ experience over 40 years’ of accounting experience within in the Lloyd’s Insurance Market. Nick held a the Insurance
Slide 24: 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 25: Investment Model
Investment Model Specialist Investor Up To £5m Initial in early stage and SME financial Relationship Driven Investment services businesses, operating in 20-40% minority equity stakes Investors in People niche segment where funding difficult to obtain Scope for follow on funding Long-Term View Value
Slide 26: Investment Process
Investment Process •Strong network of industry contacts • In-house comprehensive fact- • Final negotiation • Business plans tested brings new opportunities finding and due diligence process - three-year historic and • Completion • Post-investment plan compiled •Each opportunity is scrutinised by for
Slide 27: 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 28: Portfolio as at 31 July 2019
Portfolio as at 31 July 2019 • Group invested in July 2019 Agri Services PTY Limited – • Ag Guard provides insurance solutions for the Australian agricultural sector 36.0% • Ag Guard was established in 2013 by Alex Cohn, the current Managing Director • Group invested in April 2016 Asia Reinsurance B
Slide 29: Portfolio as at 31 July 2019 Continued
Portfolio as at 31 July 2019 Continued • Group invested in December 2017 • EC3 is an independent specialist Lloyd’s broker and reinsurance broker founded by its current CEO, Danny Driscoll, who led a management buy out to acquire EC3’s then EC3 Brokers Limited– 20.0% book of business from AJ Gallagh
Slide 30: Portfolio as at 31 July 2019 Continued
Portfolio as at 31 July 2019 Continued • Invested in SSRU in July 2017 Stewart Specialty Risk • SSRU is a recently established Specialty Casualty Underwriting Agency, based in Toronto, Canada. SSRU provides specialist insurance products to a wide array of clients in Underwriting Ltd – 30.0% the Cons
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 the time of investment the
Slide 32: Consolidated Statement of Financial Position (IFRS)
Consolidated Statement of Financial Position (IFRS) at 31 July 2019 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2019 £’000 31 July 2018 £’000* 31 January 2019 £’000* Tangible and intangible assets 150 158 158 Right of use asset 1,378 1,560 1,468 Investments at fair value – Eq
Slide 33: Consolidated Statement of Comprehensive Income (IFRS)
Consolidated Statement of Comprehensive Income (IFRS) at 31 July 2019 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2019 £’000 31 July 2018 £’000* 31 January 2019 £’000* Gains on investments (realised and 4,077 5,540 14,106 unrealised) Impairment of investments and loans (36) -
Slide 34: Consolidated Statement of Cash Flows (IFRS)
Consolidated Statement of Cash Flows (IFRS) at 31 July 2019 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2019 £’000 31 July 2018 £’000* 31 January 2019 £’000* Net cash from operating activities 850 (308) (342) Taxation 310 (1,168) (1,170) Purchase of property, plant and equipm
Slide 35: Key Shareholders at 31 July 2019
Key Shareholders at 31 July 2019 DIRECTORS • Brian Marsh OBE - 41.77%* MAJOR SHAREHOLDERS (>3%) • Alice Foulk • PSC UK Pty Limited – 19.60% • Hargreaves Lansdown Asset Management – 4.58% • Daniel Topping • RBC Wealth Management – 3.91% (Trustee of the • Jonathan Newman Less than 0.5% each Company’s
Slide 36: Joint Share Ownership Plan (JSOP)
Joint Share Ownership Plan (JSOP) • Previous 5% JSOP came to an end in November 2017 and saw year-on-year improvements in shareholder return and increase in share price 138p to 245p over the three-year period • A new 3.9% three-year JSOP instituted to incentivise and retain the management team • 1,4
Slide 37: Contacts
Contacts 4 Matthew Parker Street London SW1H 9NP Telephone: 020 7233 3112 www.bpmarsh.co.uk Nominated Adviser & Broker Financial PR Panmure Gordon Newgate Communications Telephone: 020 7886 2500 Telephone: 020 3757 6880 37
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