B.p. Marsh & Partners Plc · LSE:BPM
B.p. Marsh & Partners — FY2019 Earnings Presentation
38 slides from B.p. Marsh & Partners's earnings presentation, Jun 11, 2019
Slide 1: Year End Results for the year ending 31 January 2019
Year End Results For the year ending 31 January 2019 Dan Topping, Chief Investment Officer Jonathan Newman, Group Finance Director Camilla Kenyon, Director & Head of Investor Relations 11 June 2019
Slide 2: Overview
Overview 25+ Years strong Specialist Robust balance sheet Invested in 50 companies PE/VC investor in Financial Services intermediaries £7.9m cash and treasury funds as at 31 January 2019 and realised 32 since 1990 of which £1.5m remains uncommitted Long-term view Industry knowledge Up to £5m investm
Slide 3: 2019 Summary – Year Ending 31 January 2019
2019 Summary – Year Ending 31 January 2019 • As at 31 January 2019 – 18 investments in • Equity Portfolio Value of £101.9m • Dividend of 4.76p per share declared for the portfolio with a NAV of £126.2m (31 January year ended 31 January 2019, to be • Increase in Equity Portfolio Value of 16.1% in 201
Slide 4: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 140 130 126.24 120 120.10 110 Full Year 98.90 Half Year £ Millions 100 88.80 90 79.68 80 70.81 70 62.97 58.92 60 55.46 *NB: The valuation at 31 January 2007 includes 50 40.61 44.17 £10.1m net proceeds raised on AIM 40 **NB: The valuations 22.10 30 from and includin
Slide 5: Dividends
Dividends The Group’s historic dividend payments are shown below. Total shareholder return in period to 31 January 2019 is 11.7% £1,800,000 4.76p p/s 4.76p p/s £3.50 £1,600,000 £3.00 £1,400,000 Paid £2.86 £2.50 £1,200,000 3.76p p/s £2.54 Declared 3.42p p/s £2.00 Share Price £1,000,000 2.75p p/s 2.75
Slide 6: Placing and Open Offer completed in July 2018
Placing and Open Offer completed in July 2018 No change in the Group’s investment model and Increased share capital and reduction in Brian £16.6m net investment into the Company Marsh’s holding to c.44.2% no Board changes Strong cultural fit with both businesses operating Bigger, stronger Group, rea
Slide 7: Equity Investments - Brokers
Equity Investments - Brokers Fair market value Equity Movement in Year Movement in Year Cost of equity Year of initial Investment Sector Jurisdiction 31 January 2019 As at 31 January to 31 January 2019 to 31 January 2019 investment (£’000) investment (£’000) 2019 (£’000) (%) EC3 Brokers Insurance Br
Slide 8: Equity Investments – Underwriting Agencies
Equity Investments – Underwriting Agencies Fair market value Equity Movement in Year Movement in Year Cost of equity Year of initial Investment Sector Jurisdiction 31 January 2019 As at 31 January to 31 January 2019 to 31 January 2019 investment (£’000) investment (£’000) 2019 (£’000) (%) Nexus MGA
Slide 9: Equity Investments - Other
Equity Investments - Other Fair market value Equity Movement in Year Movement in Year Cost of equity Year of initial Investment Sector Jurisdiction 31 January 2019 As at 31 January to 31 January 2019 to 31 January 2019 investment (£’000) investment (£’000) 2019 (£’000) (%) LEBC IFA UK 35,485 59.3% 1
Slide 10: 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 Walsingham Motor Insurance Ltd XPT Group LLC Approxi
Slide 11: Specific Activity - New Investment
Specific Activity - New Investment This opportunity was initially introduced to BP Marsh by a previous investee company. The relationship between ATC and BP Marsh has developed since then, until eventual investment in 2018. ATC wanted to find a strategic partner, with industry knowledge, who would e
Slide 12: Specific Activity within the Portfolio During the Period
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 order
Slide 13: Specific Activity within the Portfolio During the Period
Specific Activity within the Portfolio During the Period LEBC reported strong results in the year ending 30 September 2018, with Revenue of £20.5m and Trading Profit of £4.3m not including Aspira. This compares to Revenue of £18m and Trading Profit of £3m in 2017. LEBC was impacted by a combination
Slide 14: 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 15: 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 16: Investment Opportunities
Investment Opportunities • 64 new investment enquiries in year to 31 January 2019 Current Pipeline • 1 completed • Overseas MGAs • 9 referrals on to portfolio companies as potential bolt-ons • UK broking businesses • Wealth management sector active Referrals for UK and overseas investments 64 Enquir
Slide 17: Financial Highlights – Period End 31 January 2019
Financial Highlights –Period End 31 January 2019 Average compound NAV growth of 11.9% 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 declared and will be paid on 26 July 2019 • To Shareholders regi
Slide 18: Financial Highlights – Period End 31 January 2019
Financial Highlights –Period End 31 January 2019 NAV of £126.2m • 31 January 2018: £98.9m, 31 July 2018: £120.1m NAV per share of 350p • 31 January 2018: 339p, 31 July 2018: 333p, adjusted NAV post July 2018 Placing: 321p Consolidated Profit after Tax: £12.5m • Year ended 31 January 2018: £20.2m, or
Slide 19: Cash Position
Cash Position Cash at 1 February 2018 (including treasury funds) £5.4m Equity investments £(8.7)m Loans granted £(3.8)m Loans repaid £1.8m Tax payments £(1.2)m Dividend paid £(1.7)m Net treasury gains and other investment income £0.1m Net proceeds from issue of shares £16.6m Shares repurchased £(0.1
Slide 20: Loan Portfolio
Loan Portfolio Investment 31 January 2019 (£’000) 31 January 2018 (£’000) Bastion* ** 426 342 Broucour 130 155 Bulwark* 665 665 Fiducia 2,470 1,619 LEBC - 1,500 MB Group 465 603 Mark Edward Partners** 2,045 - Nexus 4,000 4,000 Paladin (CBC) 4,096 3,996 PLUM* ** 1,451 1,115 Stewart Specialty Risk 261
Slide 21: Summary
Summary • Equity portfolio increase of 16.1% since 31 January 2018 • Final dividend of 4.76p per share declared to be paid on 26 July 2019 • £16.6m net proceeds raised from Share Placing and Open Offer • £7.9m of cash and treasury funds at Year end, £1.5m current uncommitted • Share price of 308p wi
Slide 22: Appendices
Appendices 1. Management Team 2. Board Members 3. Growth Strategy 4. Investment Model 5. Adding Value 6. Portfolio 7. Minority Investor Protections 8. Financials 9. Key Shareholders 10.Joint Share Ownership Plan 11.Contacts 22
Slide 23: Management Team
Management Team Brian Marsh Alice Foulk Daniel Topping Executive Chairman Managing Director Chief Investment Officer Brian Marsh has over 55 years’ experience in Alice Foulk joined B.P Marsh in September Dan Topping is a Member of the Chartered insurance broking and underwriting. Brian 2011 having s
Slide 24: Management Team
Management Team Camilla Kenyon Jonathan Newman Director, Head of IR Group Finance Director Camilla was appointed to the main Board in A Chartered Management Accountant with 2011, following her appointment as Head of over 20 years’ experience in the financial Investor Relations in 2009. She has dual
Slide 25: Board Members
Board Members Campbell Scoones Pankaj Lakhani FCCA Nicholas Carter Non-Executive Director Non-Executive Director Non-Executive Director Campbell Scoones has over 45 years' A Certified Accountant, Pankaj Lakhani has Nicholas Carter has over 50 years’ experience experience in the Lloyd's and overseas
Slide 26: 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 27: 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 28: 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 29: Portfolio as at 31 January 2019
Portfolio as at 31 January 2019 • Group invested in April 2016 Asia Reinsurance Brokers (PTE) • ARB is a Singapore-headquartered independent specialist reinsurance and insurance risk solutions provider Limited – 25.0% • ARB was established in 2008, following a management buy-out of the business from
Slide 30: Portfolio as at 31 January 2019 Continued
Portfolio as at 31 January 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 Gall
Slide 31: Portfolio as at 31 January 2019 Continued
Portfolio as at 31 January 2019 Continued • In June 2015 the Group completed an investment in Property And Liability Underwriting Managers (PTY) Limited (“PLUM”), a Managing General Agent based in Property & Liability Johannesburg, South Africa Underwriting Managers (PTY) • PLUM specialises in large
Slide 32: 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 33: Consolidated Statement of Financial Position (IFRS) at 31 January 2019
Consolidated Statement of Financial Position (IFRS) at 31 January 2019 Audited year to Unaudited 6 months to Audited year to 31 January 2019 £’000 31 July 2018 £’000 31 January 2018 £’000 Tangible and intangible assets 158 158 167 Investments at fair value – Equity 101,947 88,291 79,122 Portfolio De
Slide 34: Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2019
Consolidated Statement of Comprehensive Income (IFRS) at 31 January 2019 Audited year to Unaudited 6 months to Audited year to 31 January 2019 £’000 31 July 2018 £’000 31 January 2018 £’000 Gains on investments (realised and 14,106 5,540 18,837 unrealised) Impairment of investments and loans (2,595)
Slide 35: Consolidated Statement of Cash Flows (IFRS) at 31 January 2019
Consolidated Statement of Cash Flows (IFRS) at 31 January 2019 Audited year to Unaudited 6 months to Audited year to 31 January 2019 £’000 31 July 2018 £’000 31 January 2018 £’000 Net cash from operating activities (578) (425) 234 Taxation (1,170) (1,168) (3,076) Purchase of property, plant and equi
Slide 36: Key Shareholders at 31 January 2019
Key Shareholders at 31 January 2019 DIRECTORS • Brian Marsh OBE - 44.22%* MAJOR SHAREHOLDERS (>3%) • Alice Foulk • PSC UK Pty Limited – 19.61% • Hargreaves Lansdown Asset Management – 4.56% • Daniel Topping • RBC Wealth Management – 3.90% (Trustee of the • Jonathon Newman Company’s Joint Share Owner
Slide 37: 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 38: 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 38