Kelly Partners Group Holdings Limited (KPG) Earnings Call Transcript & Summary

All right, well, in the interest of starting on time -- it's 4 p.m. Sydney time. My name is Brett Kelly, the Founder and CEO of Kelly Partners Group Holdings. And I'm joined by Kenneth Ko, our group CFO. We've got a short presentation to share with you today that we shared this morning, and I'm looking forward to taking some questions at the end. I'll [indiscernible] a little bit better [indiscernible]. Yes, all right, let's do that. Kenny, let's do KPG in 10 seconds. We've been publishing this panel for some years now. And I think it's an easy way for people to quickly be able to see the performance of the business. Over the last nearly 17 years, we've focused on growing opportunity for our people because this is a business that, to the degree that it can provide great opportunities for people, will continue to attract, develop and retain amazing people. So 42.2% revenue growth in the industry. That's -- growth is not bad; is, I think, a really great effort by the team with a very strong organic component as well. Our margin is compressed. For a moment, if you look down the bottom of the screen, the practice margin is 30%. And we've made heavy additional investments at the services business level at the group level. Our underlying NPATA growth is up 7.5% on the prior year and we're very pleased with that progress. Our balance sheet, return on equity and net debt-to-underlying EBITDA. So return on equity, we think, is still very strong at 43.4%; and our balance sheet gearing is still very moderate. Cash flow is up 12%. Cash conversion is up 17% at over 100% in the period. These are highly cash-generative businesses that are growing very strongly with, I think, quite unlimited opportunity. On the next page. [indiscernible] as it has a framework for capital allocation that we draw your attention to here. We will [ improve the own power ] of our operating businesses, our margin still up -- more than 50% higher than the average in Australia and the U.S. and U.K. We're further increasing our earnings through acquisitions. We're growing very, very strongly. We're growing our existing businesses strongly. We're growing our existing complementary businesses, making programmatic acquisitions at an increasing cadence, making occasional large acquisition. None in the last 3 years, but there will be occasional. And we'll repurchase shares from time to time. We're pleased that the number of shares on issues -- on issue remains constant at 45 million. So 3 big buckets we're going to speak about today. I'll talk about growth. Kenny will talk about financials. And we'll talk about the growth plan over the next 5 years. The business today is a growing business that is very profitable on a daily basis; and continue to fund its own growth indefinitely without raising capital or issuing new shares, although the opportunity at any point to do those things, if it made sense, would be considered. Our number of offices has grown strongly. We're growing strongly into Queensland now and Victoria and globally into Hong Kong and the U.S. There's a strong opportunity to take our playbook and pursue global growth. I'll talk more about that later in the presentation. In terms of our growth in acquisitions, the cadence continues to grow. You can see the number of acquisitions in each 5-year period, 6 and then 8 and now 27. We believe that we can materially accelerate that over time while focusing on a programmatic acquisition approach. Revenue and EBITDA growth continue to grow. The business has doubled 5 times over its lifetime, at different periods on average, I think, about every 3 and a bit years. We expect that, that trend can be maintained for a long time, which is exciting. In terms of revenue growth and EPS growth, you'll see that on the next page. Compounded annual growth rate since '06 is 30%, earnings per share annual growth rate since IPO 13.1%. Strong growth in accounting, complementary and acquisitions during the period. Growth in owner earnings, I'll leave for you to refer to, but owner earnings continue to CAGR strongly. Our per share growth is growing strongly. And our return on invested capital, I think you can see on the next page, is very, very strong. I'd just call out the sort of methodology we're using there, average [ 2018 to 2022 ] return on invested capital of 26%. We think that's okay. And we've traded this business through a global financial crisis in '08, '09; a pandemic. Now we -- I think the first acquisition that we made was funded at 11.1% interest rate. So we understand interest rates. And so an average of "ROIC plus organic revenue growth" of 31%, we think, is not only quite good but maintainable for the foreseeable future and likely the very long term. Now our people, services and clients. We have again been nominated a great place to work by our 456 team members. Our services are, I think, easy to understand. I would call out that our aim is to be in the top 10 firms in Australia and grow globally. The firms that are larger than us today and some that are smaller have a much larger proportion of audit and [ a test type of work ]. We aim to keep audit under 5% of our revenue. In terms of clients, our Net Promoter Score of 70 is as high as any accounting firm that we're aware of in the world. And our client group numbers continue to grow, which we think is a very powerful, interesting group of people that we've brought together as clients. And I'll hand over to you, Kenny, to talk about the financials.

Thanks, Brett. Hi, everyone. Great to see everyone again and present the financial results for the half year. The first slide here is the highlights of the half year which -- as Brett said, a significant increase in our group revenue [ from $30.9 million ] to $44 million, being a 42.2% increase on the prior year mainly driven by the [ in-year acquisitions ] we completed in the second half of 2022 and in the current half year. Underlying EBITDA for the group has also increased 14.3% compared to the prior half. And the percentage increase in revenue has known -- not flown through completely to the bottom line mainly due to a drag on the margins from our recently acquired businesses, which we'll cover in a later slide; and as Brett mentioned, the additional investments we have made from the parent entity to support our accelerated growth and our expansion globally. Underlying NPATA for the parent has increased 7.5% to $3.6 million. And I'll leave most of the other metrics for you to review at your own time, as most of these we'll cover off either in later slides in the deck. And most of the metrics are either up on the prior year as a result of the growth of the business or comparable to the prior year. In terms of revenue growth, as we've covered many times now, organic 7.8%; acquired revenue growth of 34.5%, with a total revenue growth of 42.2%. In terms of the income statement. We've covered the revenue and EBITDA margins in the previous highlights slide. A couple of things I wanted to note in this year's number: You will see that the statutory numbers are mostly down on last year, whereas the underlying numbers are up. And the reason for that is because, in the last half year, the prior half year, we received government grants in relation to COVID-19, which has inflated the statutory numbers. And we exclude those numbers, obviously, from our underlying analysis. Underlying NPATA attributable to shareholders increased as a result of our strong revenue growth and acquisition activities and is offset by the additional investments in the parent entity. Depreciation and amortization there has increased significantly mainly because of our acquisitions and also increases in the right-of-use assets from the new offices that we've added into the group. As Brett has covered off previously, we've added 9 offices since 31st December 2021, which is a large increase, and hence the increase in the depreciation in those right-of-use assets. Finance cost also has increased considerably, but that is impacted by noncash accounting entries, again, relating to acquisitions and new leases. If we exclude that, the cash finance costs increased by $600,000, mainly because of the debt that we've taken out to fund the acquisitions and a generally high interest rate due to the macroeconomic environment. On to the next slide, gross margins, as we've presented previously. We present this slide to show our gross margins compared to other listed market participants. You'll see that in this year our gross margin is at 58%. We'd like that to improve to more than 60% like our previous years, but that's impacted by a higher cost of sales from the recently completed acquisitions. And we continue to integrate and transform those acquired businesses. And in terms of profitability, this is a slide that gives you a breakdown by the EBITDA margins into cohorts. As mentioned earlier, the total EBITDA margin of all our operating businesses, excluding the parent additional investment, is 30% for the half year. Excluding the acquired businesses, which you'll see there generating 20.9% EBITDA margins, our EBITDA margins is 31% for the existing businesses. And again if you look at that breakdown, you see growth and subscale businesses, which are defined as those with annual revenues less than $2 million and $1 million, to have EBITDA margins of 21.6% and 22.3%, respectively. We continue to focus, one, on scaling up those growth and subscale businesses; and two, to transform those acquired businesses to achieve the higher EBITDA margins. As Brett said, we're still comparatively much more profitable than the average accounting business in the industry, as shown in that graph there, with the average accounting business generating EBITDA margins of only 19%. In terms of the NPATA reconciliation, as I mentioned earlier, in the prior year, you'll see us deducting that one-off government grants in relation to COVID-19 to arrive at that underlying number. And you'll see that, that statutory NPAT is higher because of that reason. In this half, we've mainly added back just the acquisition costs in relation to the 6 acquisitions we've completed this year. Having a look at our core measures of WIP, debtors lockup, being cash conversion, compared to the prior year, you'll see that our measures are very comparable to the prior year even though we've made a lot of acquisitions. Our lockup this half is at 56.4 days compared to the prior half at 57.4 days. And cash conversion is very high at 106.4%. Revenue growth, much higher than the previous half year because a lot of the acquisitions were completed in the second half of financial year '22 and in this half. In terms of balance sheet, lockup days continues to be managed [ tightly ], as we covered off in the previous slide. Our gearing ratio has increased to 1.93x underlying EBITDA. Although, I think a more meaningful measure is underlying EBITDA of our operating businesses, which excludes the parent additional investment. Then that gearing ratio is 1.61x, as you can see in the slide. Our group ROE and parent ROE continues to be very strong. And our assets and borrowings have increased due to the acquisitions. In terms of debt and liquidity, our net debt increased $5.5 million since 30 June, mainly to fund our in-year acquisitions; and also partner buy-ins into the business, both existing partners and new partners. We still maintain a significant headroom of $15.1 million in cash and undrawn facility limits. As we've kind of covered off previously, although the debt has increased, we're not concerned at all. We're paying those debts, acquisition debts, back at 4 to 5 years. And you'll see this in the cash flow slide that we'll cover off in the next few slides. Net debt per partner increased marginally to $520,000. At 30th of June, it was slightly above $500,000. And that's because, even though we've increased the debt acquisitions -- debt from acquisitions, we've also grown the number of our partners considerably as well so that -- the number of equity partners as at 31st of December is 72, and we've further added 4 new partners since then. In terms of the cash flow, our cash from operations increased 12.2%. Our free cash flow, you'll see there, is basically constant -- consistent with the prior half year. And that is what I spoke about in that debt slide. We're applying all our profits from the acquisitions into debt reduction, so the free cash flow there is basically consistent with what it was in the prior year. And again it's good to see in that table that you'll see that we've drawn $7.7 million, but we've also -- in the same period, we've repaid $5.3 million, which is the addition of the scheduled debt reductions and the additional debt repayments in that slide. In terms of dividends. In the first half, we've paid final dividends and special dividends relating to FY '22. And in total for FY '22, we've paid $0.0817 per share, which amounts to a dividend payout ratio of 58.4%. And it's in line with our dividend policy. We'll continue to pay monthly dividends, and we've increased our monthly dividends again by 10% this year. And the remaining slides, I'll leave for you to read yourselves, as they're basically answers to common questions we get asked around parent, NCI, splits, cash reconciliations, first half and second half skews, et cetera. Over to you, Brett.

Thanks, Kenny, appreciate that. On to the next slide, if we can, K.K.. It's worth having a read of a book called The World Is Flat by Thomas Friedman. We believe that professional services, as the work-from-home trend continues and the use of technology accelerates, will become a global business. And so my quote here is that it's difficult to justify, I think, the investment required to run a world-class organization and deliver a world-class people, client and community impact that we've become known for if you don't grow globally. Our clients over the next 25 years are all going to have a -- have to earn a return on a global basis and will need their accountants to help them operate in this new global world. An interesting observation I'll just show in the next 2 slides is that, whilst Australia is the 13th largest economy in the world, there is no accounting firm that's a global Australian accounting firm. And so while the U.S. had Coopers & Lybrand and the U.K. had Pricewaterhouse; China, ShineWing; Japan, Deloitte; Germany, KPMG -- India is building -- or trying to build a global firm [ as ours. There's a ] very large global firm from France; MNP, less known, out of Canada. It just hasn't been -- it's like Australia is a tributary state of the world for accounting services. And Australians are a global population, a high-net-worth business owning and building. Entrepreneurs in Australia are building businesses around the world, and their accountants aren't helping them do that. We think, as [indiscernible] over next 25 years, that we can be that firm. We're calling that out as a differentiated market opportunity if we've got the team that get up and go to actually get in and make that happen. We will start by taking small sort of asymmetric bets in the U.K. and the U.S., where we've opened an office in California, a group office; where we are looking to open a group office in the U.K. We think we can, to reference Mohnish Pabrai's Dhandho Investor book, take very small bets with a massive asymmetric upside. If we can take our playbook for partnering and improving accounting firms into those markets, then the U.S. is 15x the size of Australia. And it looks like the U.K. is certainly some multiple the size of Australia. So we won't say too much more than that, other than to indicate that we have a business system. It's not just an accounting firm. While KPG owns a 51% interest in 27 accounting firms, KPG itself is not an accounting firm. It's an expert partner to accounting firms that brings system processes and insight to help them perform better; and better award their partners, their people; and make a more positive impact in their communities. So that's where we see the real opportunity. We've been supported in that by our major shareholders, who have encouraged us to have a good look at that. We'll spend a lot of time investigating those markets. I guess the other insight I would share is that, if you psychometrically profiled as we do the people that we recruit but you also did that in the U.S., Canada, New Zealand and the U.K., you'll find that the psychometric profile of an accounting professional is virtually exactly the same. In fact, when I've attended conferences in the U.S., other than the accent, accountants are expressing and experiencing virtually the same professional experience. We think we can add a huge amount of value in that context, and there's a number of people who are shareholders who share that view. What I want to assure people is that the 2 major risks that I perceive are, one, that we would over-invest capital where we get a return. I think, over the last 17 years, our team has [ a very strong ] track record of getting a return on our capital, but we'll be very careful and prudent by, first, bullets; and then cannon balls. We'll look to buy small firms and improve them and then do other things, so a programmatic acquisition methodology will continue. And secondly, if we became distracted from the core businesses growing Australia at 5% organic, 5% via acquisition, we can see again in the prior period of -- a growth rate well in excess of our long-promised 5% and 5%. We think we can continue that. We've invested in a strong team and a strong understanding as to how to do this business, but time will tell. And we'll be prepared to share the results on a very transparent and even-handed basis. So I'm here with Ken and we are pleased to take any questions. I think there's a Q&A box that we can use. Here's a couple of questions coming through. I'll just start answering them as they pop up [ if you pop them in ].

[ Leon ]: Does KPG aspire, over time, to compete for big 4 clients at the [ top end of town ]? So a 2-part question here. Definitely not. If I wanted to -- I started my career with Pricewaterhouse. I've always said I think [ the big 4 are the big 4 ]. I'm not sure the -- that they are the excellent 4 for private clients, so we want to maintain a focus on what we call driven, successful private business-only entrepreneurs, who are often first and second generation that are "get up early, stay up late" driven types of people that respond to that energy that they get from us. That answers that question. [ Jack Hays ]: With increased number of firms under the KPG umbrella, do you have any concerns about being able to manage these firms and make sure that the quality they provide to their customers remains constant? And 2 parts there, [ Jack ]. We expect that we can continue to run what are called Partner-Owner-Driver modeled firms. We've been awarded the trademark of that term that we invented and have rigorously applied now to numerous transactions. Every single one of our partnerships is where we own more than 50% and the partners own the balance and are the operating partners. We don't run firms. We partner with partners who are owners and drivers. We get under those firms and support them to do their best work. And we are completely aligned to the values and behaviors of the people that we bring in and so we're very careful about that. We don't think that the number of firms is difficult. In fact, there are numerous and very large global firms sort of managing this situation as well, so it's been done before in our industry. We think we can do a very good job of that over time, emphasizing that we're not in a rush. [ Stephen Matt ], thank you for your question. "Congrats on the strong revenue growth and especially the organic growth. Revenue grew considerably more than profit for the half. Can you please add some clarity to which significant costs have been increasing more than revenue and which of these you'd expect to drop going forward?" So [ Stephen ], we've invested about $1.5 million primarily across brand, digital and global workforce. You'll hear much more about that in the coming months and years. If you look back at where we've invested [ above our 9% at ] 6.5% services fee and 2.5% IP fee: About 4 years ago, we invested a similar number. That helped us very materially grow the business. We don't expect that they are -- or we know for certain that they're not recurring expenses. They're largely one-off investments where we think that the long-term return is huge. We see ourselves as stewards of the capital of the business. And I guess the difference between KPG and [ everyone else ] is we've always had a 25-year view of every dollar that we invest trying to build a [ 100-year-grade ] organization. So we're investing to make that happen. We're very confident that, that will prove to be money well invested. And I'll note that, [ Stephen ], I'm very -- considerably invested in the group. And so half of that money is my money, and I feel very comfortable about the investments that we've made. [ Ed Vesely ]: What are the drivers behind the half's organic growth rate? We have built genuinely a powerful brand that is attractive to excellent firms that want to become part of something bigger than themselves and ideally better than themselves, when people get to a point where they've done everything they can to really develop their business and can see that we can help them take their business to the next level. And we've got really good inbound inquiry continually from stronger and stronger firms, and so the acquisition pipeline has always been something that we have pursued over nearly 17 years. And so people come to us directly. I think we've done 2 deals, out of 65-plus, through brokers. Most of the firms that join us [ don't even go in ] the markets through broking. And I'm incredibly pleased with the quality of people that are coming to us. I'll take up the opportunity there to explain it, but there are 3 businesses that I find very inspiring. One is Berkshire, for obvious reasons, but I think what people often overlook is that Warren Buffett has become the first-choice buyer for people with amazing businesses. They feel great to have sold to Berkshire. They even write books about how they sold to Berkshire. Our humble ambition, if we can submit it in that tone, is that, over the next 25 years, we want Kelly Partners Group Holdings to be the organization that people who have spent their lives building amazing businesses, rather than flip them out to a private equity firm to be bought and sold, will choose to partner in a Partner-Owner-Driver manner with Kelly Partners Group Holdings, who -- we are a listed [ permanent capital ] style organization in the [ sort of heritage of ] Berkshire. I'm also very inspired by Louis Vuitton Moët Hennessy, where Bernard Arnault had bought into businesses that he knows have multi-hundred-year profiles, that he's bought into these heritage brands and reenergized those brands via modern leadership and management but most importantly, he's out and prepared to out-invest his competitors because he can see 25 years out rather than 25 minutes. And finally, Constellation Software, who share our love of programmatic acquisition, which is [ many ] $2 million to $5 million acquisitions over a long period of time, where we don't do things for empire building or size. We do things where we think we can get an appropriate economic return; and make impact to our partners, people, clients and communities. [ Stephen Matt ]: "It's great to have an aligned founder. And the Kelly operating model and expansion plans all sound exciting. My question is, who is your backup? The plan is to expand internationally. Who will be the leader on the brand domestically if you're off globally, or vice versa? Having first-hand experience with this is very difficult for even a great leader to lead people [ and execution to ] different countries and time zones at the level you aspire to. How do you ensure you'll keep that NPS going in different global geographies?" Great questions, [ Stephen ]. Thank you. We have a team of partners, 75-plus partners, who are owners and drivers of their businesses. We support that team through our services. While it's very flattering to be called a leader, [ Stephen ], your leadership is followed by your fellowship -- is defined by your fellowship, by who wants to go on the adventure with you and play in a manner that aligns with your mission, values and vision. I'm incredibly proud of the partners that we have. I think often they're overlooked. And people have said to me for many years, "Well, what happens if you're not there?" Well, if I'm moving around a little bit more, as I have for many, many years -- I've been outside Australia 16 weeks a year every year for a decade, and no one has noticed. I think [ I escaped for ] 3 months a couple of years ago, and no one noticed that the company performed incredibly well. Then we have 75 leaders who own 49% of their businesses. Now we have a services team where we have 7 senior professionals across people, IT, finance, risk, legal, et cetera who are more than capable and are similarly aligned to deliver in their roles. I'm incredibly pleased with these people and I am quietly confident in their ability to manage and execute their roles. Time zones are a little bit of fun. Often, as a CEO, you can get dragged into minutia that's best managed by the people. And moving around has always been my way of managing that. NPS. We still have a strong and improving quality review process for our partners, but our people are pleased. And I couldn't be more proud or pleased with the quality of our people and their values and behavior and the difference that they make to the clients. [ We see the ] NPS surveys live on screens in our offices. It's really, frankly, very, very inspiring to me. I can't see any reason why our people won't continue to behave the way they always have. [ To Janil ]. U.S. is only an expansion office today. That's right. We have not an accounting office bought yet. We have made some offers on some firms over here. We are pursuing due diligence. We've got a group office up and running. Our first team member will begin on the 27th of February. We've appointed U.S. bank Lloyds M&A advisers. So we are well down the track of -- there's 12,500 target firms in California. We would like to buy -- we would like to meet 10%, 1,250, of them. We'd like to buy 10% of that, 125. And if we do buy them, we may do okay, but we'll do that by following, at the end, our mindset of, "Heads, we win. Tails, we don't lose." We'll continue to just structure the things we do very carefully and very diligently and with a risk-averse mindset. [ Karen ]: Can we expect [ a group plan ] to directly reinvest dividends on their behalf? It's a very good question. I'll have to come back to that. I don't have thinking in that direction, but we -- I've been clear that we will ultimately try and pursue a global strategy of growing in the U.K. We are going to move our longer-serving, most senior partner into the London market by the end of March with an office, a group office, so we will have our people on the ground making things happen. And the specifics about dividend reinvestment, I'll come back to. [ Zack Joyce ]: "Can you add some insight into the investment in the services team we've made? Is this to support U.S. in particular [ keeping up the current growth?" Zack ], it's mainly in brand, digital and what we've called global workforce. We are pursuing a partnership to open an office in Mumbai with 150 seats imminently. We're well progressed on that so that we can provide workforce to U.K., U.S. and Australian firms, as workforce will become a global matter to be solved over the next decade. So we're making long-dated investments there. We've invested very significantly digitally, and it's come from our cash flows over last 2 years. We're excited that we've taken what has been our defining client service experience that has been in written form and moved it into a digital format. That's all being funded. It's begun to roll out, about 44 clients on the platform. The senior team member leading -- in services leading that program, I'm very confident in. We're going to try and have hundreds of new clients from our 20% of best clients to that, [ up on ] digital platform, every quarter. We believe that, if we have a strong sort of physical presence, a strong digital presence and a strong community, then we can build something really special. Our clients want to meet other clients and be part of the powerful relationships that we've built up across the businesses. There's more than 17,000 client groups. It's 35,000 people. It's not a insignificant number of people. If you take 20% of them as your leading wholesale clients, it's 3,500 -- or 7,000 people. There was a guy once who made quite an impact on the world [ who they say ] had a few good stories and 12 disciples. So we've got some thousands of people that believe in what we're doing. And I think that, that will prove to be a huge source of competitive advantage and value over time. [ Ed Vesely ]: How much do you -- time do you envisage before acquired subscale businesses achieve that EBITDA margin? We see it as a portfolio, [ Ed ]. And so we'll work as quickly as we can on each of those businesses in partnership with the owner; and owners, operating owners, of those businesses. I think we've got a good track record of moving them through that growth profile, but we'll always be sticking businesses in that have got lower performance and improving them over time. We can improve them generally within 12 months. If they stay subscale, it's a little bit harder, but I must say I do spend, other than Sundays, every waking hour thinking about that, [ Ed ]. So we're making good traction there. And Kenny works with me on that very, very diligently. [ Ricardo Gonzalez ]: Are there any updates on a potential U.S. listing? It's never been a secret of mine to aspire to have a Berkshire Hathaway-style structure listed in an appropriate market. And we'll continue to vigorously pursue the right capital structure and listing for the group. That's something that we just continually work on, and we'll give you updates as appropriate. [ Sebastian Campbell ]. "With new offices opening internationally, can you speak to any concerns that this may be occurring too quickly? Well, put another way, what if your starting international expansion now will provide more real benefit to KPG than spending more time hardening your roots in Australia?" It's a good question, [ Sebastian ], and I can understand the perhaps reticence. I feel that we're on track to be a top 10 firm in Australia within 2 years, 24 months, maybe sooner. The #9 firm would have 45%, certainly 35%-plus, audit revenue [indiscernible]. We don't want to have audit revenue of that size. We believe we can continue to grow strongly. It's a little bit of a, I guess, 2-part answer. One, we think we can walk and chew gum at the same time, but obviously we'll have to prove that. But I -- if I was a betting person, you can't accuse me of not being invested. And second -- so I think we can do both. And secondly, I'll give you more of a sort of [ zen-style ] answer. Within our business, we have amazing senior leaders. Many of them have been with me for more than a decade. I want to essentially unleash them on the world, but I want to unlock for them the full value of their talent and opportunity so that they can live out their full capacity. So this is not about an office here or there. This is about taking our best talent and giving them the opportunity to grow themselves and therefore the business in the very best way. We think that international expansion has a role to play in that. Jim Collins, one of the people that I love and admire, whom I've never met but I am going to meet next week, which is very exciting -- since inception of Kelly Partners, we've given every employee a copy of Good to Great, Jim Collins' very famous management book. Collins talks about having a big, hairy, audacious goal that's inspiring to your people. We have to be able to say to our best people that there is no other place that can help them better realize their potential than KPG. I am very passionate about that. I believe in our people. I want to see them be the best they can. And when I looked in the U.S. in considerable detail and the U.K., our 31% EBITDA margin compares to essentially 8% in the U.S. We think we can add some value here and -- in the U.K., so we'll see. [ Trevor Mucodazy ]. Will the global expansion for KPG also decentralize M&A decision-making to the teams on the ground? This is true, [ Trevor ]. We are -- I had an incredible session with a senior executive at Constellation Software at the Berkshire Hathaway meeting last May. He said to me, "Brett, grab your best 10 or 15 senior leaders. And invest in training, coaching and counseling them to be able to get out and grow their business. We're putting a senior leadership council together. We're growing that capability. I'm confident in those people. They have started to go and find deals, and our team, to document and tie up and make sure that we're bringing people into the business. I think we can have many of our senior people finding more deals and materially scale up our acquisition cadence in Australia, the U.S. and the U.K. [ Brendan Harrington ]. "Brett, can you please elaborate on how you're approaching the management of your time and energy in order to realize the [ 25-year view that you have ]?" Well, [ Brendan ], I plan my year in advance, in color, and then I book out all my holidays and pay for them. And then I set quarterly goals and put them into a monthly format and manage an ideal day. I try to do 10,000 steps a day. I gave up alcohol 18 months ago. And I surround myself only with positive people, not pollyannaish types that tell you what you want to hear but people that are looking for solutions, the can-do people rather than "can't do" people. And I'm very much looking to our senior people to deliver in their roles. Business has never been about me, while I do make a contribution that -- which I think is considerable. And the game at this point is to stay in the game every day and to do it across the next two 25-year plans. So I'm 48, 49 in August. I have a plan till age 50 and a plan till age 75 and a plan 75 to 100. So I intend to -- in order to pursue those, sustained health is a very high priority. That's not just physical. That's also mental. And it's very important to guide your mind and look after [ markers in your ] brain to stay focused and positive. And I have to say the biggest contributor to that are my family and the people I work closely with within our business and our amazing clients. I really cannot emphasize the joy that it is to come to work every day. Some people complain about their work. I am more invigorated and love what we're doing every day [ than I ever have planned ]. And we really are making every post a winner. So thank you for the question, [ Brendan ], and I hope that's [ a real good ] answer. [ Jim Lykosti ]. "Brett, what's your view on penetration of artificial intelligence and machine learning in all areas of life, including accounting? What are -- kind of major disruptions over the next decade are going to be?" It's a great question, [ Jim ]. I started at Pricewaterhouse when the first IBM computers went in, and all the work was going to disappear. I think artificial intelligence and machine learning will make a contribution, are making a contribution and will continue to be pretty exciting. Frankly, as accountants -- I've spent my career, [ 13 ] years, having to do work that is really very much below the level of training that chartered accounts have always had, so I look forward to a lot of the jobs being continually taken out of what we do day to day, but I know that the business that we are building for private business owners that have complex structures and looking forward, that are multi-jurisdictional Visa -- they get up early, go home late. 24/7 types. We believe they'll always value the quality of advice and insight that an organization like ours, a, can deliver today; and can harness technology to even better deliver tomorrow. I would say that, if we don't continue to reinvest our 9% and we don't look to the future, if we become what most of the industry are certainly on an 80-20 basis -- most firms are farmers. They haven't invested a cent in their business for a decade or more and they're just taking -- they're doing what they did yesterday. They're just taking whatever they can get away with. I think they'll be severely disrupted, which I'm looking forward to continuing to assist [ whoever that's in it ]. [ Anoop Kawar ]: "Brett, can you comment in terms of funding availability, acquisitions in the U.S. and U.K.?" Without giving too much of our secret sauce away, [ Anoop ]: We've worked very hard to secure banking relationships here in the U.S. that we believe will deliver the same or better funding terms than in Australia. And we believe that we can do the same in the U.K., and we're involved in discussions to that end. We're confident that there is a huge interest in partnering with us to fund what we need to do. [ Leon Poggioli ]. "There's been a lot of news lately about automation and AI." I'd refer you to my response to just -- the earlier question. [ Keran Robinson ]: "Cheeky question, but as a retail investor, how do I go about calculating our share price?" Well, as I've said before and, I think, published, you read Robert Hagstrom's book The Warren Buffett Way. You get the first edition so that you can get the 2-stage dividend discount model that he shows you in one of the appendices. You stick that into Excel and you make a decision about an appropriate discount rate and an appropriate growth rate. We think that what we -- so long as we continue to do what we've always done, which is buy into firms that are 0 to $15 million in revenue, we believe that those transactions are as close to risk free an activity that we can undertake. We don't see them defined as a risk-free activity, but when I started the group from day 1, I always valued the group on the basis of the U.S. [indiscernible] treasury bond rates. With the growth rate that I have a view on, you'll have to make your own assessment of whether I look bored or not and whether our team looked disengaged, but I'm not bored. And I don't think our team is disengaged. I think we'll continue to grow, but essentially my mindset was that a CEO's first job is Chief Risk Officer. We should not engage in any transaction where we can lose capital. We should never forget that because [ we won't stand to ] lose money. [ We won't use time to ] lose money. We [ won't freeze time to ] lose money. And so if we remember that and we construct it very intelligently and rigorously to ensure that our risk of capital loss is reduced to as close to 0 as possible, then we reduce the systematic risk of our business. There might be many other risks, but we will just control the ones that we can. And anyone who knows me knows that we're extremely aggressive about managing risk. [ Janil ]. "Congrats on your personal development [indiscernible] your resolutions." Thank you, my kind friend. And I was asked recently by an investor, "Why do you publish these checklists and these books?" Well, as a team, we have a lot of learning. We believe in its ability to improve people's lives as people; and that, when they come to work, the only way to make it a great professional is to first make a great person." So we believe personal development is professional development. And I don't think you can as a senior leader say that you're not prepared to do it, so I've been very committed to trying to improve my life and those of the people around me through continuous personal development. I'm glad that you can see that, those checklists. I shared them with an investor recently. I publish them to hold myself and our team accountable. It's just the way my brain works. If we promise to do something, we will spill blood to deliver what we promised. And so by putting those books out, by putting those checklists out, we're just setting a standard for ourselves that we want to hold ourselves accountable to. That's that internal scoreboard thing. [ Jim Lykosti ]. "Another question, if I may. How do you judge character? And what's your definition of leadership?" So for us, character is whether somebody is a person who is in the business of making other people better off, so what we call a person for others; number two, whether they keep their promises. We [ keep count ], as we say, whether they do what they say; and number three, whether they're convinced that a team can do more than an individual. So they are our 3 big judges of whether a person should join our team and, to me, fundamentally speak to the character of a person. Leadership is making other people better off, as far as I'm concerned. It's mostly about personal self sacrifice and taking on responsibility for the betterment of others. It's not for everyone. And it's certainly that some people have the -- like the right constitution, I guess, for doing that. I love Collins' sort of Level 5 leadership idea of you want a smart person that's humble and very, very determined. And so that's certainly my aspiration while claiming no level of progress or perfection. And it's to scale consistently everything I need to align with a high-quality leadership team. I'm quietly confident in the quality of our leadership team. We have an unbelievable group of people, and I'll emphasize it again. When people walk through our businesses and meet our people, it's become very easy to get people to join our group. They'll say, "Hey. Poke in. Meet our team. Arrange the meetings, [ can you ]? Let them meet our partners and our people." And if those people are excellent, just join our group, if our people are excellent and have the types of values that resonate with you. And we're doing incredibly well at getting people to join. [ Janil ], a further question: a lot of vacancies open. We're recruiting. At least half of the open vacancy is at growth. It's probably 70% growth, 30% replacement. People move around. Our retention of our best people is exceptional. We know that our top 10% people contribute 90% of the result, but that's not to disparage anyone else. We are people focused, [ a right ] people-focused organization. And I think we're doing really well at it, but we are growing a lot. And we can produce more opportunity every day than necessarily the people that we can find, but we haven't given up [ buying in ]. [ One follow-up with Keran ]. With the global expansion plans, do we expect to see KPG having other share [ mix in the foreign markets ]? We will pursue a capital structure that makes the most sense for the shareholders of the group in the long term. I've never walked away from, and frankly I've got a fair bit [ of c*** ] for, having heroes in a hero-less world. I've been pretty clear about who my heroes are. I've normally got a cardboard cutout of [ him ] sitting behind me, but I get a bit [ of grief ] about that. We think we've got the right heroes and that we're keeping the right company. And we've got the right ideas; and that we're delivering the right actions, developing the right habits and that ultimately point to a really significantly bright future. So we'll do what our heroes would encourage us to do. And that is to do the right thing by our shareholders, who are our partners in our business, to find the best way to create value with everything that exists within KPG today. We have incredible people. We have incredible intellectual property, incredible know-how. And we think that we should maximize the actual impact, positive impact, that, that can have on our partners, people, clients and communities, anywhere that we operate. So if I meet somebody who's got an excellent firm, that they've spilt blood most of their life building and they believe that our group can help them and have value -- they share our values. Then I'm going to help them because that's kind of my mindset, and that's what I believe I'm [ certainly here ] to do. [ Graham Strom ]: "As Charlie Munger said, show me the incentive and I'll show you the outcome. Can you give us a bit of information about the incentives [ of the team ] you talked about earlier? [ Was this with ] acquisitions?" [ Graham ], what we're working on and haven't signed off and unpublished -- and I'm getting ahead of what I'm going to present to that team, but essentially a [ scale-up ] model where they'll get a 10-year [ override ] on our 51%. 10% [ of that ] 51% is what I've got in mind, where 75% will go into a 10-year [ share pool ] for each of them. And 25% will go to the [ midyear ], in cash. We believe that, over a decade, we can build extraordinary value for what I'm calling senior scouts, people who go out and look for opportunity for the group to make the world better while continuing to deliver in their role. So they'll be long-term aligned on our partners since day 1 [ of signed ] 10-year agreements. They will, those incentives will absolutely reflect the values of our group. [ Ed Vesely ]. If there's U.S. system, would Kelly Partners remain listed in Australia? It's a great question and too technical for me at this point, [ Ed ]. I'm not sure would be the answer, but what we'll continue to do is we will continue to find ways to deliver the maximum impact that we can as a group to an industry that needs to change. And we think we're an organization that is most capable of leading that change, so they're lofty ambitions. We don't say much about them. We've tried to keep our presentation very sober and moderate and balanced, but if you ask me am I excited about the opportunities that are ahead for our group, I have never been more invigorated or energized by what we're doing. We have never had better people within our group. We have never had a more aligned group of partners and team and senior people helping the business externally who really want to see us as an organization live up to our full potential. When I was 22, I wrote a book. And I would relate later that I met some people and they were like that breakfast cereal in Australia called Just Right. You tell them your hopes, dreams and aspirations. And they'd say you're too young or you're too old. They never seem to be just the right time. I have 3 children with my beautiful and amazingly supportive wife, Rebecca, and who are now 17, 15 and 10. And if we look back, there was never just the right time to start a group. There was never just the right time to have a child. If you ask any woman that's delivered a child, I'm not sure if they need the full glory of that experience. They would volunteer to do it again at any particular time. And so when people say, "Well, what makes you think that now is just the right time for trying to really unleash the full capacity of our partner group and our people by growing much more strongly in Australia and globally?" I'm doing what I've always done, which is sniffing the wind of opportunity and helping people fully maximize their potential, which will fully maximize the potential of the group. So we'll do that while we continue to do the right thing by all of the stakeholders in the business, consistent with the values and that I think that most of our people who know us will know and pretty comfortable of have been pretty consistently delivered. Now I've had a few people over the last few years tell me, "Oh, I can't buy the share price of $1, $2, $3, $4, $5 because it's too expensive." My job is to make it gobsmackingly expensive; and make you, if you have sold our shares or don't own our shares, feel sick every day. I'm here working for our people and our shareholders and our clients and the communities that we operate in, and jeez, we're having some fun doing that. Now I don't -- I noticed there are no further questions. I'd love somebody to ask Kenny a question. I've got him here. He's in Hong Kong. Here we go. Somebody wrote, "This question is for Ken and we need Ken to answer one." This one, you should know it. "Amongst your competitors or peers [indiscernible] [ like we're ] international, who [indiscernible] company do you consider as gold standard? I have never hidden the fact that my business heroes are, in the area of people, Disney; in the area of processes, Walmart and McDonald's; in the area of clients, Four Seasons and The Ritz-Carlton; in the area of finances, Warren Buffett and Bernard Arnault and Mark Leonard. So no, I've never looked at accounting firms for inspiration, frankly. I went to a conference here, in October, in the U.S. with 75 of the practice leaders of the top 400 accounting firms in the U.S. And it was very interesting but not like sitting down and having lunch with Warren Buffett or some similarly amazing and -- business leader. [ Okay, Zack Joyce ] has a question for you, Kenny. Who are your business heroes, [ big fellow ]?

Business heroes. I have to say the same as Brett. Like we -- I'm completely aligned with Brett. Warren Buffett really is my business hero as well, as Brett. That's what we aspire to live in. The values that he has conducted his business in is really what we aspire to do. So that's Warren is definitely my business hero.