B.P. Marsh & Partners (LSE:BPM) — Annual General Meeting 2023

0:01 Good morning. Welcome to the BPMARTIAN PARTNERS PLC Annual General Meeting Proceedings. Call

0:24 I'd now like to hand you over to John Newman, Group finance director. Good morning, sir. Good morning. And to all our shareholders and our visitors, I'd like to give a warm welcome to BPM Martian Partners PLC Annual General Meeting. I'd like to welcome shareholders who are viewing the meeting electronically as well as those present in person today. My name is John Newman. I'm the group finance director of BPMARSH, and I will be chairing this meeting today. I would also like to introduce Dan Topping, our chief investment officer, and Sinead O'Hare, our company secretary. As we recently gave at the Investor Day Company presentation on our annual results following the year ended 01/31/2023, we're not going to go and repeat that presentation again.

1:09 However, the recording on 06/15/2023 does remain available on the IMC portal, but we will, however, deal with any questions you may have after the formal business of the meeting. It's now just after 11:00, so I will commence. As we have a quorum, I can now declare the meeting open. In terms of practicalities, I'm pleased to inform you that the meeting today is being recorded and live streamed so so that shareholders and other stakeholders who cannot be present can view it on the company's website and on the company's profile on Investor Meet company in due course. By way of reminder, shareholders who are viewing the AGM online will not be participating in the voting of resolutions, but hopefully, you've submitted your votes by proxy in advance of the meeting.

1:58 So, ladies and gentlemen, I would like to start the formal proceedings of this annual general meeting. The notice of annual general meeting together with the explanatory notes was posted to shareholders on June 30. Accordingly, the requisite notice of the meeting has been given. I propose, therefore, that with your consent, the notice of meeting should be taken as read. Is that all agreed? Thank you. In terms of voting procedures, to accurately reflect the views of shareholders of the company, voting today will be done by way of a poll on each of the resolutions put to the meeting. This is seen as best practice as it gives all shareholders the opportunity to participate in in the the decision making of the company and have their votes recorded in proportion to the number of shares that they hold.

2:45 I am appointing a Quincy Group, the company's registrar, to act as scrutineers. A summary of each resolution will be shown on the screen together together with a breakdown of proxy votes we've received thus far before I put each resolution to the vote. As it will take some time to complete the poll procedure, the final results of the voting, including the proxy votes on each of the resolutions, will be announced through our regulatory information service and published on our website as soon as reasonably practicable. You have three options for each resolution. You can vote for the proposed resolution against the proposed resolution, or you may withhold your vote. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against the resolution.

3:32 Will Will you you please complete your poll card by ticking the appropriate box next to the relevant resolution depending on how you wish to cast your vote? Once all votes have been taken on the resolutions, please would you sign the poll card and hand your completed card to Chenay Dohair. Should you require any further assistance, our registrars or will be happy to assist you. With your permission, therefore, ladies and gentlemen, I would like to proceed by dealing with proceed by dealing with formal business of the meeting at the outset before moving on to any questions. Unless Unless anyone has any questions relating to a specific resolution, in which case, if you can please raise them now.

4:10 Okay. Thank you. We will now proceed to vote on the resolutions which I will formally propose to the meeting. The full text of each of the resolutions is set out in the notice of meeting, a copy of which you will have already received. Resolutions one through eight are proposed as ordinary resolutions and require a simple majority to be passed. Resolutions nine and ten are proposed as special resolutions, which to be passed require a majority of 75% to vote in favor of the resolution. Resolution one. The first resolution is to receive and adopt the annual report of accounts for the year ended 01/31/2023. I now propose that the annual report of accounts for the year ended 01/31/2023 to be received and adopted together with the report of the directors and the report of the auditors.

5:01 You will see on screen a summary of the proxy figures of the proxy votes that have been lodged. As I explained to vote, please would you tick the appropriate box on your poll card to vote for the resolution or against the resolution, or you may withhold your vote. These instructions apply to all of the resolutions, and therefore, I won't repeat this. Thank you.

5:27 Okay. If everyone has now voted, I declare the poll closed. Provisional results are shown on the slide, and subject to confirmation by our registrars, resolution is carried. Resolution two. The second resolution is to approve the report of the remuneration committee. I now propose to receive and approve the report of the remuneration committee set out on pages 34 to 38 of the company's report accounts and for the financial year ended 01/31/2023. You will see on screen the results of the proxy votes received to date. So if you have now voted, I declare the poll closed.

6:20 Subject to confirmation by our registrars, the resolution is carried. Resolution three. The third item on the agenda is to approve the final dividend of 1.39p per ordinary share as recommended by the directors. If approved, the recommended final dividend would be payable on 07/31/2023 to all shareholders on the register of members from the close of business on the record date of June 30. I therefore propose to approve the final dividend of 1.39p upward in any share. And the results of the proxy votes are shown on screen now. If you have now all voted, I declare the poll closed.

7:08 Subject to confirmation by our registrars, the resolution has been carried. Resolution four. The fourth item on the agenda is the reappointment of miss Alice Burke as a director of the company. I therefore propose to re elect miss Alice Burke as a director of the company, and on screen the results of the proxy votes received to date. Could you please vote now?

7:37 If you have now all voted, I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Turning to resolution five. The fifth item on the agenda is the reappointment of mister Nick Carter as a director of the company. I therefore propose to reelect mister Nick Carter as a director of the company. And on screen, you will see the number of proxy votes. Could you please vote now?

8:07 If you have now all voted, I declare the poll closed. Subject to confirmation by our registrars, the resolution has been carried. Resolution six. Six items on the agenda is to reappoint Wallinson and Hunter Audit LLP until the conclusion of the next general meeting before which accounts are late. I therefore propose to reappoint Warlinson and Hunter Audit LLP as auditors of the company until the conclusion of the next general meeting before which accounts are late. On screen, you will see the number of proxy votes lodged. I therefore ask you to vote now in resolution six. If you have now or done that, I declare the poll closed, and subject to confirmation by our registrars, the resolution is carried.

8:57 Turning to resolution seven. The seventh item on the agenda is to authorize the directors of the company determine the remuneration of the auditors of the company. I therefore propose to authorize the directors to determine the remuneration of audits of Manhunter Audit LLP. On screen, you'll be able to see the number of proxy votes received. If you can now vote. If you have now concluded, I declare the poll closed and subject to confirmation by registrars, the resolution is carried. Resolution eight. The eighth item on the agenda is the granting of authority to allow the company to allot ordinary shares or grant rights to subscribe for or to convert any security into shares in the company up to a nominal value of £1,248,866.60.

9:56 So I therefore propose to authorize the directors pursuant to and in accordance with section five five one of the company's act 2,006, otherwise known as the act, to allot ordinary shares or grant rights to subscribe for or to convert any security into shares in the company up to a nominal amount of £1,248,866.60. On the screen, you'll be able to see the number of proxy votes received. If you can now vote. If you have now concluded, I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Turning to resolution nine.

10:41 The ninth item on the agenda is the granting of authority to allow the company to allot equity securities wholly for cash pursuant to the authority given in resolution eight, which is proposed as a special resolution. I therefore propose to authorize and empower the directors, subject to the passing of resolution eight above, in accordance with the company's act, to lock equity securities either in connection with a preemptive offer or, if not, up to an aggregate nominal amount of £187,330 disregarding preemption rights. Such power to expire at the conclusion of the next annual general meeting of the company or on 07/31/2024, whichever is the owner. Would you please all vote now?

11:30 On the screen, we're displaying the number of proxy votes received. If you have now all voted, I declare the poll closed. And subject to confirmation by our registrars, the resolution is carried. Resolution 10. The tenth item on the agenda is the granting of authority to allow the company to buy back up to 3,746,600 of the company's shares, which is proposed as a special resolution. I therefore propose to authorize the company to make market purchases of ordinary shares in the company in such manner and on such terms as the directors of the company may, from time to time, determine up to a maximum of 3,746,600 ordinary shares.

12:17 Will you please vote now? On screen, we set out the number of proxy votes received today. If you have now all voted, I therefore declare the poll closed. And subject to confirmation by our registrars, the resolution is carried.

12:39 And now moving on to questions. Questions will be moderated before being sent to me as chair. This is to avoid repetition and to ensure the smooth running of the meeting. If multiple questions on the same topic are received, I may choose to provide a single answer address member queries on the same topic. Please note that if your question pertains to the audit or remuneration committee as Pankaj Adkani, who chairs the audit and remuneration, was was unable to attend the meeting in person, it might be that these questions are better dealt with by him after the meeting. Before asking your question, please can you give your name and state whether you are a shareholder, proxy, or corporate representative?

13:26 If you are a proxy or corporate representative, please can you state your name and the name of the shareholder you are represent representing? First, I will deal with those questions that have been submitted in advance and then invite questions from the floor. We have had one presubmitted question regarding our investments in Singapore, which we will put up on the screen now. For those in attendance, I'll read it out. So what were the investment costs for Criterion Underwriting Limited? So it's currently written down to zero. What are the future prospects for both Criterion and Asia reinsurance brokers going forward? So just to clarify, we invested £50,000 in criterion underwriting in 2018 and 1,550,000 in Asia reinsurance brokerage in 2016.

14:18 So in line with our conservative outlook and our prudent approach, we currently have subscribed no value to these. However, we are working alongside management in a proportionate way with the management teams to rebuild the value in those respective businesses. I think, as you all know, our long standing position, we tend to take prudent approach in these kind of things. And, you know, we have hope that we may be able to build value going forward.

14:52 And then if we may turn having done so for the preregistered question, I would now like to invest invite questions from the floor. So do please ask any questions that you may have.

15:08 Okay. I'm shareholder for Moody. The first question I've got, I suspect, can be answered quite simply, but I'll ask it anyway. On On page one zero three, there's a weighted average number of shares, which indicates a change from previous year. I can see when I look at page 86, Yes. Page 86, weighted average number of ordinary shares and changes from 36,900,000 to 37,400,000, which on the face, it appears to clash with the number of diluted shares under option. But I presume that just because those shares vested partway through the financial year that ended in 2022.

16:00 So to hopefully be able to explain. So the reason that the number of shares, a weighted average, changed from and they've stayed roughly about 36,000,000 is we we quite often, we will buy back shares when we are able to, and we quite often we will use some of those shares as part of an incentive scheme. So we do have a employee share option scheme. And so there are transfers in and out. And so the weighted average will include the times when those shares are either in treasury when they're not included, and when they go into a a scheme, then they are included again. So that's why there can be some small variation.

16:46 In relation to the specific 1,400,000 that are excluded, these currently sit within a joint share ownership plan. And this is a scheme whereby certain staff have the rights to any value in excess of it's just under 313p per share. And And for as long as they remain within the trust, they don't have any voting or dividend rights. And so therefore, whilst they are in there, they are nondilutive. But we explain within our net asset value per share, we quote both the gross and the diluted because at some future date, the individual participants, and they're free of all performance criteria, can elect to sell those on the open market, at which point, once they're bought, they become voting and dividend rights and therefore will be part of the weighted average.

17:48 Does that explain it? Okay. I'll work on it. My my next question is on page 101, the second paragraph, and it talks about valuations, and the second line in the second paragraph is there are no valuations using a weighted average post discount price price earnings made multiple when when valuing the portfolio at 30. The implication that was used in the previous year, what was the reason for not using it? So In that specific instance, there are we have a number of metrics for valuation, which can include current market multiples that we may then discount down to reflect a private company investment or a recent trade or based on cost or anything else that we consider to be prudent, and that's in line with the European valuation guidelines, the IVEC.

18:57 The in that particular instance, there is another metric that we used, which we felt was far more appropriate for valuing that business. I'm not at liberty to go into more detail than that at this point in time. But, yes, we we sometimes change our valuation methodology to reflect where we think as a management team and evaluation committee that that is the best way of valuing that business. And I think based upon our results and when we sell them, hopefully, we've demonstrated that our our valuation methodologies have been, you know, sort of either in line with or prudent in terms of where we finally exit these investments.

19:44 Okay. My predominant question is on page 10 regarding XPT within that company. So I presume any acquisitions they've made are betting the elements. Yeah. I think that's fair. If you look at that investment as a start up five years ago and where it is now, it's grown significantly from, So start up to a business that's north of $600,000,000 of premium, adjusted EBITDA of probably north of $20,000,000 It's not quite there comparable with the size or scale of Kentronexus, but it's almost there. And therefore, just by nature of it, what it's achieved, the valuation's gone up and we've got no reason to to suggest or theorize it. What it's achieved in the past isn't a good indicator of future performance, but that being said, don't give future guidance on performance of the portfolio.

20:52 Okay. Thank you. My final question is, obviously, the company is looking to receive the proceeds of 51,500,000 and has identified how a portion of it will be spent, which leaves, as far as I've calculated, a net 38,500,000. Given the investments that a company team makes where the upper limit is, say, given us 5,000,000. So even if you took approved average of, say, just 2,500,000, you would be identifying, say apologies. My graph is not that good. 50 say, new investments, which would obviously happen to affect the capacity of yourselves to deal with those investments? Or I think the reality of it is we won't be looking to materially move the modus operandi for new investments.

21:46 And therefore, we won't be doing 15 investment. It's unlikely we'll be doing that many investments. But where we've seen success within the portfolio and realizations is where we redeploy to existing investments. So if you use Kentro, which has delivered these proceeds as an example, we took a 5% stake in that business in 2014 for 1,500,000. We've reinvested, and we've actually invested over the course of those, circa nine years, 15,000,000, which has delivered the 51,500,000 return. Therefore, if you looked within the portfolio of businesses that we've invested in that are performing well, of that net $38,000,000 that you've highlighted, a good proportion of that will be used to reinvest in the portfolio to try and deliver returns that we hope to achieve alongside with a new business pipeline that's robust and growing, but we're not going to go all in on new business. Actually, when we've got a good portfolio of investments, we'd rather double down on that than throw a lot of mud at the wall and see what sticks with new investments.

22:48 Okay. Does anyone else have any questions for the floor? Two. We've got some online from John Williamson. So performance is good, so no complaints at all. I'm very happy and congratulations. But it comes from a small number of investments. So So does does this this make make it it a relatively high risk investment? I wouldn't even go into technicalities of what qualifies as a high risk investment because there's there's there's regulation on that. But I think our portfolio approach having, at the moment, say, 17 investments with divestments 15, that sort of 15 to 20 bracket, I'd say makes it less risky having a good spread. And if you go back in time and look through how the portfolio ebbs and flows, having that spread but sector specific approach in financial services, but insurance distribution is actually probably a good defensive barrier that we've got quite a few in an area that we're highly specialist at, and that's allowed us to deliver the returns that we have over the time period we have.

23:52 Thank you. Another question. As an investment company, would it be right to assume that this does not qualify for I h t relief even though it's your aim? Yeah. Unfortunately, that's that's the case. Now that you've received a cash payment from the sale of, which I don't think you have received the cash payment yet, what can be done to close the discount now? I would have thought when we received the cash and we instituted the share buyback, the dividend policy, has already impacted on the discount to NAV. I think the biggest reducer of discount to NAV was the release of our results. And on the assumption that we continue to deliver results in line with our improvements on those results, the discounts for NAV should continue to reduce. But that being said, all we can do is increase the NAV as we've done in the past. And hopefully, if the discount doesn't get to zero, which perhaps unlikely, as long as the NAV keeps going up 10 or 15% around the share price will mirror it such that you you'll see the share price going up materially in line with the NAV going up.

24:59 Thank you. And there are no more questions. Okay. Excellent. So unless anybody else has any more questions, that concludes the business of the meeting. I'd like to thank everybody for your interest and attendance today and declare now the meeting is closed. A confirmation that the final results of the meeting will be announced to the markets through our regulatory information service and posted on our website as soon as possible. I would like to thank you and hand back over to sir. Fantastic, John. Thank you and the team for updating attendees today. Can I please ask attendees not to close the session? It should be automatically redirected to provide your feedback in order the Board can better understand your views and expectations. It's only going take a few moments to complete and is greatly valued by the company. On behalf of the Board of BPMARTIAN PARTNERS PLC, we'd like to thank you for attending today's Annual General Meeting proceedings, and good morning to you all.