B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2014 Earnings Presentation
35 slides from B.p. Marsh & Partners's earnings presentation, June 2014
Slide 1: Year End Results for the year to 31 January 2014
B.P. Marsh & Partners Plc Year End Results For the year to 31 January 2014 Brian Marsh OBE, Chairman Jonathan Newman, Group Finance Director Dan Topping, Investment Director Camilla Kenyon, Director & Head of Investor Relations June 2014
Slide 2: Overview
Overview Niche Venture Capital provider focused on minority investments in financial services businesses, typically taking an equity stake of between 15% and 45% Considers investment opportunities based in the United Kingdom, Australia, Europe, North America and occasionally elsewhere Established in
Slide 3: Overview Continued
Overview Continued = As at 31 January 2014 — eleven investments in portfolio with an equity valuation of £31.7m, with an average holding period of eight years = Equity Portfolio increase of 14% for the year (2013: 13.3% increase) = Average compound NAV growth of 11.6% p.a. since 1990 (excl. £10.1m r
Slide 4: Investment Sector Cost of equity, fair market value
Investment Sector Cost of | Fair market Equity equity value initi i in Year to 31.01.14 investment g . 31.01.14 (4000) Hyperion Insurance Group Insurance 2.79% 14% Limited Intermediary Besso Insurance Group Insurance 2,828 7,190 | 37.94% 1995 1,757 32% Limited Intermediary LEBC Holdings Limited Fina
Slide 5: Specific Activity within the Portfolio (I)
Specific Activity within the Portfolio Over the Period (1) Besso Insurance Group Limited (“Besso”’) Besso Appoint Sam Hovey as new CFO * Sam joined Besso from Cooper Gay & Company where she was CFO since 2010. Her previous roles include positions at HSBC Insurance Brokers and Rattner Mckenzie = Sam
Slide 6: Specific Activity within the Portfolio (II)
Specific Activity within the Portfolio Over the Period (11) LEBC Holdings Ltd (““LEBC”) Successful 2013 financial year " LEBC continue to grow revenues and improve its profitability. For the year ended 30 September 2013 LEBC performed as follows:- Turnover 411.3m (2012: £10.4m) Operating Profit 40.7
Slide 7: Specific Activity within the Portfolio (III)
Specific Activity within the Portfolio Over the Period (111) Summa Insurance Brokerage SL (“Summa”’) = The Group has reduced the value of this investment again in response to the continued difficult conditions within the Spanish economy = Management team restructured and augmented where necessary to
Slide 8: Specific Activity within the Portfolio (IV)
Specific Activity within the Portfolio Over the Period (iv) Sterling Insurance PTY Limited (“Sterling”’) Performance in line with expectations as at investment A more recent investment which has seen pleasing growth in valuation over the period Sterling is beginning to leverage its new shareholder r
Slide 9: Disposals — Hyperion Insurance Group Ltd & Portfolio Design Group International Ltd
Disposals — Hyperion Insurance Group Ltd & Portfolio Design Group International Ltd Hyperion Insurance Group Limited (“Hyperion”) As previously announced, the sale of 80% of the Group’s holding in Hyperion to General Atlantic completed in July 2013 for £29.2m in cash The Group retains a 2.79% stake
Slide 10: Investment Opportunities
Investment Opportunities = 61 new investment enquiries received in the year to 31 January 2014 = 16% of the 61 investments continued to detailed investigations, 8% to Heads of Terms stage and 5% (3 investments) were completed * Strong current pipeline, including opportunities in the insurance interm
Slide 11: Case Study — MB Prestige Holdings Limited
Case Study — MB Prestige Holdings Limited (“MB Group”) Overview In December 2013 the Group invested in MB Group, which was seeking to effect an MBO MB Group is an MGA recognised as a market leader in respect of prestige motor vehicle insurance in all mainland states of Australia New connections forg
Slide 12: Case Study — Continued
Case Study — Continued Deal Structure MB Group’s Management team acquired an additional 20% from the exiting shareholder, taking their overall holding to 60% The Group acquired 40% in MB Group for AU$0.8m and, in addition to the equity investment, provided MB Group with loan funding of AU$1.4m (Mini
Slide 13: Case Study — Continued
Case Study — Continued The Group’s Rationale for Investment: * The Group saw MB Group as a profitable and solid business with an excellent reputation and a capable and experienced management team * Chairman with respected industry background and proven track record in growing MGA businesses with Pri
Slide 14: Case Study — Continued
Case Study — Continued The MB Group’s Rationale for seeking Investment from the Group: MB Group saw that the Group could add value in a number of ways: = Minority investor with a flexible approach to exit = Reputation within insurance market = Representation on the Board * Provision of follow-on fun
Slide 15: Financial Highlights — Year Ended January 2014
Financial Highlights — Year Ended 31 January 2014 * Equity Portfolio increase of 14% for the year (2013: 13.3% increase), despite the sale of 80% of the Group’s holding in Hyperion which accounted for 67% of the Group’s equity portfolio in 2013 = £20.1m increase in Retained reserves * NAV of £58.9m
Slide 16: Financial Highlights — Year Ended January 2014
Financial Highlights — Year Ended 31 January 2014 * Interim Dividend of 1.25p per share paid (40.36m), 25% increase over 2013 * Total shareholder return of 6.9% in year * Final Dividend of 2.75p per share declared (40.8m), payable July 2014 = Average compound NAV growth of 11.6% p.a. since 1990 (exc
Slide 17: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 60 58.90 55.50 50 44.17 40.61 40 30 £ Millions 22:10 20 10 477 2.50 0) ; ; : ; : ; : 31st Jan 31st Jan 31st Jan 31st Jan 31st Jan 31st Jan 31st July 31st Jan 1990 1995 2005 2007* 2010 2013 2013 2014 = YEAR ENDED Py SIX MONTHS ENDED NET OF DEFERRED TAX * NB: The val
Slide 18: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 220 200 180 160 140 120 100 20 33% discount to NAV asat 31 January 2014 hd NAV comparators rebased to BP. Jan-07 Jul-O7 Jan-08 Jul-O8 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 eB PM share price BPM NAV ee FSTE AIM All Share ===FTS
Slide 19: Cash Position
Cash Position Cash at 1 Feb 2013 £1.8m » +£29.2m received on sale of 80% of Hyperion holding » -£4.5m to fund new investments: 41.9m Sterling 41.3m MB Group 4£1.3m Walsingham (of which £0.5m in escrow) : -£10.6m invested in existing portfolio: 4£3.3m net loans to Hyperion £2.2m loans to Besso to fin
Slide 20: Cash Position - continued
Cash Position - continued » + £0.7m Operating cash flow for year » -£1.4m Tax paid on account » -£0.4m Dividends paid £14.8m cash and treasury funds at 31 January 2014 £9.0m available for new investments - after providing 40.7m further financial commitments to the portfolio, £0.8m for July 2014 divi
Slide 21: Summary
Summary Equity Portfolio increase of 14% since 31 January 2013 Interim Dividend of 1.25p per share paid in 2013, Final Dividend of 2.75p per share declared for 2014 £9.0m of cash and treasury funds available for investment as at 31 January 2014 Current share price discount to Net Asset Value of 28.5
Slide 22: Appendices
Appendices Management Team Board Members Current Portfolio Minority Investor Protections Adding Value Exit Strategy Financials Major Shareholders Contacts 22:
Slide 23: Management Team
Management Team Executive Chairman Brian Marsh OBE Group Finance Director Jonathan Newman ACMA CGMA MCSI Investment Director Dan Topping ACIS MCSI 50 years’ experience in insurance broking and underwriting. 1979-1990 was chairman and major shareholder of the Nelson Hurst & Marsh Group, the internati
Slide 24: Management Team
Director, Head of IR. Camilla Kenyon Investment Director Natasha Dunbar Management Team Camilla Kenyon was appointed as Head of Investor Relations at BP Marsh in February 2009, having four years’ prior experience with the Company. Camilla has a number of non-executive appointments over two investee
Slide 25: Board Members
Board Members Non-Executive Director Stephen Clarke Non-Executive Director Philip Mortlock Non-Executive Director Campbell Scoones A Chartered Accountant, Stephen gained many years’ experience with Charterhouse Development Capital in the structuring of venture capital projects in all fields includin
Slide 26: Current Portfolio
Current Portfolio Besso Insurance Group Limited- 37.94% The Broucour Group Limited — 49% Hyperion Insurance Group Limited — 2.79% LEBC Holdings Limited- 34.91% MB Prestige Holdings Limited — 40% sted a specialist team departing from Jardine Lloyd Thompson Group in February 1995 the Group a alises in
Slide 27: Current Portfolio Continued
Portfolio Design Group International Limited - 20% Randall & Quilter Investment Holdings Limited - 1.33% Sterling Insurance PTY Limited — 19.7% Summa Insurance Brokerage, S.L. - 48.6% US Risk (UK) Limited — 29.3% Walsingham Motor Insurance Limited — 30% Current Portfolio Continued The Group invested
Slide 28: 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 matt
Slide 29: Adding Value
Adding Value " We believe in building strong relationships with the businesses we partner and using our expertise and experience in assisting them to achieve their growth targets and maximise shareholder value. We do so as follows: « Representation at Board level « Provision of follow-on funding « G
Slide 30: Exit Strategy
Exit Strategy = Exit considered on entry = Patient development to achieve full earning potential = Recognise and act on opportunistic situations 30
Slide 31: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position (IFRS) at 31 January 2014 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2014 31 July 2013 31 Jan 2013 £000 £000 £000 Tangible assets 18 13 7 Investments at fair value — Equity Portfolio 31,710 27,344 52,711 Treasury Funds 9,289 - - Debtors
Slide 32: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehen Income (IFRS) at 31 January 2014 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2014 31 July 2013 31 Jan 2013 £000 £000 £000 Gains on Investments (Realised and Unrealised) 3,853 1,389 6,140 Impairment of investments and loans - - - Operating Income 2
Slide 33: Consolidated Statement of Cash Flows (IFRS)
Consolidated Statement of Cash Flows (IFRS) at 31 January 2014 Audited Unaudited 6 Audited Year to months to Year to 31 Jan 2014 31 July 2013 31 Jan 2013 sult £000 £000 Net cash from operating activities 705 655 12 Taxation (1,400) - - Purchase of Property, plant and equipment (17) (8) (1) Equity in
Slide 34: Key Shareholders
Key Shareholders = Directors » Brian Marsh OBE - 58.45% » Natasha Dunbar - 4.87% = Major Shareholders (>3%) «James Sharp » Henderson Global Investors « IS Partners AG » The Stephen Crowther Trust » AXA Framlington 34
Slide 35: Contacts
Contacts B. P. Marsh & Partners Plc 2"4 Floor 36 Broadway London SW1H 0BH Telephone: 020 7233 3112 Website: www.bpmarsh.co.uk Nominated Adviser & Broker Panmure Gordon & Co Telephone: 020 7886 2500 Financial PR Redleaf Polhill Telephone: 020 7382 4730 35