18 October 2022
B.P. Marsh & Partners Plc
(“B.P. Marsh”, “the Company” or “the Group”)
Interim Results
B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, announces its unaudited Group Interim Results for the six months to 31 July 2022 (the “Period”).
Highlights:
· Net Asset Value at 31 July 2022 £179.8m (31 July 2021: £155.0m; 31 January 2022: £166.6m)
· Net Asset Value per share 499.0p* (31 July 2021 430.4p; 31 January 2022: 462.7p)
· Consolidated profit before tax of £17.0m for the Period (six months to 31 July 2021: £6.2m; year ending 31 January 2022: £19.4m)
· Total Shareholder return of 8.5 % for the Period including the dividend paid in July 2022 (16.6% for the 12 months since 31 July 2021, inclusive of the July 2022 dividend paid)
· Group liquidity of £14.1m as at 31 July 2022
· Current liquidity £12.7m
*The diluted Net Asset Value per share is 490.8p including shares held within an Employee Benefit Trust which have met certain performance criteria (31 July 2021: 424.6p; 31 January 2022: 455.6p).
Commenting on the results, Brian Marsh OBE, Chairman, said:
“I am delighted the Company has achieved such a strong set of results, highlighting the success of our investment strategy. These results are a testament to the hard work that goes on across our team and at all of our investee companies.
“Our performance demonstrates the benefits of having a diverse portfolio both by business line and geography and shows that the financial intermediary space continues to have room for young, dynamic entrepreneurial businesses.
“Following a series of disposals in the past 12 months, we are actively seeking new investment opportunities to add to our portfolio while further supporting our investee companies fund their growth plans.”
Analyst briefing:
An analyst presentation, hosted by the Company, will be held on Tuesday 18 October 2022 at 10:00 a.m. BST.
Please contact Tim Pearson at Tavistock Communications on 07983118502 or tim.pearson@tavistock .co.uk should any analyst wish to attend.
B.P. Marsh & Partners Plc will also provide a live presentation for all existing and potential shareholders via the Investor Meet Company platform on 20th October 2022 at 10:00am BST.
Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet B.P. Marsh & Partners Plc via: https://www.investormeetcompany.com/bp-marsh-partners-plc/register-investor
Note
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
| For further information, please visit www.bpmarsh.co.uk or contact: | |
| B.P. Marsh & Partners PlcBrian Marsh OBE / Alice Foulk | +44 (0)20 7233 3112 |
| Panmure Gordon (UK) LimitedAtholl Tweedie / Charles Leigh Pemberton / Ailsa MacMaster | +44 (0)20 78862500 |
| TavistockSimon Hudson / Tim Pearson | bpmarsh@tavistock.co.uk+44 (0)20 7920 3150 |
Notes to Editors:
B.P. Marsh’s current portfolio contains fifteen companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk .
Since formation over 30 years ago, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Many of the directors have worked with each other in previous roles, and all have worked with each other for approaching ten years.
Statement by the Chairman and Managing Director
We are pleased to present the unaudited Consolidated Financial Statements of B.P. Marsh & Partners Plc for the Period to 31 July 2022.
Interim Results
During the Period, the Group’s Net Asset Value (“NAV”) has grown by £13.2m from £166.6m to £179.8m which together with the dividend paid in July 2022, represents an increase of 8.5%. This equals a NAV per share of 499.0p, an increase of 36.3p from 31 January 2022.
The Group was pleased to announce that it had completed a new investment during the Period in Denison and Partners Ltd (“Denison and Partners”) led by Alasdair Ritchie. The Company is confident that Denison and Partners will be a valuable addition to the Portfolio. Furthermore during the Period the Group provided an additional $3.5m (£2.8m) to XPT Group LLC (“XPT”) through a mixture of redeemable shares and equity. XPT will use the additional funding to support its positive growth trajectory.
Additionally during the Period the Group also finalised the disposal of its Spanish Broking consolidator, Summa Insurance Brokerage S.L. delivering net cash proceeds of £9.6m.
Elsewhere in the Portfolio Kentro Capital Limited (“Kentro”) (formerly Nexus Underwriting Management Limited) continues to deliver its successful strategy and remains one of the 10 largest independent Managing General Agencies in the world.
However, EC3 Brokers Group Limited (“EC3”) continues to experience difficulty, and we are working closely with the management team at EC3 to provide appropriate support and, out of caution, have written this investment down.
Post Period-end the Group provided a AU$1.2m (£0.7m) loan to Ag Guard PTY Limited to support their growth objectives as they develop a new product for QBE Insurance (Australia) Limited.
There is a healthy new business pipeline currently being considered by the Group, however we also have a number of opportunities for follow-on funding within our existing portfolio. As such, the Group’s current cash balance is likely to be deployed through a mixture of new investments and into the Group’s current portfolio.
We are conscious that we are entering a world that comes with challenges, including the rising cost of living crisis with inflation at a 40 year high and the ongoing conflict in Ukraine. The Team at B.P. Marsh continue to review the impact these macro-events could have on both the business and our underlying portfolio and work with our partners to deliver the long term growth we are well experienced in achieving.
The Period under review has predominantly been a time of “business as usual” with the Group demonstrating that it is able to deliver on its business aims. We have a positive outlook for the rest of the year and are confident we will be able to deliver the Group’s long term strategy.
Chief Investment Officer’s Portfolio Update, New Business and Outlook
Over the Period, the valuation of the Group’s equity portfolio has increased by 11.4% adjusting for additions and disposals, with NAV increasing by 7.9%.
Over the past 12 months, the equity portfolio has increased by 23.2% adjusting for additions and disposals, with NAV increasing by 16.0%.
The Period under review continues to demonstrate the Group’s successful investment strategy. Our diverse portfolio across the insurance intermediary sector, both by line of business written and geography, has resulted in sustained resilience, notwithstanding the wider economic challenges.
This has resulted in the Group producing a stellar set of results in the Period to 31 July 2022, with the majority of B.P. Marsh’s portfolio companies showing substantial growth.
The Group continues to work closely with its investee companies’ respective Management Teams, providing advice and support, to assist in long term growth. The Management teams the Group support are experienced and well-rooted in their local markets, across the UK, North America, Australia and elsewhere.
The Group believes that the portfolio is well positioned to take advantage of the ever-changing environment and, whilst our portfolio businesses are not immune from the current widely-reported global political and macro-economic headwinds, the Group believes that most are operating from a position of strength.
Overall, the Group is looking to continue its clear and consistent strategy of investing and supporting ‘people’ businesses in the financial intermediary sector, delivering long term attractive returns to our shareholders.
The Group remains positive about the prospects for the Company throughout the remainder of its current financial year to 31 January 2023.
New Business
Following a number of successful disposals, the Group currently has £12.7m of liquidity, which is available for further investment within the existing portfolio and for new investments.
The Group continues its renewed focus on new business and it is the Board’s expectation that some of these will complete in a reasonable time frame. B.P. Marsh continues to focus on investing in niche SME businesses in the financial services space, managed by capable management teams.
The Group has a healthy pipeline of new business opportunities having received 41 in the Period (for the six months to 31 July 2021 the Group received 31 proposals). Continued M&A activity at the larger end of the insurance market tends to lend itself to creation of opportunities at the smaller end of the market. These opportunities fit in the Company’s investment model, and we therefore remain prepared to take advantage of this phase in the insurance cycle.
Outlook
The Insurance sector continues to see rate increases across most of the lines in which our investee companies operate. The pace of these increases is slowing across the industry, although the Group does not anticipate the market returning to the low pricing of the last soft market in the short to medium term.
The Group continues to monitor the macro-economic challenges facing the world economy, the Group and our underlying investee companies. This includes inflation at its highest rate for two generations, increased interest rates and political uncertainty. The effect of these challenges is likely to be increased costs for the insurance market, mainly due to the impact of economic stimulus packages linked to Covid-19, supply chain issues and the increases in energy prices due to the ongoing conflict in the Ukraine. The impact will develop in different ways, varying by business lines and region.
In the short to medium term, the Group remains of the view that increased insurance rates will at least match any cost increases. Additionally, sections of the industry which are most exposed to inflationary costs should also be the first parts of the industry to receive increased premium, linked to inflation. As such, with inflation on one side and increased yield on the other, the net impact should be positive.