47 slides from B.p. Marsh & Partners's earnings presentation, Oct 13, 2020
Slide 1: Interim Results for the six month period ending 31 July 2020
Interim Results For the six month period ending 31 July 2020 Dan Topping, Chief Investment Officer Jonathan Newman, Group Finance Director 13 October 2020
Slide 2: Overview
Overview 25+ Specialist Years strong 18 current investments PE/VC investor in Financial Services intermediaries Invested in 53 companies since 1990 Geographically diverse within our specialist sector Long-term view Industry knowledge Up to £5m initial investment Partnership approach to investment an
Slide 3: Performance: Net Asset Value (NAV)
Performance: Net Asset Value (NAV) 160.00 142.63 140.00 136.90 130.00 126.17 120.03 Full Year 120.00 Half Year 98.90 *NB: The valuation at 100.00 88.80 31 January 2007 includes £10.1m net £ Millions 79.68 proceeds raised on AIM 80.00 70.81 **NB: The valuation at 62.97 31 July 2018 includes 58.92 60.
Slide 4: 2020 Summary and Price and NAV comparators
2020 Summary – Period Ending 31 July 2020 • As at 31 July 2020 – 18 investments in portfolio with a NAV of £142.6m (31 • Increase in Equity Portfolio Value of 5.1% in January 2020 £136.9m) period to 31 July 2020 to £122.1m • Total Shareholder return of 4.8% for the period to 31 July 2020, • Loan Boo
Slide 5: Outlook & Covid-19 Impact
Outlook & Covid-19 Impact • Since the outbreak of Covid-19, the Group has continued to work with and support each investee company • The Group has worked with respective management teams to put in place appropriate arrangements to ensure that all investee companies have robust response plans • The G
Slide 6: International Portfolio
International Portfolio Summa Insurance Brokerage S.L. CBC UK Ltd EC3 Brokers Ltd Stewart Specialty Risk The Fiducia MGA Company Ltd Underwriting Ltd LEBC Holdings Ltd Lilley Plummer Risks Ltd Mark Edward Partners LLC Nexus Underwriting Management Ltd XPT Group LLC Walsingham Motor Insurance Ltd SAG
Slide 7: Insurance Intermediary Overview
Insurance Intermediary Overview • The Group’s insurance intermediary portfolio companies are budgeting to produce, in aggregate £1.12bn (approaching US$1.5bn) of Gross Written Premium (“GWP”) in 2020, of which: • The Group’s Broking investments are budgeting to place over £450m of GWP, producing ove
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 are, in aggregate, budgeting to place over £45
Slide 9: Overview - Managing General Agencies (“MGAs”)
Overview - Managing General Agencies (“MGAs”) • The Group’s 11 MGAs are budgeting to produce GWP of £670m in 2020, in aggregate • This will produce over £84m of commission income in 2020 • The Group’s MGAs operates in excess of 30 product areas, on behalf of more than 50 insurers • These MGAs focus
Slide 10: Specific Activity in the Period - New Investment
Specific Activity in the Period - New Investment • In June 2020, the Group invested $250,000 into Sage Program Underwriters, Inc for a 30% shareholding • SAGE provides Workers Compensation insurance to niche industries, including inland delivery and field sport sectors • Led by CEO, Chuck Holdren, w
Slide 11: Specific Activity After the Period – Further Investment
Specific Activity After the Period– Further Investment • In December 2017, the Group invested in EC3 Brokers Limited (“EC3”), an independent specialist Lloyd’s broker and reinsurance broker, taking a 20% shareholding • EC3 was founded by its Chief Executive Officer Danny Driscoll, who led a manageme
Slide 12: Investment Case Study
Investment Case Study Since the Group’s B.P. Marsh’s valuation of In April 2019, BP Marsh £344m investment in Nexus in Nexus has increased from provided Nexus with a 2014, GWP has grown an investment of £1.6m in £2m revolving credit £328m Jan 2020: established a wide- from £50m to estimated 2014 (fo
Slide 13: Portfolio Company Highlight - ATC
Portfolio Company Highlight - ATC • The Group invested in ATC Insurance Solutions in July 2018, acquiring a 20% shareholding for AU$5m (£2.7m) • ATC is an MGA and Lloyd’s Coverholder, headquartered in Melbourne, Australia • ATC specialises in Accident & Health, Construction & Engineering, Trade Pack
Slide 14: Portfolio Company Highlight - Fiducia
Portfolio Company Highlight - Fiducia • The Group invested in Fiducia MGA Company Limited in November 2016, acquiring a 25% shareholding • Fiducia is a registered Lloyd’s Coverholder which specialises in the provision of insurance solutions across a number of Marine risks including, Cargo, Transit L
Slide 15: Portfolio Company Highlight – Lilley Plummer Risks
Portfolio Company Highlight – Lilley Plummer Risks • In October 2019, the Group invested into the newly formed specialist marine Lloyd’s broker, Lilley Plummer Risks Limited (“LPR”) • Established by Stuart Lilley and Dan Plummer in 2019, LPR provides products across the Marine Insurance market • Mik
Slide 16: Portfolio Company Highlight - XPT
Portfolio Company Highlight - XPT • In June 2017 the Group invested US$6m into XPT for a 35% shareholding • Since investment, XPT has made 7 acquisitions, providing it with a footprint across the USA • In April 2019, the Group provided XPT with a further US$2m Loan Facility, which sits alongside US$
Slide 17: 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 • The Group subscribed for a 30% stake in SSRU in January 2017, for a nominal equity investment of £19 which has now grown to a v
Slide 18: Portfolio Company Update - LEBC
Portfolio Company Update - LEBC • The Group has been invested in LEBC, the Independent Financial Advisory company providing expert financial advice to individuals, since April 2007 • The Group was greatly saddened by the passing of LEBC’s CEO and Founder Jack McVitie. Whilst his spirit can’t be repl
Slide 19: Investment Opportunities
Investment Opportunities • 21 new investment enquiries in period to 31 July 2020 Independent Financial Advisers • 1 completed (SAGE Program Underwriters) 5% • 48% of new investment enquiries in year to 31 July 2020 Non-Finanical emanated internationally, compared to 52% domestic Services Financial S
Slide 20: 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 Interme
Slide 21: Financial Highlights – Period End 31 July 2020
Financial Highlights – Period End 31 July 2020 NAV of £142.6m • 31 January 2020: £136.9m, 31 July 2019: £130.0m NAV per share of 396.2p • 31 January 2020: 380.1p, 31 July 2019: 360.9p Consolidated Profit after Tax: £6.5m • Year ended 31 January 2020: £12.5m, six months ended 31 July 2019: £5.6m Unde
Slide 22: Financial Highlights – Period End 31 July 2020
Financial Highlights – Period End 31 July 2020 Average compound NAV growth of 8.0% p.a. since flotation and 11.6% 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) paid on 31 July 2020 • To Sh
Slide 23: Cash Position
Cash Position Cash at 1 February 2020 £0.8m Equity investments £(0.5)m Equity proceeds - Loans granted £(0.9)m Loans repaid £2.8m Tax repayments £0.2m Dividend paid £(0.8)m Other operating movements £(0.4)m Cash at 31 July 2020 £1.2m Current cash balance £0.6m Total Available Cash (inc. Loan Facilit
Slide 24: Loan Portfolio
Loan Portfolio Investment 31 July 2020 (£’000) 31 January 2020 (£’000) 31 July 2019 (£’000) Fiducia 2,545 2,470 2,470 LEBC 1,500 1,000 1,000 MB Group - 282 472 Nexus 4,000 6,000 6,000 Paladin (CBC) 4,896 4,596 4,596 Stewart Specialty Risk 256 258 280 Summa 2,042 2,012 2,144 Walsingham 300 715 1,120
Slide 25: Dividends
Dividends The Group’s historic dividend payments are shown below. Aggregate dividend per share of 27.7p paid since flotation £1,800,000 4.76p p/s 4.76p p/s 1 £1,600,000 0.9 February 2017: Realisation 0.8 £1,400,000 of Besso Insurance Group 0.7 £1,200,000 3.76p p/s July 2013: Realisation of Hyperion
Slide 26: Summary
Summary • A leading specialist investor in global financial intermediary companies for 25 years • Diversified in terms of company concentration, geography and currency, mitigating risk • A proven track record of creating excellent value for shareholders: • Identifying future industry leaders through
Slide 27: Appendices
Appendices 1. Equity Investments 2. Portfolio 3. Financials 4. Management Team 5. Board Members 6. Growth Strategy 7. Investment Model 8. Investment Process 9. Adding Value 10. Minority Investor Protections 11. Key Shareholders 12. Joint Share Ownership Plan 13. Contacts 27
Slide 28: Equity Investments – Underwriting Agencies
Equity Investments – Underwriting Agencies Movement in Movement in Fair market value Equity Cost of equity Year of initial Period to 31 July Investment Sector Jurisdiction Period to 31 July 31 July 2020 (£’000) As at 31 July 2020 investment (£’000) investment 2020 2020 (£’000) (%) Nexus MGA UK 40,31
Slide 29: Equity Investments – Brokers and Other
Equity Investments – Brokers and Other Movement in Movement in Fair market value Equity Cost of equity Year of initial Period to 31 July Investment Sector Jurisdiction Period to 31 July 31 July 2020 (£’000) As at 31 July 2020 investment (£’000) investment 2020 2020 (£’000) (%) Paladin (CBC) Insuranc
Slide 30: Portfolio as at 31 July 2020
Portfolio as at 31 July 2020 Agri Services • Group invested in July 2019 Company PTY • Ag Guard is an Australian-based MGA which provides insurance to the Agricultural Sector Limited – 36.0% • Group invested in April 2016 Asia Reinsurance • ARB is a Singapore-headquartered independent specialist rei
Slide 31: Portfolio as at 31 July 2020 Continued
Portfolio as at 31 July 2020 Continued • Group helped establish Criterion alongside its Partners in Asiare Holdings (PTE) Limited and Asia Reinsurance Brokers (PTE) Criterion Limited in July 2018 Underwriting • Criterion is a start up Singapore-based Managing General Agency providing specialist insu
Slide 32: Portfolio as at 31 July 2020 Continued
Portfolio as at 31 July 2020 Continued Lilley Plummer Risks • Group invested in October 2019 Limited – 30.0% • LPR is a specialist marine Lloyd's broker, based in London MB Prestige • December 2013 invested in MB Holdings Limited – • MB is a MGA, headquartered in Sydney, Australia, recognised as a m
Slide 33: Portfolio as at 31 July 2020 Continued
Portfolio as at 31 July 2020 Continued SAGE Program • Invested in June 2020 Underwriters, • Based in Bend, Oregon and founded in 2020 by CEO Chuck Holdren, SAGE provides Workers Compensation insurance to niche Inc – 30.0% industries, including inland delivery and field sport sectors • Invested in SS
Slide 34: Portfolio as at 31 July 2020 Continued
Portfolio as at 31 July 2020 Continued • January 2005 the Group provided finance to a Spanish management team with the objective of acquiring and consolidating regional insurance brokers in Spain Summa Insurance • Summa has acquired brokers all over Spain. It now has over 20 offices and continues to
Slide 35: Consolidated Statement of Financial Position (IFRS) at 31 July 2020
Consolidated Statement of Financial Position (IFRS) at 31 July 2020 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2020 £’000 31 July 2019 £’000 31 January 2020 £’000 Tangible and intangible assets 137 150 151 Right of use asset 1,084 1,378 1,286 Investments at fair value – Equi
Slide 36: Consolidated Statement of Comprehensive Income (IFRS) at 31 July 2020
Consolidated Statement of Comprehensive Income (IFRS) at 31 July 2020 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2020 £’000 31 July 2019 £’000 31 January 2020 £’000 Gains on investments (realised and 5,922 4,077 11,570 unrealised) Impairment of investments and loans - (36) (
Slide 37: Consolidated Statement of Cash Flows (IFRS) at 31 July 2020
Consolidated Statement of Cash Flows (IFRS) at 31 July 2020 Unaudited 6 months to Unaudited 6 months to Audited year to 31 July 2020 £’000 31 July 2019 £’000 31 January 2020 £’000 Net cash (used by) / from operating activities (345) 850 1,189 Taxation 238 310 261 Purchase of property, plant and equi
Slide 38: Management Team
Management Team Brian Marsh Jonathan Newman Daniel Topping Alice Foulk Executive Chairman Managing Director Group Finance Director Chief Investment Officer A Chartered Management Dan Topping is a Member of the Brian Marsh has over 55 years’ Alice Foulk joined B.P Marsh in Accountant with over 20 yea
Slide 39: Board Members
Board Members Pankaj Lakhani FCCA Nicholas Carter Non-Executive Director Non-Executive Director A Certified Accountant, Pankaj Lakhani has Nicholas Carter has over 50 years’ over 40 years’ of accounting experience experience in the Lloyd’s Insurance Market. within the Insurance Market and joined the
Slide 40: 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- Invest Take minority equity positions in promising early stage financial services companies with talente
Slide 41: 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 Long-Term View Value
Slide 42: 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 43: 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 44: 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 45: Key Shareholders at 31 July 2020
Key Shareholders at 31 July 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 – 19.74% • Pankaj Lakhani • Hargreaves Lansdown Asset Management – 4.33% • Nicholas Carter • RBC Wealth Management
Slide 46: 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 47: 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 47