B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2020 Earnings Presentation
46 slides from B.p. Marsh & Partners's earnings presentation, Jun 9, 2020
Slide 1: Year End Results for the year ending 31 January 2020
Year End Results For the year ending 31 January 2020 Dan Topping, Chief Investment Officer Jonathan Newman, Group Finance Director 9 June 2020
Slide 2: Overview
Overview 25+ Specialist Years strong 17 Investments PE/VC investor in Financial Services intermediaries Invested in 52 companies since 1990 Geographically diverse within our specialist sector Long-term view Industry knowledge Up to £5m investment Partnership approach to investment and mutually agree
Slide 3: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 160.00 140.00 136.90 130.00 126.17 † 120.00 120.03† Full Year Half Year 98.90 *NB: The valuation at 31 100.00 January 2007 includes 88.80 £10.1m net proceeds £ Millions 79.68 raised on AIM 80.00 70.81 **NB: The valuations 62.97 from and including 31 July 58.92 60.0
Slide 4: 2020 Summary – Price and NAV comparators
2020 Summary – Year Ending 31 January 2020 • As at 31 January 2020 – 17 investments in portfolio with a NAV of £136.9m (31 • Increase in Equity Portfolio Value of 11.1% in year January 2019 £126.2m*) to 31 January 2020 to £115.7m • Total Shareholder return of 9.8% for the period to 31 January 2020,
Slide 5: Outlook & Covid-19 Impact
Outlook & Covid-19 Impact • The Group believes the portfolio and the management teams within it are well set to continue to deliver excellent long- term growth to their shareholders • There is continued demand from the wider private equity market for financial services and intermediated investments
Slide 6: International Portfolio
International Portfolio Summa Insurance Brokerage S.L. CBC UK Ltd EC3 Brokers Ltd The Fiducia MGA Company Ltd Stewart Specialty Risk LEBC Holdings Ltd Underwriting Ltd Lilley Plummer Risks Ltd Mark Edward Partners LLC Nexus Underwriting Management Ltd Walsingham Motor Insurance Ltd XPT Group LLC B.P
Slide 7: Insurance Intermediary Overview
Insurance Intermediary Overview • The Group’s insurance intermediary portfolio produced £939m (over US$ 1bn) of insurance premium (“GWP”) in 2019, of which: • The Group’s Broking investments placed over £400m of GWP, producing over £32m of commission income in 2019, accessing specialty markets aroun
Slide 8: Overview – Broking Investments
Overview – Broking Investments • Since inception, much of the Group’s growth has been underpinned by a successful track record of investing in Brokers, both in the Lloyd’s and London market, as well as internationally • The Group’s 6 Broking investments placed over £400m of GWP in 2019 • This produc
Slide 9: Overview - Managing General Agencies (“MGAs”)
Overview - Managing General Agencies (“MGAs”) • The Group’s 9 MGAs produced GWP of £538m in 2019 • This produced over £62m of commission income in 2019 • The Group’s MGAs operate across 28 product areas, on behalf of 50 insurers • These MGAs focus on profitable underwriting, and in a market where ac
Slide 10: Specific Activity in the Year - New Investment
Specific Activity in the Year - New Investment • This opportunity was initially introduced to the Group by PSC Insurance Group Limited and provided an opportunity to add a further investment to B.P. Marsh’s portfolio based in Australia • Founding management team Alex Cohn and Ben Ko wanted a strateg
Slide 11: Specific Activity in the Year - New Investment
Specific Activity in the Year - New Investment • B.P. Marsh sourced an opportunity to invest in a newly formed specialist Marine Lloyd's broker, based in London • The investment made by B.P. Marsh is being used to finance the growth of the business within its specialist sector via the hiring of othe
Slide 12: Investment Case Study: Growth in Gross Written Premium
Investment Case Study Since investment Nexus’ In April 2019, BP Marsh £344m EBITDA is expected to increase provided Nexus with a £2m from £2.6m to an estimated revolving credit facility as £328m £14.5m in 2020. part of Nexus’ wider debt fundraising exercise in order Growth in Gross Written Premium B
Slide 13: Portfolio Company Highlight - XPT
Portfolio Company Highlight - XPT • Since investment, XPT has made numerous acquisitions, providing it with a footprint across the USA • In April 2019, the Group provided XPT with a US$2m Loan Facility, which sits alongside US$40m of funding from Madison Capital • In September 2019, Madison Capital
Slide 14: Portfolio Company Highlight - CBC
Portfolio Company Highlight - CBC • CBC is a specialist Lloyd’s broker providing both wholesale and retail solutions to its UK clients • The Group acquired its shareholding in CBC, as part of a management led buy-out of its previous owner • As part of this buy-out, the Group was once again able to p
Slide 15: Portfolio Company Highlight - SSRU
Portfolio Company Highlight - SSRU • The Group backed SSRU as a start-up in 2017, having been introduced to its CEO, Stephen Stewart, by contacts at what was Aon Benfield • Since its establishment, SSRU has become a trusted insurance partner to the Canadian Property and Casualty Sector concentrating
Slide 16: Portfolio Company Update - LEBC
Portfolio Company Update - LEBC • The Group have been invested in LEBC, the Independent Financial Advisory company providing expert financial advice to individuals, since April 2007 • In line with its successful long-term investment strategy, the Group continue to support LEBC as it evolves its busi
Slide 17: Investment Opportunities
Investment Opportunities • 110 new investment enquiries in year to 31 January 2020 Independent Financial Advisers • 2 completed (Ag Guard PTY Limited and Lilley Plummer Risks) 5% • 59% of new investment enquiries in year to 31 January 2020 Non-Finanical Services emanated internationally, compared to
Slide 18: Investment Model
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 19: Financial Highlights – Year End 31 January 2020
Financial Highlights – Year End 31 January 2020 NAV of £136.9m • 31 January 2019: £126.2m NAV per share of 380.1p • 31 January 2019: 350.3p Consolidated Profit after Tax: £12.5m • Year ended 31 January 2019: £12.4m†. Underlying Profit before Tax: £0.8m • Year ended 31 January 2019: £0.7m†. † restate
Slide 20: Financial Highlights – Year End 31 January 2020
Financial Highlights – Year End 31 January 2020 Average compound NAV growth of 8.1% p.a. since flotation and 11.8% 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 2.22p per share (£0.8m) declared to be paid on 31 J
Slide 21: Cash Position
Cash Position Cash at 1 February 2019 (including treasury funds) £7.9m Equity investments £(2.6)m Equity proceeds £0.4m Loans granted £(5.1)m Loans repaid £1.0m Tax repayments £0.3m Dividend paid £(1.7)m Shares repurchased £(0.2)m Other operating movements £0.8m Cash at 31 January 2020 £0.8m Current
Slide 22: Loan Portfolio
Loan Portfolio Investment 31 January 2020 (£’000) 31 January 2019 (£’000) Fiducia 2,470 2,470 LEBC 1,000 - MB Group 282 465 Nexus 6,000 4,000 Paladin (CBC) 4,596 4,096 Stewart Specialty Risk 258 261 Summa 2,012 2,123 Walsingham 715 1,470 XPT 1,512 - Total 18,845 14,885 22
Slide 23: Dividends
Dividends The Group’s historic dividend payments are shown below. Aggregate dividend per share of 25.5p paid since flotation £1,800,000 £3.50 4.76p p/s 4.76p p/s £1,600,000 £2.86 £3.00 February 2017: Realisation £1,400,000 of Besso Insurance Group 2.61 Paid £2.54 £2.50 £1,200,000 July 2013: Realisat
Slide 24: Covid-19 – Financial Impact
Covid-19 – Financial Impact • No financial impact was included within the audited results to 31 January 2020 • Covid-19 was treated as a non-adjusting post balance sheet event • The Group adapted to the pandemic as follows: o Successfully transitioned to remote working prior to the Government ordere
Slide 25: 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 excellent value for shareholders: • Identifying future industry leaders through th
Slide 26: Appendices
Appendices 1. Management Team 2. Board Members 3. Growth Strategy 4. Investment Model 5. Adding Value 6. Equity Investments 7. Portfolio 8. Minority Investor Protections 9. Financials 10. Key Shareholders 11. Joint Share Ownership Plan 12. Contacts 26
Slide 27: 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’ A Chartered Management Dan Topping is a Member of the Chartered Alice Foulk joined B.P Marsh in experience in ins
Slide 28: Board Members
Board Members Pankaj Lakhani FCCA Nicholas Carter Non-Executive Director Non-Executive Director A Certified Accountant, Pankaj Lakhani has over Nicholas Carter has over 50 years’ experience in 40 years’ of accounting experience within the the Lloyd’s Insurance Market. Nick held a variety Insurance M
Slide 29: 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 investment Invest Take minority equity positions in promising early stage financial services compani
Slide 30: Investment Model
Investment Model Specialist Investor Up To £5m Initial in early stage and SME financial Relationship Driven Investment services businesses, operating in Investors in People 20-40% minority equity stakes niche segment where funding difficult to obtain Scope for follow on funding Value Add Flexible Ap
Slide 31: 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 forecast • Completion • Post-investment plan compiled by •Each opportunity is scruti
Slide 32: 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 33: Equity Investments – Underwriting Agencies
Equity Investments – Underwriting Agencies Fair market value Movement in Year to Equity Cost of equity Year of initial Movement in Year to Investment Sector Jurisdiction 31 January 31 January 2020 As at 31 January 2020 investment (£’000) investment 31 January 2020 (%) 2020 (£’000) (£’000) Nexus MGA
Slide 34: Equity Investments – Brokers and Other
Equity Investments – Brokers and Other Fair market value Movement in Year Equity Cost of equity Year of initial Movement in Year to Investment Sector Jurisdiction 31 January 2020 to 31 January As at 31 January 2020 investment (£’000) investment 31 January 2020 (%) (£’000) 2020 (£’000) Paladin (CBC)
Slide 35: Portfolio as at 31 January 2020
Portfolio as at 31 January 2020 Agri Services Company • Group invested in July 2019 PTY Limited – 36.0% • Ag Guard is an Australian-based MGA which provides insurance to the Agricultural Sector • Group invested in April 2016 Asia Reinsurance • ARB is a Singapore-headquartered independent specialist
Slide 36: Portfolio as at 31 January 2020 Continued
Portfolio as at 31 January 2020 Continued • Group helped establish Criterion alongside its Partners in Asiare Holdings (PTE) Limited and Asia Reinsurance Brokers (PTE) Limited in July Criterion Underwriting 2018 PTE Limited – 29.4% • Criterion is a start up Singapore-based Managing General Agency pr
Slide 37: Portfolio as at 31 January 2020 Continued
Portfolio as at 31 January 2020 Continued Lilley Plummer Risks • Group invested in October 2019 Limited – 30.0% • LPR is a specialist marine Lloyd's broker, based in London • December 2013 invested in MB MB Prestige Holdings • MB is a MGA, headquartered in Sydney, Australia, recognised as a market l
Slide 38: Portfolio as at 31 January 2020 Continued
Portfolio as at 31 January 2020 Continued • Invested in August 2014 Nexus Underwriting • Nexus is an independent specialty Managing General Agency founded in 2008. Through its five operating subsidiaries Nexus specialises in Management Limited – Directors & Officers, Professional Indemnity, Financia
Slide 39: Portfolio as at 31 January 2020 Continued
Portfolio as at 31 January 2020 Continued • January 2005 the Group provided finance to a Spanish management team with the objective of acquiring and consolidating regional Summa Insurance insurance brokers in Spain Brokerage, S.L. – • Summa has acquired brokers all over Spain. It now has over 20 off
Slide 40: 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 41: Consolidated Statement of Financial Position (IFRS) at 31 January 2020
Consolidated Statement of Financial Position (IFRS) at 31 January 2020 Audited year to Audited year to 31 January 2020 £’000 31 January 2019 £’000* Tangible and intangible assets 151 158 Right of use asset 1,286 1,468 Investments at fair value – Equity Portfolio 115,666 101,947 Debtors / Loans recei
Slide 42: Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2020
Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2020 Audited year to Audited year to 31 January 2020 £’000 31 January 2019 £’000* Gains on investments (realised and unrealised) 11,570 14,106 Impairment of investments and loans (69) (2,595) Operating income 5,194 4,631 Total incom
Slide 43: Consolidated Statement of Cash Flows (IFRS) at 31 January 2020
Consolidated Statement of Cash Flows (IFRS) at 31 January 2020 Audited year to Audited year to 31 January 2020 £’000 31 January 2019 £’000* Net cash from operating activities 1,189 (342) Taxation 261 (1,170) Purchase of property, plant and equipment (26) (20) Equity investments made (2,551) (8,719)
Slide 44: Key Shareholders at 31 January 2020
Key Shareholders at 31 January 2020 DIRECTORS • Brian Marsh OBE – 41.78%* • Alice Foulk • Daniel Topping MAJOR SHAREHOLDERS (>3%) • Jonathan Newman Less than 0.5% each • PSC UK Pty Limited – 19.71% • Pankaj Lakhani • Hargreaves Lansdown Asset Management – 4.36% • Nicholas Carter • RBC Wealth Managem
Slide 45: 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 46: Contacts
Contacts 4 Matthew Parker Street London SW1H 9NP Telephone: 020 7233 3112 www.bpmarsh.co.uk Nominated Adviser & Broker Financial PR Panmure Gordon Tavistock Telephone: 020 7886 2500 Telephone: 020 7920 3150 46