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

0:01 Good afternoon, and welcome to BPMARSH and PARTNERS PLC annual general meeting. Throughout this recorded meeting, attendees online will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab. It's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, all questions will be reviewed with responses published on the investor meet company platform where it is appropriate to do so. Now like to hand you over to group finance director, John Newman. Good afternoon, sir. Good afternoon. I'd like to extend a warm welcome to all our shareholders and visitors, to BPMARSH and PARTNERS PLC Annual General Meeting twenty twenty two. I especially like to welcome all our shareholders who are viewing the meeting electronically as well as those present in person today.

0:53 I'm John Newman, group finance director, and I'll be chair of this meeting. It's now just after twelve noon, and I declare the meeting formally open. I can confirm that we have a quorum, and I therefore declare the meeting open as set. Practicalities, just a few things before turning to the formal part of the meeting, I'd just like to mention a few housekeeping points for those visitors and intending in person that the fire exits located just at the door to the right at the end of the corridor. We do not expect there to be any fire alarm test during the meeting. Please, can you make sure those in attendance here that your phones are off or switched to silent mode? I'm pleased to inform you that the meeting here today is being recorded and livestreamed to 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.

1:49 By way of reminder, shareholders who are viewing the AGM online will not be participating in the voting of resolutions will hopefully have submitted their votes by proxy in advance of the meeting. I would like to introduce Dan Topping, our Chief Investment Officer. I would also like to introduce off camera B. Sinead O'Hare, our company secretary. So ladies and gentlemen, I would now like to start the formal proceedings of this annual general meeting. The notice amount of the annual general meeting together with the explanatory notes was posted to shareholders on the 07/01/2022. Accordingly, the requisite notice of the meeting has been given. I propose, therefore, that with your consent, the notice of the meeting should be taken as read. Is that all agreed? Thank you.

2:35 Voting procedures. To accurately reflect the views of shareholders of the company, voting today will be done by way of 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 the Equinity Group, the company's registrar to act as scrip's neers. A summary of each resolution will be shown on the screen together with breakdown of the 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.

3:26 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. 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 Sinead O'Hare. Should you require any further assistance, our registrars of Sinead O'Hare will be happy to assist you. With your permission, ladies and gentlemen, I should like to proceed by dealing with the formal business of the meeting at the outset before moving on to any questions unless anyone has any questions specifically relating to a reservation, in which case you can raise them now.

4:17 Otherwise, we will deal with them in due course. Does anyone have any specific questions? Okay. So resolutions. 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 the meeting, a copy of which you will have already received. Resolutions one through to 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 be in favor of the resolution. So resolution one. The first resolution is to receive and adopt the annual report and accounts for the year ended 01/31/2022.

5:04 I now propose that the annual report and accounts for the year ended 01/31/2022 be received and adopted together with the report of the directors and the report of the auditors. You will see on screen, we have had 15,945,089 votes in favor and 50 votes again. As I explained to those attending 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 be told your vote. These instructions apply to all the resolutions, and therefore, these instructions won't be repeated. Thank you. So I now declare the poll closed, and the provisional results are shown on the slide, and formal results will be declared after the meeting.

5:53 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 37 of the company's report accounts for the financial year ended 01/31/2022. As you can see on the slide, there were 15,933,539 proxy votes in favor, ten eighteen votes against. I now declare poll closed. Resolution three. The third item on the agenda is to approve the final dividend of 2.78p per ordinary share as recommended by the directors.

6:38 If approved, the recommended final dividend will be payable on 07/29/2022 to all shareholders on the register of members for the close of business on the record date of 07/01/2022. I therefore propose to approve the final dividend of 2.78p of ordinary share. As you can see on screen, there were 15,946,057 votes in favor on the proxy. And therefore, if everyone has now voted, I declare the poll closed. Resolution four. The fourth item on the agenda is the reappointment of myself as a director of the company. And accordingly, I'll hand over to my colleague, Dan Topping, to propose this resolution.

7:25 I propose to reelect mister Jonathan Newman as a director of the company. I declare the poll closed. And back to you. Thank you. Still here. Good. Resolution five. The fifth item on the agenda is the reappointment of mister Pankaj Lakhani as the director of the company, and I therefore propose to reelect Mr. Pankaj Lakhani as director of the company. As you see on screen, there were 15,945,039 votes in favor and 100 votes against. I now declare poll closed. Resolution six. The sixth 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.

8:21 I therefore propose to reappoint Warnellson and Hunter Audit LLP as auditors of the company until the conclusion of the next general meeting before which accounts are made. As you can see on the slide, there were 15,943,268 proxy votes in favor of eighteen seventy one votes against. I now declare the poll closed. Resolution six sorry, seven. Apologies. The seventh item on the agenda is to authorize the directors of the company to to determine the remuneration of the auditors of the company. I therefore propose to authorize the directors to to determine the remuneration of Wannersen and Hunter Audit LLP.

9:06 Will you please vote now? I can confirm as per the proxy votes, 15,945,089 votes were in favor and 50 votes against. And I now declare the poll closed. Turning to 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 1,000,002 and £48,548.60 I therefore propose to authorize the directors pursuant to and in accordance with Section five fifty one of the Companies Act 2006 otherwise known as the Act to allot ordinary shares or grant rights to subscribe for or to convert any security into shares at the company up to a nominal amount of 1,248,008 sorry, pounds 548.60.

10:05 As you can see on the screen, we've had 15,945,089 votes cast in favor of proxy forms of 50 votes against. I declare the poll closed. Resolution nine. The ninth item on the agenda is the granting of authority to allow the company to allot equity securities holding the 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 allot 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 07/31/2023, whichever is the earlier. Would you please vote now?

11:07 I can confirm we had 15,921,106 votes in favor and 23,446 votes against. I now declare the poll closed. 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 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. And where such shares are held as treasury shares, the company may use them for the purposes set out in section seven twenty seven, seven twenty nine of the act, including for the purpose of employee share schemes, provided that a, the maximum number of ordinary shares hereby authorized to be purchased is 3,746,600.

12:06 B, the minimum purchase price exclusive of the expenses, which may be paid for any ordinary share is 10p being the nominal value of an ordinary share. And c, the maximum purchase price should not be more than the higher, 5% above the average range of middle market quotations for an ordinary share for the five business days immediately preceding the day on which the ordinary share is purchased and the amount stipulated by Article 5.1 of the buyback and stabilization regulation 2,003. And d, this authority shall expire on the conclusion of the next annual general meeting of the company following the passing of this resolution or if earlier, the close of business on 07/31/2023.

12:54 I can confirm as you can see on the screen, there were 15,941,432 proxy votes in favor and a 125 votes against. Please vote now. And I now declare the poll closed. And now we move on to the Q and As. Questions will be moderated before being sent to the 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 to address member queries on the same topic. Before asking your question, please can you give your name and state whether you are a shareholder, proxy, or corporate representative. If you are a proxy or corporate representative, please state your name and the name of the shareholder you are representing.

13:43 First, we'll deal with those questions submitted in advance and then invite questions from the floor. So if I could hand it over. Yes. Presubmitted question one. In the auditor's report, number one, risk. So details were as assurance of giving evaluations are professionally based and in line with common practice. Evaluation of 19.2 times price to earnings appears at the high end of the range, and that has followed the market value for similar businesses. This is not here to mitigate the risk of the market as a whole, you know, or has the market as a whole been overvalued? Is the discount varied according to the business cycle or not? Are any adjustments made to the calculation if, say, it becomes clear after the January 31 and before completion of the report, the valuations had started to fall?

14:36 Okay. Should I start on this one and then I'll pass over, Dan. So specifically in relation to the investment valuations, this one is so we we value our investment portfolio on a range of of different metrics based upon what might be if it's early stage, we might value it cost or if there's been a recent, range of investment, we might market against that, or using common multiples within the industry for which we are, fairly well rehearsed and familiar. And in, specific items in relation to this, it is typical to use where there are a number of quoted, investments, within that area. And this is, specifically linked to, an average of what are considered to be comparable, businesses and what they are based upon the current or they were at 01/31/2022.

15:43 So they go up and down as the markets do. So but in addition to that, we will take a business when we're looking at it, and we will consider whether or not we want to apply a discount to that. And we also look at specifically any kind of potentially, dilutive. There might be contingent liabilities. There might be deferred consideration. There might be option schemes that might come in, and so that we will also apply that. So we to come out and take liabilities into account on the balance sheet to come up with an equity valuation. In specific comment regarding in this one area, the markets have come down since, but that wouldn't affect our valuation. We actually value this specific investment significantly lower. We just took a view. It was marked fairly similar to a recent transaction that had actually passed where somebody come in and and and acquired a meaningful stake of almost 21 percent of the business for cash, and it's in line with that. In terms of what happens afterwards, well, if it's anything that would significantly affect our overall valuation, we would have a duty if we felt that it affected the portfolio to make a regulatory announcement.

17:11 In this specific instance, we don't believe that it's had a the fact that the markets have have dropped since January 31 in this area, which is specifically in IFAs, we don't believe that's had an impact upon our valuation because we were valuing it significantly below what the markets were anyway and in line with a recent cash transaction. I hope that answers that question. Do you want to add anything further to that? No. It's a very comprehensive answer. No further questions at this time. Okay. So we've got no further specific questions in advance. We did do a presentation with IMC only a few weeks ago where we had a number of questions that were answered, and that's all available on the IMC website.

18:03 Obviously, if anyone online at the moment has any questions, please feel free to ask them. Yes. Tell me when to start. Well, if if we wait for any more he he answered that. So, please could you state your name and your question? Right. My name is Jordan Moody. I'm a shareholder. I have quite a specific question to do with the notes in the annual report. So on one, you have note number 13 on page 88, which gives a lot of detail regarding financial covenants, which we have investments. And then earlier to that on page 79, there is note one, which, of course, is the accounting regulations, and it gives information about the income particular investments, but doesn't give any details because IFRS eight says you don't have to give any details if the if the income of that investment is less than 10% of the whole.

19:16 So my obvious question would be, would yourselves be prepared to change that to, say, five percent given the detail that we were already giving in. If I can refer you to the related party disclosures note on page a 102, note 24, we actually provide specific detail for all the income from all of our investing companies there. Okay. Final question. Obviously, with regard to the largest investment, which has changed from Nexus to Kentro, is there a a point where you take view of the investment is now too large for yourselves or just intending to keep going?

20:09 I I think we look at all of our investments from the perspective of do management want us still involved in that investment regardless of size or direction? And certainly, with regard to Kentro, at this moment in time, clearly, it's the largest on our balance sheet. Without access to external capital, you'd be looking at our balance sheet and say, how can you support that growth? But the reality of the situation with Kenya is that they've also got access to debt finance with Barex, international asset manager, that provides them with all the access of funds that they would want. So at this stage, clearly, it's a big asset on our balance sheet. It's one of our biggest investment, biggest ever investment, a really good strong performing investment. So at this stage, it's a hold as long as it continues to perform, deliver income and grow. We've got no reason to sell it at this stage. That's not to say that it might be sold in the near future. It could be sold, you know, five or ten years' time. That's the flexibility that's afforded by BPMarch.

21:10 And certainly, from a management standpoint, they certainly want us to still involve the business to provide guidance and oversight, which over the last eight or so years has transformed alongside our investments to transform that business. Okay. Again, for the Moody's shareholder, there are two investments in Singapore which appear to have very little value. Is that an issue to do with the actual market in Singapore or the individual companies? I think both probably. I think the the Singapore market for the underwriting agency, it's problematic in terms of regulation, in terms of whether the MAS and monetary authority of Singapore actually wants underwriting agencies, but it was a modest investment for us.

21:59 So I would say that's more governmental issue. And on the Asian reinsurance brokers, it's a combination of factors. It hasn't performed as we'd expect. We've worked with management to try and mitigate the downside. We've also taken a very conservative approach to valuation of that investment by putting it taking action as quickly as we can to make sure there's no real body shocks in terms of effectively value it down. So we we have done that. But, you know, it is a challenge investment with the rest of the portfolio by and large again, great guns, but there will always be two laggards. And I would say ARB falls into that that category. Okay. Thank you. The only thing I would add to that is, you know, we it is a risk, you know, what we do, but and there are always, you know, sort of disappointments.

22:47 And the key thing is our long term compound growth is therefore to see, and that's inclusive of of everything. And, yes, we we have disappointments, you know, we learn from them. You move on. It would be highly unusual to not have. In fact, we're probably a bit concerned if everything was always, you know, sort of brilliant all the time. But, you know, it's it's all about making sure how you act. And there have been I think a key point is several even of our most successful investments have had moments when things weren't always going right. And our approach, our part of the approach with our investments, our flexibility, our sort of longer term view enables us to be able to take time for the patients and help them out to achieve the best results for all concerned.

23:39 Thank you. Okay. So unless there were any further questions, there were no, questions come through online. In which case, I'd like to say a warm thank you to everyone attending online and a big thank you to everyone attending in person. Just to reiterate, we did do a full presentation on the July 7 that is on the IMC website. That's also available on YouTube if you search for BPMARSH and PLC full year results 2022, that will come up there. They will also we have some presentations on our website. If you have any questions pursue it after the meeting that you would like, by all means, message them in. And Brian Marsh has made a point of saying that he's not present here today. If anyone wants to go and get in touch with him, the door is always open. We'd be happy to do with the best of that way.

24:40 On which point, I'd like to thank everyone for their attendance. We will tally up all of the folks, and we will be releasing that in due course after the meeting. Thank you, everybody, and goodbye. John, that's great. And, thank you very much indeed for taking the time to update those online today. Could I please ask attendees online not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can best understand your views and expectations. It's only take a few moments to complete, and I'm sure will 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. That now concludes today's session. So good afternoon to you all.