B.P. Marsh & Partners (LSE:BPM) — Half Year Results

0:02 Good morning, ladies and gentlemen, and welcome to the BPMARSH and Partners PLC Half Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company will not be addressing any questions during the live meeting itself, but we'll review all of the questions submitted today, and we'll publish our responses on the Investor Meet company platform where it is appropriate to do so. You'll be notified by email when these are ready for your review. Before we begin, I would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from B. P. Marsh and Partners PLC. Dan, good morning, sir. Good morning. Good morning, everybody, and thank you for joining us. I'm Dan Topping, the Chief Investment Officer, and I'm joined by Francesca Chappell, our Chief Financial Officer.

0:55 Today, we'll talk you through the group's interim results for the six months ended 07/31/2025.

1:01 Firstly, I'd like to thank the entire team at BPMARSH from the board to the rest of us. We've delivered a strong set of results thanking the team and also the wider portfolio. Without their performance, we wouldn't be here. So just wanted to note our thanks to everybody involved in producing these results. It's been another busy and rewarding period for BPMARSH, a half year that shows both the resilience of our model and the steady contribution of our portfolio companies. Turning to Slide two, the highlights. We'll start with the key numbers as at 07/31/2025. Net asset value rose to GBP 3 and 49,500,000, an increase of 7% over six months and 38% over the past twelve. Profit before tax came in at £32,100,000 and available capital stood at £52,600,000 Total shareholder return combining net asset value uplift in dividends was 9.5%.

1:56 We paid £8,000,000 in dividends over the period, equating to 21.64p 21.64p per share. These figures represent strong consistent progress, perhaps less headline grabbing than last year's exceptional results, but in our world, boring and predictable is often the nicest compliment one can receive. Turning to Slide three, just to remind everyone of our of the way we operate. We're long term minority investors, typically taking 20% to 40% stakes and holding them for an average of nearly seven years. Our focus remains early stage or specialist financial services businesses that fall below the radar of mainstream private equity, which we consider bridging the gap, providing growth capital and support where traditional funding is scarce. And we think our flexibility has allowed us to maintain the growth we've delivered in a patient and solid way.

2:45 On to Slide four, net asset value performance. The chart on this slide shows our NAV journey since 2005. It's a steady upward line, reflecting an average annual growth rate of around 11% over twenty years. We're now approaching $350,000,000 in NAV, up from just 22,000,000 in 2005. Not every year has been smooth sailing, of course, but the long term trend speaks to the value of the patients and our partnership approach. At this stage, I'll be handing over to Francesca to talk through her slides on the financial performance. Thank you, Dan. I'm pleased to be able to present a strong set of results for the period ended 07/31/2025.

3:32 NAV increased by 23,100,000 or 7.1% over the period and now stands at 394,500,000.

3:41 This is equivalent to 956.1p per share or 909.8p per share diluted and has grown by 7.4% over the six month period. The growth in NAV is largely driven by the rise in our equity portfolio, which has increased by 30,800,000 or 12.8% in the period, adjusting for additions and realizations. Our equity portfolio is now valued at GBP 2 and 71,500,000, while cash and other assets are GBP 78,000,000. Based on this, 77.7% of our NAV was attributable towards the equity portfolio, whilst 22.3 was cash and other assets. Profit before tax for the period was 32,100,000, of which 30,800,000 related to unrealized gains arising on the investment portfolio.

4:37 It remains the group's strategy to cover its recurring expenses from the portfolio yield, and it achieved this during the six month period by delivering an underlying profit before tax of 700,000. As of July 31, the group had available capital of 52,600,000 compared to GBP 74,100,000 as of the January 31. As of the October 21, the group has available capital of 36,500,000. Slide six further details the financial highlights for the year. The group is delighted to deliver a total shareholder return for the period ended July 31 of nine and a half percent, including 8,000,000 in aggregate dividends paid. The graph on this slide shows how the group has significantly outperformed the AIM AllShare and AIM Financials.

5:29 Slide seven reports the distribution of our loan portfolio and treasury funds. On the left of the side, you will find a breakdown of our loan book as of the July 31, which stood at 31,100,000. No provisions were made against our loans at July 31. Details of our loan book could be found in the appendices. The average interest rate for the year was approximately 9%, down from 10% as of the January 31. This decrease was due to many of our loans being linked to the bank of England base rate. The middle of the slide shows that during the period, we issued 6,000,000 in new loans and received loan repayments of 200,000. On the right of the slide, will see that at the end of the period, we held GBP 52,600,000 in cash and treasury, which is a decrease from GBP 74,100,000 as of the January 31.

6:22 The main reasons for the decrease in cash since this period are the new investments made in IO Partners of 10,000,000 and Cameron Specialty of 1,100,000. Follow on equity investment of 5,500,000 into Pantheon, net loans granted to the portfolio of $0.5800000, dividends paid of 8,000,000, and share buybacks of 1,000,000. There was a significant cash receipt received during the period being 9,200,000 of deferred consideration in respect to the group's investment in Paladin, which was sold in March 2024. Post July 31, 5,000,000 has been provided in loan funding, and we have received 100,000 in loan repayments. Additionally, there have been four post period equity investments, totaling 11,400,000, which have reduced cash further.

7:15 The group continues to keep its cash diverse across various institutions in a mixture of short term and instant access deposit accounts. The average interest rate received on the group's cash was 4.03%, which amounted to 1,200,000 of investment income received during the period. Slide eight reports the group's dividends since 2010. As of the July 31, the group has paid a total of $24,700,000 in dividends. During the period, a total of £8,000,000 in aggregate dividends was paid amounting to 21.64p per share. The group believes that it's important to reward shareholders via dividend distributions following successful disposals.

8:01 The graph on this slide highlights the key realizations made by the group and how value is returned to shareholders. As announced previously, it's the group's intention to pay dividends of 5,000,000 per annum in the years ending thirty first of January twenty twenty seven and twenty twenty eight. I will now hand over to Dan to talk through the rest of the presentation. Thanks very much, Fran. Turning to Slide nine, the overview of our Managing General Agency portfolio, a long standing area of strength for BPMash. Our MGA investments remain a major driver of value, both in terms of growth and diversification. As at the July 31, they represented around GBP 81,600,000 of value, about 23% of the group's NAV, built on a total cost of £11,400,000

8:47 Across the portfolio, our MJ is expected to underwrite around £750,000,000 of gross written premium, producing roughly £88,000,000 in commission income. These businesses span markets in Australia, The UK, North America and Europe and range from more mature platforms like ATC and Stewart Specialty Risk Underwriting to newer entrants like Vault and Amiga Specialty. It's a segment where access to insurer capital remains tight, which plays to our advantage. Our MGAs have built strong relationships with Lloyd's syndicates and other carriers. We like MGAs specifically because they combine specialist underwriting expertise with scalability and strong cash generation. On Slide 10, our broking investments, they also continue to perform strongly. As at period end, they represent around GBP 167,000,000 of value built on a cost base of just under GBP 58,000,000.

9:38 Collectively, these firms are budgeting to place nearly £1,000,000,000 of premium in the insurance market in 2025, generating over £80,000,000 of brokerage income across The UK, U. S. And Asia Pacific markets. The standout performer remains Pantheon Specialty, which we backed just over two years ago. We now value it at £105,000,000 up from our £27,000,000 invested, reflecting both strong trading and the market's confidence in its leadership. In The U. S, XBT continues its disciplined acquisition strategy, now operating across more than 25 offices and managing over $1,000,000,000 in premium. Both Pantheon and XBT exemplify our investment approach, building meaningful platforms in partnership with ambitious management teams. We've also seen encouraging progress from SRT and partners, our recent UK broking investment, and we've just added one global broking post period, which we'll come to later.

10:34 Turning to Slide 11. Disposal during the period. We completed the sale of Sterling Insurance, one of our Australian NGA holdings to ATC Insurance Solutions, another of our portfolio companies. We first invested in Sterling in 2013, committing around £1,900,000 for a 19.7% stake. ATC acquired 100% of Sterling for approximately £33,000,000 or about £16,000,000 paid in a mixture of cash and new equity in ATC. This transaction increased our holding in ATC from 25% to 27, generating a profit on disposal of roughly £1,200,000 over the original investment amount and an IRR of 8.8%. It's a good example of how our flexible model allows us to structure deals that work for both sides. In this case, the integration creates a stronger combined business while we retain exposure to future upside through our enlarged stake in ATC.

11:34 Turning to Slide 12, new investments in the period and post period end. We made a number of investments both within the period and post period end, which in the aggregate amount to £22,500,000 of equity funding alongside £4,500,000 of loan funding. Dealing with Slide thirteen, IO, which is our non insurance distribution holding completed in April 2025. We took approximately 8% stake for GBP 10,000,000 alongside Janus Henderson as a co investor. IO is building a buy and build platform in the alternative finance market, focusing on SME asset finance, an area which is generally underserved by traditional banks. We're attracted to this by an experienced management team with a strong track record and by the opportunity to help fill the lending gap to UK SMEs.

12:25 It's early days, but IO has already completed three acquisitions. The valuation at period end remains at cost, which reflects prudence rather than a lack of progress. Next, Amiga Specialty, a new specialty underwriting platform founded in June 2025. We acquired a 49% stake for a nominal equity investment alongside a £10,000,000 loan facility to fund growth, which is still outstanding. They've drawn down a modest amount under that facility. Omega's strategy combines organic expansion with selective M and A across niche specialty classes, and they've already made significant key senior hires in both the underwriting and operations segment of their business. Slide 15.

13:12 Our third investment in period was Cameron Specialty. We invested £1,100,000 for a 27% stake and provided a loan facility of £600,000 Cameron's a Lloyd's cover holder focusing on UK specialty property insurance. We backed the founder, Tom Kirkland, to expand into Europe and Ireland, a classic case really of partnering with proven underwriters looking to build their own platform. It's a modest first investment, but precisely the kind of opportunity that can scale into something significant over time. Now we can turn to investments post period end, starting with Slide 16. In Gambit, we invested approximately £1,390,000 for an 8.33% stake. It's a new reinsurance vehicle supporting XPT's underwriting programs.

14:01 It's fully collateralized and designed to give XPT greater operational and financial flexibility while also providing the investors attractive risk adjusted returns. I think it also demonstrates our willingness to back our existing management teams at adjacent ventures when there's a sound strategic rationale. On to Slide 17, XPT ProducerCo. On the back of Gambit, we invested in ProducerCo, a token of £2,500 £2,600 for a 35% stake, alongside up to £9,400,000 in loan funding. This new platform we use to recruit and incubate new producers for XBT's growing U. S. Wholesale broking network. The loan carries a minimum 10% interest rate, so it's both a growth driver for XBT and an income generating asset for BPMARSH.

14:53 Slide 18. Also in September, we backed Salus Capital Partners, a UK based insurance intermediary specializing in professional indemnity. We took a 35% stake for a nominal amount alongside a £2,000,000 loan facility. Salus brings together two subsidiaries, Forte Professions, an insurance broker and Scribe MGA, an underwriting agency, specializing in professional indemnity, starting in construction, surveying and accountancy. It's a strong management team with deep experience in professional lines, and we're looking forward to seeing them build a presence from Bristol and shortly London across The UK, generally thereafter. And Slide 19, finally. One Global Broking. In September, we invested £10,000,000 for a 10% stake. One Global is a London based international broker, majority owned by J. C. Flowers and Company.

15:44 It operates across 15 offices globally, placing around GBP 50,000,000 in brokerage here for the 2025 financial year across marine, property, aviation, financial lines, energy and casualty. We think our sport will further provide for their expansion, including the Bermuda acquisition and growth in Asia. It's a rare opportunity to partner with a top tier management team in an existing business, but which the business shares our entrepreneurial DNA. So we look forward to taking that One Global investment forward. Moving on from investments, Slide 20. It's worth turning briefly to the other side of the equation, the realization and deferred consideration profile from early disposals. While we've been active in deploying new capital, we continue to receive value from transactions completed in the previous years.

16:35 First example is LEBC Holdings, where our initial investment dates back to 2007. LEB sold its trading subsidiary, Aspira Corporate Solutions, to Titan Wealth last year, which allowed immediate repayment of our outstanding loans. Since then, we've received approximately £5,700,000 in sale proceeds, with a further £9,800,000 of deferred consideration expected over the next two years. That would take total proceeds to around £15,500,000 a steady disciplined return from what was a long term patient investment that wasn't without its challenges. Similarly, with CVC UK, which we sold to SRG in March 2024, we've already received, in the aggregate, GBP 54,700,000, which includes GBP 9,200,000 of deferred payments.

17:22 There's a further potential tranche of deferred consideration payable in 2026, subject to CVC meeting its EBITDA target for the preceding financial year. If those targets are achieved, our total proceeds could easily reach over £60,000,000 for this investment. Both of these examples demonstrate an important point about our model. When we realize an investment, the story doesn't necessarily end there. Deferred consideration structures often continue to deliver incremental value over time quietly but materially. And it's a reminder that alongside new investments, we do have a reliable tail of incoming cash flows from historic deals, an important feature of our capital recycling discipline. Those inflows, together with our available capital, mean we're well placed to fund the next stage of portfolio growth without stretching our balance sheet.

18:11 Turning now to the portfolio as a whole on Slide 21. This slide shows the NAV composition as at 07/31/2025. Our three largest holdings, Pantheon, XPT and ATC, together account for just under 60% of NAV, giving the growth both focus and diversity. We also retained smaller but strategically valuable stakes across underwriting agencies, brokers and IO partners in financial services. The portfolio value equates to about GBP $271,000,000, with an additional GBP 31,000,000 in loans supporting investee growth. As at 07/31/2025, we had 17 active investments, of which around half are MJs and half are broker related intermediaries. That balance between early stage growth and mature cash generative asset continues to underpin our stability.

19:00 And in many respects, it's like managing an investment garden, a few large oaks providing shade but plenty of younger shoots that keep things interesting. Onto the larger portfolio companies. Starting with Pantheon, which remains our largest single holding and a clear success story in the portfolio. Since 2023, we've now invested £27,300,000 for a 39% stake, and the valuation has now increased to £105,500,000 or equating to an IRR of approximately 268%. Pantheon began life as a London based specialty lines broker focusing on global casualty. In just two years, it's expanded into professional risks, property, innovation and technology and delegated authority and now operates across multiple territories.

19:49 Pantheon's headcount has grown from three at launch to approaching 45, that supported consistent growth in commission income and profitability. Pantheon also completed its first overseas acquisition, a 25% stake in Fraction Brokers Asia, a Hong Kong based outfit, which broadens its reach geographically and product into digital assets and the Asian specialty market. Pantheon's trajectory reinforces the benefit of backing exceptional management early on and staying aligned as they scale. Continue to remain confident in its outlook. On to Slide 23, ATC, another core contributor. We invested in 2018 and hold a 27% stake valued at GBP 39,200,000, up from a cost of GBP 5,300,000, giving an IRR of over 40%.

20:38 ATC is a multiline Lloyd's cover holder, crossing underwriting across many specialty lines. It's now the largest independent Lloyd's agency in Australia, working exclusively with Lloyd's syndicates. ATC's expected performance for the year to June 2026, so it was impressive, with gross written premium exceeding GBP 300,000,000, revenue exceeding over GBP 50,000,000 and EBITDA of around AUD 20,000,000. Its acquisition of Sterling, one of our former holdings, has broadened its footprint further, and the new office in Perth extends its national presence. Slide 24, which deals with Stuart Specialty Risk underwriting in Canada, a business we've backed since 2017. We hold roughly a 28% stake, which we value at about £22,900,000 from a nominal investment, delivering an IRR of about 90%.

21:31 SSRU is an underwriting agency focused on specialty property to casualty lines, in particular, construction, manufacturing, onshore energy and public entity sectors. It's one of Canada's leading independent underwriting agencies with GWP budgeted to exceed CAD 100,000,000. The growth has been driven by product expansion, notably the launch of the primary casualty division and by recruitment of high caliber underwriters. We think it's a textbook example of a disciplined organic growth supported by strong underwriting performance. And then finally, XPT Group in The U. S. On Slide 25, another cornerstone within the portfolio. We first invested in 2017 and now hold a 29.6% stake.

22:17 Our cost to date is approximately £18,800,000 which we value at about £60,600,000 delivering an IRR of 28%. With XBT, it's grown from a start up aggregator into a substantial specialty lines distribution platform. It now operates across 26 offices, employs over 400 people and has completed 17 acquisitions since its inception. And for the 2024 financial year, FFG wrote more than £970,000,000 in GWP and generated north of £23,000,000 in adjusted EBITDA. It's a strong example and continued example of our strategy of backing management teams capable of building scale through acquisition and integration. Recent initiatives such as Gambit Re and XPT ProducerCo, both of which we supported post period, will help sustain that growth momentum.

23:08 Taken together, Pantheon, ATC, SSRU and XPT represent the engine room of the portfolio, proven management teams, profitable trading and clear runway for further growth. They also provide the financial stability that allows us to pursue new opportunities at the earlier stage. In short, the combination of mature and developing holdings gives us the right mix of excitement and sleep at night. On to Slide 26, which details shareholder returns and buybacks. We continue to balance reinvestment with shareholder returns, A 9.5% return for the period, including NAV growth and dividend, speaks to that balance. And during the half, we repurchased approximately 145,000 shares for just over £1,000,000 all focusing on maintaining and reducing the discount to NAV.

23:57 On to Slide 27, as previously flagged, we did have one single shareholder, Ardona, via its acquisition of PSC, which accounted for just under 20% of the shareholder base in BPMARSH. They ultimately look to realize that due to return cash for their own growth strategy. And we're pleased to see institutional demand for these shares during the period, which we think reflects growing recognition of our long term track record and consistent delivery. In May, roughly 10% of the share capital was placed at GBP 6.30 per share for approximately 23,000,000. And then in August, ArdonaPLC completed the sale of its remaining 9.8% at GBP 6.50 a share for a further 23,600,000.

24:47 That process not only broadened our shareholder base but also increased our free float significantly, which we think is a significant milestone for liquidity and index eligibility. We also took the opportunity to purchase, as I said, 769,000 shares ourselves for around 5,000,000, demonstrating our confidence in the long term value of the group. We're pleased to well, Wellington Management Group became a new major shareholder, now earning around 8% of the company. The strength of demand and the quality of incoming institutions, we think, sent a clear signal that the market increasingly appreciates the durability of our model. The placing was a constructive step that allowed an orderly exit for an existing shareholder, improved liquidity and brought several high quality long term institutions into the register, exemplifying how we manage the business thoughtfully and with the future shareholder base in mind.

25:44 Slide 28. The institutional support links neatly to this next point, our ongoing work to narrow the discount between our share price and NAV. At the end of July, the discount stood at around 24%, a significant improvement from over 60% back in 2009. We've made steady progress over the years through consistent NAV growth, regular dividends and measured share buybacks. Since adopting our dividend policy in 2010, we've distributed 71p per share in total, which equates to over half of the flotation price. We see these dividends, together with our NAV track record, as key factors in supporting the share price and demonstrating capital discipline. We're realistic, of course, the market will always apply some discount to a specialist investment company like ours, but our goal is to ensure that the market valuation more accurately reflects the intrinsic value of our portfolio.

26:33 And if we can keep closing the gap without talking too loudly about it, so much the better. We think it's about steady, consistent delivery, growing NAV, maintaining liquidity and rewarding shareholders. That combination is what ultimately shifts sentiment over time. So whilst we can't control market mood, we can control execution, and that's where our focus remains. We'd like the share price and NAV to be on friendlier terms, but we are doing our best to play matchmakers in this situation. And Slide 29, summary and outlook. So to close, we'd like to bring the key points back together. This half year has been one of steady progress, a period defined not by one off gains but by consistent delivery across the portfolio and the disciplined use of capital. Our NAV rose to £349,500,000 an increase of 7% over six months and 38% year on year. Profit before tax was £32,100,000 and we ended the period with £52,600,000 in available capital.

27:27 We paid £8,000,000 in dividends equating to 21.6p per share and delivered a total shareholder return of 9.5%. Completed three new investments during the period and a further four post period end, continuing to broaden our reach across the insurance and financial services landscape. And we also completed the realization of Sterling Insurance, strengthening ATC in the process and generating a healthy uplift in value. Our portfolio companies remain well capitalized and well led. They're budgeting for approximately GBP 1,700,000,000 of gross written premium in 2025, a testament to the resilience of their markets and the strength of their management teams. And with our liquidity position, we're well placed to continue supporting both follow on funding and new opportunities. Strategically, our priorities remain the same: to identify and back strong management teams in specialist markets to compound value over the long term and to maintain a disciplined balance between investment, liquidity and shareholder returns.

28:24 We've been doing this for over thirty years. And while markets evolve, the underlying principle of partnership and patience haven't changed. If anything, patience seems to be the one skill that our investment approach rewards most long as you can afford to practice it. Looking ahead, we see continued opportunity, particularly in The UK and international specialty insurance market, where entrepreneurial talent remains strong. We'll keep doing what's worked for us, investing carefully, supporting our partners and growing value for shareholders. That's great, guys. If I may just jump back in there. Thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

29:13 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of BPMARSH and PARTNERS PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.