Annual results of LEBC, a privately owned independent financial advisory firm that has been generating explosive earnings growth from developing its traditional advice model and growing corporate project work, have just been filed with Companies House. They make for an interesting read. LEBC’s operating profit surged by 43 per cent to £4.3m on revenues ahead by 13 per cent to £20.5m in the 12 months to end September 2018, all of which represented organic growth, a continuation of a strong trend that seen operating profits quadruple in the past four financial years. Shareholders have been rewarded with an 80 per cent hike in dividends to £1.68m.
I have been following LEBC closely because insurance sector investment company BP Marsh & Partners (BPM:268p) holds 59.3 per cent of its equity. The holding is in its books for £36.8m, so accounts for 41 per cent of BP Marsh’s £88.3m equity portfolio and 30 per cent of its net asset value (NAV) of £120m. Net of cash on LEBC's balance sheet, the investee company was last valued by BP Marsh’s valuation committee on only 13 times operating profit.
That’s worth noting because with LEBC reporting another strong start to the 2018-19 financial year then a potential listing of its shares on the London Stock Exchange in the first half of 2019 is on the cards, thus providing an opportunity for BP Marsh to crystalise some of its substantial paper profits. Also, LEBC’s profit result for the financial year just ended doesn’t include a contribution from Bristol based IFA, Aspira Corporate Solutions, which has over 11,000 clients and nearly £0.5bn in funds under management. Aspira is being integrated within LEBC and strengthens its presence in South West England, adding advisory capacity that will boost turnover for the business.