B.P. Marsh & Partners (LSE:BPM) — Annual General Meeting 2024

0:01 Good morning, ladies and gentlemen, and welcome to the BPMARSH and Partners PLC Annual General Meeting. Throughout this recorded meeting, attendees online will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. I would now like to hand you over to the chairman of today's meeting, John. Good morning, sir. Good morning. So to our shareholders and all visitors, I would like to welcome you to BPMARSH and PARTNERS annual general meeting.

0:31 I'd like to welcome shareholders who are viewing the meeting electronically as well as those present in person here today. So just a brief introduction. I'm John Newman, the finance director of BPMARSH, and I'll be chairing the meeting today. I'd also like to introduce Dan Topping, our chief investment officer. We also have Schneider Aire, our company secretary, with us as well. As we recently gave an investor meet company presentation following our year end 01/31/2024 annual results, We won't be repeating that again. However, the recording of the 06/12/2024 presentation remains available on the IMC portal, which you're all welcome to go and review. We will, however, deal with any questions you may have after the formal business of the meeting. This is now just after 11:00, so I will commence with the formal proceedings.

1:19 As we have a call quorum, I declare the meeting open. I'm pleased to inform you that the meeting today is being recorded and livestreamed so so that shareholders and other stakeholders who cannot be present can view it on the company's profile or an investment company both live and as a recording at their own time. By way of reminder, shareholders who are viewing the AGM online will not be participating in the voting of resolutions and will hopefully have submitted their votes by proxy in advance of the meeting. Ladies and gentlemen, I would now 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 the 06/25/2024. 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 Thank you.

2:13 Onto voting procedures. Act accurately reflect the views of the 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 the decision making of the company and have their votes recorded in proportion to the number of shares that they hold. I'm appointing a liquidity group, the group's registrar to act as group to leaders. A summary of each resolution will be shown on the screen together with the breakdown of proxy votes we've received thus far before I put each resolution to the vote. As it takes 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 will be published on our website soon to reasonably act.

3:01 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 voting law and will not be counted in the calculation of the proportion of votes for or against the resolution. Will 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 Dobain. Should you require any further assistance, our registrars or Chenay Dobain will be happy to assist you. With your permission, ladies and gentlemen, I should like to proceed by dealing with the formal business meeting at the outset before moving on to any questions unless anyone has any specific questions relating to a specific resolution. In which case, please raise them now.

3:53 Okay. Thank you. So 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 received. Resolutions one through 12 are proposed as ordinary resolutions and require a simple majority to be passed. Resolutions thirteen and fourteen 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 and accounts for the year ended 01/31/2024. So I now propose that the annual report and accounts for the year ended 01/31/2024 be received and adopted together with the report of directors and the report of the auditors. 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 that we may report your vote. These instructions apply to all the resolutions and will not be repeated.

4:52 Thank you.

4:57 So I now declare the poll closed. The provisional results are shown as such and subject to confirmation by our registrars. The 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 33 to 37 of the company's report of accounts for the financial year ended 01/31/2024.

5:34 So I now declare the poll closed and subject to confirmation by our registrars. As you can see, the res resolution is capped. Resolution three is to declare a final dividend of 5.36p per ordinary share as recommended by the directors. If approved, the recommended final dividend will be payable on the 07/26/2024 to all shareholders on the registered members for close of business on the record date of 06/28/2024. So I therefore propose to approve the final dividend of 5.36p per ordinary share. Okay. Thank you. I declare the poll closed.

6:19 Subject to confirmation by registrars, this resolution is carried. Resolution four. Fourth item on the agenda is the reappointment of mister Brian Marsh as a as a director of the company. I therefore propose to reelect mister Brian Marsh as a director of the company. Can you please vote now?

6:40 Thank you. I declare that the poll closed. Subject to confirmation by registrars, resolution is carried. Resolution five. The fifth item on the agenda is the reappointment of as the director of the company. I therefore propose to reelect as director of the company. Please be your vote now. I declare the poll closed. Subject to confirmation by registrars, resolution is carried. Resolution six six the sixth item on the agenda is the reappointment of mister Daniel Topping as the director of the company. I therefore propose to reelect mister Daniel Topping as the director of the company. Will you please vote?

7:26 Thank you. I declare the poll closed. Subject to confirmation by our registrars, resolution is carried. Resolution seven. Seventh item on the agenda is the reappointment of mister Jonathan Newman as the director of the company. It's a dodgy one this morning. I therefore propose to reelect mister Jonathan Newman as director of the company. Will you please vote now?

7:50 Thank you. I declare the file closed. Subject to confirmation by our registrars, the resolution is carried. Resolution eight. The eighth item on the agenda is the reappointment of mister Pankaj Pakani as director of the company. I therefore propose to reelect mister Pankaj Mukhani as director of the company. Will you please vote?

8:14 Thank you. I declare the poll closed. Subject to confirmation by our registrars, the resolution is capped. Resolution nine. The ninth item on the agenda is the reappointment of mister Nick Carter as director of the company. I therefore propose to reelect mister Nick Carter as a director of the company. Can you please note?

8:37 Thank you. I declare the poll closed. Subject to confirmation by our registrars, the resolution is counted. Resolution 10. The tenth item on the agenda is to reappoint Rawlinson and Hunter Audit LLP until the conclusion of the next general meeting before which the accounts are made. I therefore propose to reappoint Rawlinson and Hunter Audit LLP as auditors of the company until the conclusion of the next general meeting before which accounts are made. Will you please vote now?

9:09 Thank you. I declare the call closed. Subject to confirmation by registrars, the resolution is carried. Resolution 11. Eleven five on the agenda is to authorize the directors of of the company to determine remuneration of the officers of the company. I therefore propose to authorize the directors to determine the remuneration of the auditor and Hunter audit LLP. Please vote. Thank you. I declare the poll closed. Subject to confirmation by our registrars, the resolution is capped. Resolution 12. Twelfth item on the agenda is the granting of authority to allow the company to unlock ordinary shares or grant rights to subscribe for or to convert any security into shares of the company up to a nominal value of £1,241,094.30.

10:03 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 £1,241,094 and 39.

10:29 Thank you. I declare the public closed. Subject to confirmation by our registrars, resolution is carried. Resolution 13. The The thirteenth item on the agenda is granting of the authority to allow the company to roll up equity securities wholly for cash pursuant to the authority given in resolution 12, which is proposed as a special resolution. So I therefore propose to authorize and empower the directors subject to passing of resolution 12 above in accordance with the company's act to allot equity securities either in connection with a preactive offer or, if not up to, an aggregate nominal amount of a 186,000 £164.10, disregarding preemption rights. Such power to expire at the conclusion of the next annual general meeting with the company on the 07/31/2025, whichever is.

11:22 Will you please, ma'am? Thank you. I declare the call closed. Subject to confirmation by a registered resolution is counted. The fourteenth item on the agenda is the granting of authority to allow the company to buy back up to 3,723,283 of the company's shares, which is proposed as a special resolution. So 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 3,723,283 ordinary shares, such power to expire at the conclusion of the next annual general meeting of the company on the 07/31/2025, whichever is the year. Would you please open now?

12:16 Thank you. I declare the public closed. Subject to confirmation by registrars, the resolution is carried. So moving on to questions. Questions will be moderated before being sent to me to chair. This is to avoid repetition and to ensure the smooth running of the meeting. If multiple multiple questions on the same topic are received, I may choose to provide a single answer to address them with queries on the same topic. Please note that if your question pertains to the audit or remuneration committee, it's Pankaj Macarney who chairs the audit and remuneration is unable to attend the meeting in person. It might be that these questions are best dealt with by him after the meeting. Before asking your question, please can you give me your name and state with you if you're a shareholder, proxy, or corporate representative?

13:02 If you are a proxy or corporate representative, please state your name and the name of the shareholder you are representing. Firstly, we'll deal with those questions that were submitted in advance of the meeting and then invite questions from the floor, and then we will take any questions that received online. So we've had two presubmitted questions, which we will take in. First question, your investment in LEBC was valued at approximately 4,000,000 for 59.3% of the equity. Given this valuation, why did you pay 1,100,000 for 2.53% of the company after the year end?

13:40 So whilst we don't set out in detail all the transactions that the group undertake, we agreed to acquire these shares in principle prior to the transaction in order to achieve the successful sale of the Sphera business as combined with the assets of LEBC Group to tighten the wealth for the benefit of all shareholders of LEBC Holdings. A conservative approach has been taken on the valuation of the existing holding given the nature of the sale arrangement with Titan, and we are receiving deferred consideration over the three year period based upon performance. The board considers that a higher value could therefore be achieved eventually but has taken a pragmatic approach at this time. Second question that we received, do you expect our dollar to retain the investment in BPMARSH following the recent acquisition of PLC Insurance Group?

14:29 I understand that, that acquisition will be subject to, confirmation of approvals in regulatory just to explain that PSC Insurance don't have a board presence and are just shareholders alongside other shareholders. So we're aware of the proposed transaction between the two entities, but we cannot comment on what their future plans may be at this time. So that deals with the questions that we received in advance. And now I'd like to open it up to the floor if any of our shareholders have any questions that they may wish to ask. And, please, if you could state your name and ask me if can set out if you want to share. Okay. My name is Gordon Luby.

15:15 I'm a shareholder. I've got about four questions. The first one is when I look at the valuations, for example, I can see with Lenny Plumber risks, 30% value is equivalent to 13,460,000. I can see that the forecast EBITDA is about 5,000,000. I look also look at specialty where 25% value is equivalent to, I think, 14,800,000. Forecast EBITDA of 10,000,000.

15:52 My question is how quickly did the valuations or is it when the forecasts are confirmed or not by verified annual accounts that the valuations are changed to reflect the new realities of the profitability of the respective organizations? I think it on the generality of value in brokers, it's a case by case basis, to be fair for. PARTNERS obviously had an excellent start to its life as an independent broker. It's only just over twelve months in. So at that point, we apply a variety of discount factors or modifies to what we look at valuation. But, you know, as that investment in Pantheon continues to establish itself, improve it or increase its footprint, then, clearly, it'll it'll start to mirror similar valuation models

16:44 more established in terms of breaking operations. Mhmm. Okay. Would you anticipate that after a year or two or give it more time? I would never like to put a a time frame on it specifically, but certainly when we look at the next round of evaluations, it would be for an extra six months. Headcount will increase this standing on its own two feet. So, yeah, I I would imagine it wouldn't be unfair to assume incremental increase in that valuation given its underlying EBITDA performance. Okay. The next is more general in terms of, obviously, it's a considerable sum of money in the bank. What are the opportunities out there like? Would you how could it put it? Restrict yourself to just the insurance industry or the English speaking insurance industry? How are you what do you use? I think I think there's a a pretty active pipeline of new business, but we won't move outside of our modus operandi. We're looking at for new business.

17:43 So that naught point naught 5,000,000 investment size structure, broadly speaking, is similar, but where I think we've seen success with for example. We made an investment of 5%, 1,500,000. Ultimately, we invested 15,000,000, which at the time was the largest single investment we've made from a a cash standpoint. Focusing well, allocating some of our resources to existing portfolio seems to be bearing fruit and certainly with the likes of XBT in America. That that was a start up in 2017 with four people and business planners out. Couple of 100 employees knocking down the door to a big improvement '22 and, you know, north of 20,000,000 in EBITDA. We've committed circa £18,000,000 to that. And if we can see a a strong trajectory for further growth, increasing the BPMARSH value stake of the BPMARSH evaluation, we'll commit further funds to that. So I think our modus operandi in terms of new business might won't change.

18:44 But in terms of follow on funding to the existing portfolio where we see a strong track record for growth and further opportunity to deploy cash at an exceptional rate of return, that's, I think, what I would flag. Yes. So just to confirm, you've received, well, the niche is clearly 5,000,000 plus whatever inflation takes it, but the changes in effect you can continue with the Yeah. Present companies. Okay. Changing more to to some extent with governments. I can see on page 29, first column, an alternate paragraph, if I'm being specific. A review of performance and effectiveness of directors takes place annually, but it's assessed on an ongoing basis. How is that done?

19:37 We have an annual performance review of each director, the board effectiveness from the chairman on down. That's annually, but, you know, it's performance of the portfolio, how the board, you know, demonstrates or it's it's authority. How we manage the portfolio is done. Every board meeting, really. So and that's at the PLC level, which is the ultimate owner of the business, but we do have a subsidiary board at company level that, again, mirrors the board practices and review that PLC does. So I think it's for the size of the business and how we're growing, I think it's relatively robust. My fund, which is more specific question, page 39, I can see the audit have continued or the relevant audit continue due to extenuating circumstances.

20:25 Dare I ask what the extenuating circumstances? So, hopefully, they won't mind me saying this. So, we were going to, change our senior order policy, And the new person who was proposed was all in place, unfortunately, suffered from, some. And so under the circumstances and given the time involved, you very much. Thank Are there any other questions from the floor?

21:17 No? Okay. And can I confirm there were no more questions from on the line? Okay. Well, thank you. So we have a a summary up on the screen for those of you on the floor. So our sort of our summary position is, so our investments continue to achieve attractive returns over long periods with low risk investors. Obviously, we've had a, you know, incredibly successful year achieving 22%, including the dividends that we paid during the year. BPMARSH's expertise and experience puts us in a prime position to continue to support financial intermediaries to reach the next level. There are plenty of opportunities out there, both within new opportunities and expansion of the existing portfolio. We've demonstrated our ability to be able to invest in and dispose of at or above our investment valuations, we've had an incredible record, you know, with some significant realizations over the last twelve months in from Kentro at CBC.

22:23 The company has allocated 1,000,000 to a share buyback program. We've invested £300,000 up to date with the AGM, which we've been back at about £5.17 shares. They they would be on our diluted NAV worth about £400,000. And so we are so we've just renewed that for a million, and we will obviously that goes to support the share price without obviously trying to take away too much liquidity from the market. But we're buying back at a price of £5.32 a share at the moment. So we're plenty of opportunities. After the payment of the latest dividend, which is 2,000,000, we've got about 80,000,000 in the bank, so plenty of cash for of those opportunities.

23:13 We've declared an aspiration to to pay 4,000,000 a year for the next two years in dividends. And so we're in an excellent place. The portfolio is doing very well at the moment. So with that, I'd like to thank all of our shareholders, both those online and also everyone who's yet to come to the meeting in person. Thank you. And so as such, I'd like to declare the meeting closed. Confirmation and final results of the meeting will be announced to the markets through our regulatory information service posted on our website as soon as possible. Thank you. Thank you. Perfect. John, that's great. And thank you to the board, for updating attendees online this morning. Could I please ask attendees online not to close this session as you'll now be automatically redirected and for the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

24:07 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the board of BPMARSH and PLC, we would like to thank you for attending today's annual general meeting, and good afternoon to you all.