Interim Results For the period ending 31 July 2018 Dan Topping , Chief Investment Officer Jonathan Newman , Group Finance Director Camilla Kenyon , Director & Head of Investor Relations 16 October 2018
Overview 25+ Years strong Specialist Robust balance sheet Invested in 50 companies PE/VC investor in Financial Services intermediaries £15.4m cash as at 31 July 2018 and realised 32 since 1990 Industry knowledge Long-term view Up to £5m investment Significant, specialist experience and deep sector Partnership approach to investment and mutually For minority equity positions (20-40%) knowledge acquired across several decades agreed exit route, maximising value 2
2018 Summary – Period Ending 31 July 2018 • As at 31 July 2018 – 18 investments in • Equity Portfolio increase of 6.7% • Dividend of 4.76p per share declared portfolio with a NAV of £120.1m (31 July since 31 January 2018 for the year ended 31 January 2018, 2017 £88.8m ), with an average holding paid in July 2018 period of approximately 3.5 years • Total Shareholder return of 6.4% for the period • £15.4m cash and treasury funds to 31 July 2018 at 31 July 2018 320 270 Price and NAV comparators 220 % Change 31 January 2010 to 31 July 2018 170 B.P. Marsh & Partners +205% PLC FTSE AIM All Share +64% 120 FTSE AIM Financials +150% 70 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 3 BPM share price BPM NAV/share, rebased FSTE AIM All Share, rebased FTSE AIM Financials, rebased
Performance: Net Asset Value (NAV) 130 120.08 120 110 98.87 Full Year 100 88.80 Half Year £ Millions 90 79.68 73.85 80 70.81 62.97 70 58.92 55.46 60 44.17 50 40.61 40 *NB: The valuation at 31 30 January 2007 includes 20 £10.1m net proceeds raised on AIM 10 **NB: The valuation at 0 31 July 2018 includes 31-Jan-07* 31-Jan-10 31-Jan-13 31-Jan-14 31-Jan-15 31-Jan-16 31-Jul-16 31-Jan-17 31-Jul-17 31-Jan-18 31-Jul-18** £16.6m net proceeds raised in the July 2018 Share Placing and Open Offer 4
Dividends The Group’s historic dividend payments are shown below. Total shareholder return in period to 31 July 2018 is 6.4% £3.50 4.76p p/s 4.76p p/s £1,800,000 £3.00 £1,600,000 Paid £1,400,000 £2.50 Intended 3.76p p/s £2.54 £1,200,000 3.42p p/s Share Price £2.00 £1,000,000 £2.06 2.75p p/s 2.75p p/s £1.50 £800,000 £1.47 £1.40 £1.35 £600,000 £1.25 £1.00 £0.93 £0.95 1.25p p/s £400,000 1p p/s 1p p/s £0.50 £200,000 £0 £0.00 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 • Aggregate dividend of £1.7m, paid in July 2018, including all Placing and Open Offer shares • Aggregated dividend of £6.4m ( 20.69p per share) since flotation • It is the Board’s intention to maintain at least this level for the year ending 31 January 2019 and thereafter to continue to pay dividends when circumstances allow • The Board aims to strike a balance between rewarding shareholders with a sustainable yield and investing cash to deliver long-term capital growth 5
Placing and Open Offer completed in July 2018 Increased share capital and reduction in Brian £16.6m net investment into the Company by PSC No change in the Group’s investment model and Marsh’s holding to c.44.2% no Board changes Strong cultural fit with both businesses operating As part of the transaction, a Joint Share Bigger, stronger Group, ready for the next phase under a similar philosophy and scope for Ownership Plan was created for all members of of its development strategic partnerships and co-investment staff working at the Group 6
Investments Fair market value Equity Cost of equity investment Movement in Period to Movement in Period to Investment Sector Jurisdiction Year of initial investment (£’000) 31 July 2018 (£’000) 31 July 2018 31 July 2018 (£’000) As at 31 July 2018 EC3 Brokers UK 5,000 20.0% 5,000 2017 - - Insurance Broking Summa Spain 4,206 77.3% 6,096 2005 188 4.7% Insurance Broking Mark Edward USA 3,176 30.0% 4,573 2017 (1,043) (24.7)% Insurance Broking Partners Paladin (CBC) UK 2,884 44.3% 404 2017 112 4.0% Insurance Broking ARB Singapore 793 25.0% 1,551 2016 (269) (25.3)% Insurance Broking Bastion South Africa - 35.0% 100 2014 - - Insurance Broking XPT USA 4,574 35.0% 4,790 2017 355 8.4% Insurance Group Nexus UK 22,087 16.5% 8,575 2014 1,543 7.5% MGA ATC Australia 3,009 20.0% 2,866 2018 143 5.0% MGA Sterling Australia 2,453 19.7% 1,945 2013 255 11.6% MGA MB Australia 2,105 40.0% 480 2013 265 14.4% MGA Walsingham UK 779 40.5% 600 2013 87 12.6% MGA SSRU Canada 268 30.0% - 2017 268 -* MGA Fiducia UK 105 35.0% 105 2016 - - MGA Criterion Singapore 49 29.4% 50 2018 (1) (1.9%) MGA Bulwark South Africa - 35.0% - 2015 - - MGA PLUM South Africa - 42.5% 1,220 2015 - - MGA LEBC UK 36,803 59.3% 12,374 2007 3,637 11.0% IFA Total 88,291 50,729 5,540 * 1.4m% on CAD30 equity 7 MGA – Managing General Agent; IFA – Independent Financial Adviser
International Strategy UK Based Investments: Summa Insurance Brokerage S.L. CBC UK Ltd EC3 Brokers Ltd Stewart Specialty Risk The Fiducia MGA Company Ltd Underwriting Ltd LEBC Holdings Ltd Nexus Underwriting Management Ltd Mark Edward Partners LLC XPT Group LLC Walsingham Motor Insurance Ltd Approximately 52% of our investee companies’ revenue B.P. Marsh’s international originates overseas strategy is focused on areas where we see: Sufficient opportunity for • business development in partnership with a London- based investor Asia Reinsurance Brokers Pte Ltd A suitably developed • Criterion Underwriting Pte Ltd regulatory and compliance environment The Group believes that the geographic spread of the portfolio provides sufficient Bastion Reinsurance Brokerage (PTY) Ltd diversification to minimise ATC Insurance Solutions (PTY) Ltd Bulwark Investment Holdings (PTY) Ltd any impact of specific MB Prestige Holdings (PTY) Ltd country risk Property & Liability Underwriting Managers (PTY) Ltd 8 Sterling Insurance (PTY) Ltd
Specific Activity - New Investment ATC specialises in For the year ended 30 ATC is a Melbourne On 10 July 2018 the Group Accident & Health, headquartered MGA and June 2018 ATC reported invested AUD$5.1m in ATC Construction & Lloyd’s Coverholder, a Gross Written Insurance Solutions PTY Engineering, Trade established in 2006 by the Premium of AUD$61m Limited, for a 20% stake Pack and Sports current management team (2017: AUD$47m ) Insurance ATC is a company that we have been aware of for some time and we were pleased to invest in this business, as we believe it to have a first rate management team, a growing suite of specialist insurance products, an enviable track record of profitability, and sound Dan Topping, Chief Investment growth potential. Officer & ATC Board Member commented: 9
Specific Activity within the Portfolio During the Period Throughout the Period to 31 July During the same period, EBITDA is Nexus was ranked in the Sunday Since the Group’s investment in 2018, Nexus continued its M&A expected to increase from £2.6m Times Profit Track 100 league table Nexus back in 2014, Nexus has activity and completed the to an estimated £13.8m for Britain’s fastest growing private grown its Gross Written acquisition of Altitude Risk Partners annualised in 2018 companies Premium from £50m in 2014 to and Huntington Underwriting £275m in 2018 Limited after the Period end Nexus continues on an exciting growth trajectory. We were pleased to support Nexus with loan funding over the course of 2017 to allow it to pursue its expansive M&A strategy. Dan Topping, Chief Investment Officer & Nexus Board Member commented: 10
Specific Activity within the Portfolio During the Period LEBC announced strong half-year Trading profit grew by 100% LEBC has made changes to the senior management team results for the six-month period to from £1.2m to £2.4m. in October, with Derek Miles (formerly MD of Aspira), 31 March 2018, with revenue growth being appointed as MD of the corporate and private of 20.7% from £8.5m last year to client division with several new management hires. £10.2m. The Aspira acquisition is significant given that it will strengthen LEBC by providing additional experienced personnel and geographic coverage. LEBC continues to Camilla Kenyon, Director & LEBC demonstrate strong growth. Board Member commented: 11
Investment Model Up To £5m Initial Specialist Investor Investment Relationship Driven in early stage and SME financial services businesses, operating in 20-40% minority equity stakes Investors in People niche segment where funding Scope for follow on funding difficult to obtain Value Add Long-Term View Flexible Approach Apply significant specialist Partnership approach to experience and deep sector to investment and exit investment and mutually agreed knowledge acquired across exit route several decades 12
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