B.P. Marsh & Partners PLC (BPM) Earnings Call Transcript & Summary

Thank you. I declare the poll closed. Subject to confirmation by registrars, resolution is carried. The 14th tenth item on the agenda is the granting of authority to allow the company to buy back up to 3,723,283 company 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 time to time mean determine up to a maximum of 3,723,283 ordinary shares. Such power to expire at a conclusion of the next Annual General Meeting of the company or on the 31st of July 2025, whichever is earliest. Will you please vote now. [Voting]

Thank you. I declare the poll closed. Subject to confirmation by registrars, resolution is carried.

So 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 single answer to address member queries on the same topic. Please note that if your question pertains to the audit or Remuneration Committee, Pankaj Lakhani who chairs the audit and Remuneration is unable to attend the meeting in person. It might be that these questions better dealt with him after the meeting. Before asking your question, please give me your name and state whether you are a shareholder, proxy or corporate representative. If you were 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 advanced to meeting and then questions from the floor, and then we will take any questions that we received online. So we've had 2 pre-submitted questions, which we will take. First question, your investment in LEBC was valued at approximately GBP 4 million or 59.3% of the equity. Given this valuation, why did you pay $1.1 million or the [ 2.53% ] of the company after the year end. So whilst we don't set out in detail all the transactions of -- great [indiscernible], we agreed to acquire these shares in principle prior to the transaction in order to achieve the successful sale of the Aspira business as combined with the assets of LEBC Group to tighten wealth, 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, and we are receiving deferred consideration over a 3-year period based upon performance. The Board considers that a higher value could therefore be achieved eventually by us taking a pragmatic approach at this time. Second question that we received, do you expect our dollar to retain the investment in B.P Marsh, following the recent acquisition of PSC Insurance Group. I understand that, that acquisition will be subject to confirmation of approvals with regulatory, just to explain that PSC insurance don't have a Board presence and they're just the shareholders alongside other shareholders, so we are aware of the proposed transaction between the 2 entities, but we cannot comment on what the future plans going 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 and many ask. And please, you can state your name and set up if you want to share.

Okay. My name is [indiscernible]. I'm a shareholder. I've got now 4 questions. The first one is when I look at the valuation, for example, you can see we have [indiscernible] risks, a 30% value is equivalent to GBP 13.46 million. I can see that the forecasted EBITDA is about GBP 5 million. I will -- also Pantheon Specialty, where 25% value is equivalent to [ GBP 14.8 million ] Forecast EBITDA, $10 million. My question is, how quickly did the valuations or -- is it [indiscernible] in the forecast a term or not by verified annual accounts that the valuations have changed to reflect the new realities of profitability of the respective organizations.

I think on the generality of value growth because it's a case-by-case basis, to be fatal. Pantheon obviously had an excellent start to its life, its in a very -- just over 12 months in. So at that point, we apply a variety of discount factors or [indiscernible] to what we look at valuation. But as that investment in Pantheon continues to establish itself, improve it or increase its footprint there. Clearly, it will start to mirror similar valuation models, more established insurance operations.

Would you anticipate that after a year or 2? Or do you get...

I would never like to put a timeframe on it specifically. But certainly, when we look at the next round of valuations that will be 6 months, headcount will increase. [indiscernible] So yes, I would imagine it would be unfair to assume an incremental increase in that valuation given this underlying EBITDA performance.

Okay. The next is more general in terms of, obviously, there is considerable sum of money in the bank. What are the opportunities out there like? And will you have everybody [indiscernible] insurance industry or the English insurance industry and how what it will be used?

I think there's a pretty active pipeline of new business, but we won't move outside of our modus operandi. We're looking out for new business. So, [indiscernible] investment size structure broadly speaking, is similar, but where I think we've seen success with Kentro, for example, we made an investment [ 5% to GBP 1.5 million ]. Ultimately, we've invested GBP 15 million, which at the time is the largest single investment we made from a cash standpoint. Focusing, well allocating some of our resources to the existing portfolio seems to be bearing fruit and certainly with the likes of XPT in America. That was a startup in 2017 with a business plan out, a couple of hundred employees knocking down also a bit improving, north of GBP 20 million in EBITDA. We've committed certain GBP 8 million of that. And if we can see a strong trajectory for further growth, increasing the B.P Marsh -- let's take B.P Marsh evaluation. We'll commit funds to that. So I think -- our modus operandi is undoubtedly business point, won't change. But in terms of follow-on funding to the existing portfolio where we see a strong track record for growth and firm opportunity to deploy cash at an exceptional rate of return, That's, I think, [indiscernible].

Yes. So just in term you can received the net [indiscernible] the challenges in effect you can continue with the present companies. Changing more to some extent. Government, you can see on Page 29, the first column, little paragraph. A review of performance and effectiveness of directors takes place annually but is assessed on an ongoing basis. How is that done?

We have an annual performance review of each of our director. Board effectiveness from the chairs on down. That's annually. But it's performance of the portfolio, how broad downstate sense of authority, how we manage the portfolio is done, every board meeting. So -- and that's the PLC level, which is the alternate owner of the business, but we do have a subsidiary board at company level. But again, there is the forward practices and review that PLC does. So I don't think it's for the size of the business and how we're growing, we think it's relatively very fast.

And my final just more specific question. Page 39, I can see the audit have continued all the routine audit continued, it seem like the circumstances, they don't ask for [indiscernible].

So we were going to change our senior [indiscernible]. And the new proposed is allover place. Unfortunately, we suffered from [indiscernible] and under the circumstances and within that time it was considered that it was acceptable. So the audit committed [indiscernible] subsequently agreed that under the circumstances we were okay with continue [indiscernible].

Thank you very much, are there any other questions from the floor? No. Okay. Can I confirm there are no more questions from the floor. Okay. Well, thank you. So we have a summary on the screen, the first year, on the floor. So our sort of our summary position is our investments continue to achieve attractive returns for long periods for those investors. Obviously, we've had an incredibly successful year, achieving 22%, including the dividends that we paid during the year. B.P Marsh' expertise and experience puts us in prime position to continue to support financial intermediaries to reach a level, there are plenty of opportunities out there, both within new opportunities and the expansion of the existing portfolio. We've demonstrated our ability to be able to invest in at or above our investment valuations and we're having impressive record and have some significant realizations over the last 12 months in Kentro and CBC. The company has allocated GBP 12 million to a share buyback program. We've invested GBP 300,000 up to the date of the AGM, which we paid back at about [indiscernible] shares. So they would be on our diluted -- worth about GBP 400,000. And so we are -- and so we've just renewed that for GBP 1 million. And we will obviously -- that goes to support the share price with that, obviously, trying to take away too much liquidity to the market. But we're buying back at price of right offer to share the money. So we have plenty of opportunities. After the payment of the latest dividend, which is GBP 2 million, we've got about GBP 80 million in the bank. So plenty of cash for all of those opportunities. We've declared an explanation to pay GBP 4 million per year for the next 2 years in dividends. And so we're in an excellent place in portfolios, doing very well at the moment. So with that, I'd like to thank all of our shareholders, both those online, but also everyone who has come to the meeting. 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 and posted on our website as soon. Thank you.

Jon, 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 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. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the Board of B.P Marsh & Partners PLC, we would like to thank you for attending today's Annual General Meeting, and good afternoon to you all.