B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2018 Earnings Presentation
41 slides from B.p. Marsh & Partners's earnings presentation, Jun 12, 2018
Slide 1: Year End Results
Year End Results For the year ending 31 January 2018 Camilla Kenyon, Director & Head of Investor Relations Dan Topping, Chief Investment Officer Jonathan Newman, Group Finance Director 12 June 2018
Slide 2: Overview
Overview 25+ Years strong Specialist Invested in 48 companies Robust balance sheet PE/VC investor in Financial Services intermediaries and realised 32 since 1990 £5.4m cash as at 31 January 2018 Industry knowledge Long-term view Up to £5m investment Significant, specialist experience and deep sector
Slide 3: 2018 Summary - Year End 31 January 2018
2018 Summary - Year End 31 January 2018 • As at 31 January 2018 – 16 investments in • Equity Portfolio increase of 31.3% portfolio with a NAV of £98.9m (31 January year to 31 January 2018 (22.1% • Dividend of 4.76p per share declared 2017 £79.7m), with an average holding year to 31 January 2017) for
Slide 4: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 98.87 100 88.80 90 79.68 Full Year 80 73.85 Half Year 70.81 £ Millions 70 62.97 58.92 60 55.46 50 44.17 40.61 40 30 22.10 20 * NB: The valuation at 31 January 2007 10 includes £10.1m net proceeds raised on AIM 0 31-Jan-05 31 Jan 2007* 31-Jan-10 31-Jan-13 31-Jan-14
Slide 5: Dividends
Dividends • The Group’s historic dividend payments are shown below. Total shareholder return in year to 31 January 2018 is 25.5% £1,600,000 £3.00 £1,400,000* £2.54 £1,400,000 £2.50 Paid £1,100,000 £1,200,000 £2.06 Declared £1,000,000 £2.00 £1.47 £1,000,000 £800,000 Share Price £800,000 £1.35 £1.40 £
Slide 6: Conditional Placing and Open Offer – Post Year end Event
Conditional Placing and Open Offer – Post Year end Event • £18.49m total investment by PSC • 6.17m new shares in the Placing for £15.55m • purchase of 1.17m B.P. Marsh Management Limited shares for £3m • Up to £1.5m Open Offer element (up to 595,238 shares) • Increased share capital and reduction in
Slide 7: PSC & B.P. Marsh – Investment Rationale
PSC & B.P. Marsh – Investment Rationale • Complementary listed businesses operating in the insurance intermediary sector • Excellent strategic fit • Investors in businesses from early stage to mature • Investors in insurance intermediary businesses, without taking underwriting risk • Successful inve
Slide 8: PSC – Business Overview
PSC – Business Overview • The PSC Insurance Group (PSC) operates a diversified insurance intermediary Group with operations and investments in Australia, New Zealand and the United Kingdom • PSC has a proven track record in business acquisition, establishment and turnaround in the insurance services
Slide 9: 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 5% three-year JSOP to be instituted to incentivise and retain the management team •
Slide 10: Investments
Investments Fair market Movement in Cost of equity Equity Movement in value Year of initial Period to 31 Investment Sector Jurisdiction investment As at 31 January Period to 31 31 January 2018 investment January 2018 (£’000) 2018 January 2018 (£’000) (£’000) EC3 Brokers Insurance Broking UK 5,000 5,
Slide 11: International Strategy
International Strategy 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 XPT Group LLC Walsingham Motor Insurance Ltd Approxi
Slide 12: Specific Activity New Investments – Lloyd's Brokers
Specific Activity New Investments – Lloyd’s Brokers • On 18 December 2017 the Group invested £5m in EC3 Brokers Group • The Group acquired 35% of CBC UK Limited in February 2017, via a Limited, for a 20% stake thinly capitalised holding company, Paladin NewCo Limited (now Paladin Holdings Limited) •
Slide 13: B.P. Marsh Strategy to Invest in North America
B.P. Marsh Strategy to Invest in North America • In 2016 a strategic decision was made to directly enter the North American arena, which would constitute B.P. Marsh’s first direct investment since 2006, given North American significance in the Insurance Market • To source new investments, B.P. Marsh
Slide 14: Specific Activity New Investments – USA
Specific Activity New Investments – USA • On 13 June 2017 the Group invested USD $6m into XPT for a 35% • On 12 October 2017 the Group invested USD $6m in MEP for a 30% shareholding shareholding • XPT is a newly established US speciality lines insurance distribution • MEP is a specialty retail insur
Slide 15: Specific Activity within the Portfolio During the Period (i)
Specific Activity within the Portfolio During the Period (i) • Throughout the Group’s financial year to 31 January 2018, Nexus has undertaken a number of acquisitions, Vectura Underwriting, Equinox Global, Zon Re Accident Reinsurance, Apsley Specialty and Credit Risk Solutions • This M&A activity wa
Slide 16: Specific Activity within the Portfolio During the Period (ii)
Specific Activity within the Portfolio During the Period (ii) • On 26 July 2017, the Group purchased a further 17.84% stake in LEBC for a consideration price of £7.14m, increasing the Group’s holding in LEBC to 60.88% • In February 2018, LEBC completed the acquisition of Aspira, a Bristol-based advi
Slide 17: 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 18: 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 19: Investment Process
Investment Process BUSINESS PLAN HEADS OF TERMS INVESTMENT DOCUMENTS Initial Assessment Due Diligence Completion Post Transaction Support • Business plans tested • Strong network of industry • In-house comprehensive fact- • Final negotiation • Post-investment plan contacts brings new opportunities f
Slide 20: Investment Opportunities
Investment Opportunities • 77 new investment enquiries in period to 31 January 2018 (in line with Current Pipeline previous years totals; 84 and 71) • MGA pipeline continues to be strong, including start-ups • 4 completed; CBC & EC3 (UK Lloyd’s brokers) and XPT & MEP (U.S.) • Overseas insurance inte
Slide 21: Investments Financial Highlights – Year Ended 31 January 2018
Investments Financial Highlights –Year Ended 31 January 2018 Equity Portfolio value increase of 31.3% for the year ending 31 January 2018 • NAV of £98.9m (31 January 2017: £79.7m, 31 July 2017: £88.8m)* • NAV per share of 339p (31 January 2017: 273p, 31 July 2017: 304p)* • Consolidated profit after
Slide 22: Investments Financial Highlights – Year Ended 31 January 2018
Investments Financial Highlights –Year Ended 31 January 2018 • Average compound NAV growth of 12.0% p.a. since 1990 (excl. £10.1m raised on flotation)* • Final Dividend of 4.76p per share declared and will be paid on 31 July 2018 to Shareholders registered at the close of business on 13 July 2018 •
Slide 23: Cash Position
Cash Position Cash at 1 Feb 2017 (including treasury funds) £12.6m Proceeds from disposal of investments £25.0m Equity investments £(21.7)m Loans granted £(15.6)m Loans repaid £8.9m Tax payments £(3.1)m Dividend paid £(1.1)m Net treasury gains and other investment income £0.5m Other operating moveme
Slide 24: Loan Portfolio
Loan Portfolio Investment 31 January 2018 (£’000) 31 January 2017 (£’000) Bastion* 342 342 Besso - 1,808 Broucour 155 255 Bulwark* 665 615 Fiducia 1,619 350 LEBC 1,500 1,005 MB Group 603 759 Nexus 4,000 - Paladin (CBC) 3,996 - PLUM* 1,115 - Stewart Specialty Risk 201 152 Summa 2,283 2,346 Trireme -
Slide 25: Summary
Summary • Equity Portfolio increase of 31.3% since 31 January 2017 • Final Dividend of 4.76p per share declared and to be paid on 31 July 2018 and intend to maintain that level for the year ending 31 January 2019 • £5.4m of cash and treasury funds at year end • Share price of 284p with a discount to
Slide 26: Appendices
Appendices 1. Management Team 2. Board Members 3. Growth Strategy 4. Adding Value 5. Portfolio 6. Minority Investor Protections 7. Financials 8. Key Shareholders 9. PSC Business Overview 10.Contacts 26
Slide 27: 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 underw
Slide 28: 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 2011, following her appointment as Head of 20 years’ experience in the financial services Investor Relation
Slide 29: Board Members
Board Members Campbell Scoones Nicholas Walker MSc, (Comb Hons) Pankaj Lakhani FCCA Non-Executive Director Non-Executive Director Non-Executive Director Campbell Scoones has over 45 years' experience Nick has over 30 years’ experience in the Financial A Certified Accountant, Pankaj Lakhani has over
Slide 30: 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 31: 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 32: Portfolio as at 31 January 2018
Portfolio as at 31 January 2018 • 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 A
Slide 33: Portfolio as at 31 January 2018 Continued
Portfolio as at 31 January 2018 Continued • Group invested in November 2016 The Fiducia MGA Co Limited – • Fiducia is a UK Marine Cargo Underwriting Agency, with registered Lloyd’s Coverholder status which specialises in the provision of insurance solutions across a number of 35% Marine risks includ
Slide 34: Portfolio as at 31 January 2018 Continued
Portfolio as at 31 January 2018 Continued • Invested in SSRU in January 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% the
Slide 35: 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 36: Consolidated Statement of Financial Position (IFRS) at 31 January 2018
Consolidated Statement of Financial Position (IFRS) at 31 January 2018 Audited Year to Unaudited 6 months to Audited Year to 31 January 2018 £’000 31 July 2017 £’000 31 January 2017 £’000 Tangible and intangible assets 167 177 15 Investments at fair value – Equity Portfolio 79,122 62,982 63,567 Debt
Slide 37: Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2018
Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2018 Audited Year to Unaudited 6 months to Audited Year to 31 January 2018 £’000 31 July 2017 £’000 31 January 2017 £’000 Gains on investments (realised and 18,837 12,419 11,491 unrealised) Impairment of investments and loans (2,122
Slide 38: Consolidated Statement of Cash Flows (IFRS) at 31 January 2018
Consolidated Statement of Cash Flows (IFRS)at 31 January 2018 Audited Year to Unaudited 6 months to Audited Year to 31 January 2018 £’000 31 July 2017 £’000 31 January 2017 £’000 Net cash from operating activities 234 (213) (69) Taxation (3,076) (93) (102) Purchase of property, plant and equipment (
Slide 39: Key Shareholders at 31 January 2018
Key Shareholders at 31 January 2018 DIRECTORS MAJOR SHAREHOLDERS (>3%) • Brian Marsh OBE - 56.7%* • IS Partners AG / Helium Special Situations Fund – 5.80% • B.P. Marsh Management Limited – 4.87% • Hargreaves Lansdown Asset Management – 3.94% • James Sharp & Co – 3.68% • Alice Foulk • Daniel Topping
Slide 40: PSC – Management Team
PSC – Management Team PSC has an experienced team of insurance practitioners, with broad skill sets, at both Board and Executive level. These are utilised across the different businesses to leverage efficiencies and opportunities. Paul Dwyer – Group Managing Director Paul Dwyer was appointed to the
Slide 41: 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 (UK) Limited Telephone: 020 7886 2500 Financial PR Redleaf Communications Telephone: 020 3757 6888 41