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

Welcome to the Kelly Partners Group Holdings First Half 2025 Results Call. It's 4 minutes past 10:00 a.m. My name is Brett Kelly, the Founder and CEO, and this is my colleague, Kenneth Ko, our CFO. Really nice that everyone has made the time today. Just check my phones turn down and we're good to go. The reports have been published to the ASX this morning and so early this morning, I think about 8 a.m. So I'll take them as largely read. I think that you'll find the information clear as I hope it always is. And our aim is to spend perhaps 10 minutes going through the numbers and then take some questions. We've tried to condense our report and keep it pretty tight, but we do hope that there's good information in there. The team has grown to 594 team members across the front page, 104 partners across 38 businesses in 4 countries, and first half revenue was $65 million. Our revenue run rate is about AUD 134 million, and we've reduced the share count from 45 million approximately to 44.9 million shares on issue. You'll see free cash flow per share is at $0.11 per share and our return on invested capital plus organic growth remains strong. On Page 3, we've got some great quotes from Henry Singleton. We like from time to time just to mention heroes because you tend to end up with people you spend most time with. And so, we try to spend time with our heroes living or imminently dead. In terms of highlights on Page 5, KPG in 10 seconds is really the fastest way for an investor to quickly sort of see progress. Revenue has grown strongly by 22%. Our margins have tightened due to the level of growth over the last 6 months and last 2 years. Our parent NPATA has grown 12%. Our returns remain very, very high at 36.5% return on equity. Gearing is low and remains low. Cash flow has grown 18% and our cash conversion is still very, very strong. I think these numbers are a testament to our people working very diligently and intelligently to operate the businesses in the interest of our people and clients and communities. And I think that our whole team should be particularly pleased again with their efforts. There's a lot of good information on that page. You'll notice bottom left-hand corner that our billings per FTE remain very strong and industry high. We've added a lot of people over the last 6 and 12 months, and we're working hard to integrate them and the business continues to chug along strongly. Free cash flow is strong and free cash flow per share remains strong and growing. On Page 6, the business has doubled consistently over an 18-year period. And so, when thinking about the business, we like to think of the business as a business system that knows in flywheel fashion how to double itself. And sometimes this will happen faster and sometimes this will take a little bit longer. But on average there, you can see that we've doubled 6x in 18 years. And so, on average, every 3 years, we've been able to double the business. I'm very often asked, will you have to buy into larger businesses? Can you continue to grow the business, or can our team continue to grow the business? We don't think in those terms. We believe that if we do business with the right people in the right way and make the difference that we should make, then the business will continue to generate excellent financial results. The financial results are really an outcome. They're definitely not an input, and we're focused on those inputs of bringing the right people together with the right systems and processes, working with the right type of private business owner client that wants to go somewhere. And if we do all of that well, then the numbers are likely to remain strong. Now that said, there are some very large accounting groups around the world. We're not one of them. We're a growing group in the top 20 largest firms in Australia. And so, we see really an unlimitedly large and long runway that we think that our 51:49 partner owner driver model that we invented is unique, is different, creates a unique level of alignment and opportunity for our people, partners, clients and communities. And we know and are very quietly confident that there's a lot of demand for what we do, not just here in Australia, but in the U.S., in the U.K. and all around the world, we're consistently finding inquiries from all sorts of great people. And we will continue to partner with the people that share our values and drive to do something that really makes a difference. On Page 7, there's just summary numbers across revenue growth, EBITDA growth, et cetera, programmatic acquisition strategy, return on equity, return on invested capital and cash conversion. So the numbers are very straightforward. We've included our progress in 5-year periods. We've always said judge us in 5-year periods. We are accelerating the growth of the group, as we foreshadowed and trying to push ourselves to think bigger and to understand really the scale and scope of the opportunity globally for the Kelly Partners business model. Now we included a new slide on Page 9 that we sort of called KPG earning power. We're always in a position, where we want to be very transparent and share information that's helpful for our investors. And we're also trying to maintain a lot of the secret sauce that drives the unusual results within the business. What we sought to do here is demonstrate that often there's commentary around, well, how is the business performing and how do you value it? We know that a business that doubles every 3 years has got a revenue CAGR of 30% over an 18-year period is a difficult thing to get your arms around in terms of valuing. But this is one way of thinking about earning power. We believe that if we buy businesses and earn or buy into businesses, where we earn a return higher than the weighted average cost of capital, where we're going to create economic value. And obviously, to the degree that, that the more true that is then the higher the return. If we can grow those businesses and have a cash-on-cash payback period that's 5 years, 4 years, 3 years or less, then that's likely to work out very well if you do a lot of it for a very long time. And we've done a lot of it, and we intend to do a lot more of it for a very, very long time. So we're really thinking about and have always thought about maximizing the long-term earning power of the businesses. And we're not referable to today's share price or yesterday's or what somebody else thinks is the value of the group. We think that it's a very straightforward business to understand without explaining too much to other market participants. And what you can see is that, I guess, today, the sector has become more attractive as people have understood a little bit more about the sector than they did before. Page 10 just highlights the profitability of the group. The group has demonstrated an ability to earn margins far beyond peers for a very, very long time. We've now substantially grown the U.S. business, and we will now turn our minds to really moving their margins forward over the next 6 months, and we expect more action in that market, as we are engaged in discussions with many, many firms across all markets currently.

Sorry, Brett. You're saying that the slides aren't moving for some reason. So I might -- so I might just share it on this screen.

Sorry, people haven't been able to see the slides. How is that working?

I think that should be alright.

Can you tell us whether that's working. Yes, it's working. So hopefully, everyone can see this page.

Yes, they can see it now.

Sorry, I've been chatting to myself. I was probably boring myself and probably boring you. I have said a few of these things before. Hopefully, that they were very exciting for you. Capital allocation in half year, capital allocation full year, we're very focused, and we think we're okay at that. Now we recently republished the owner's manual. Keynote observers of KPG would have noticed. And I'd draw your attention to the long-term strong performance of the business in compounding book value. We've averaged 36.8% per annum across a nearly 18-year period. And fundamentally, that's a type of investment performance that it's hard to sustain on a momentary basis. So it's fair to conclude that we have some idea of what we're doing there. In terms of performance scoreboards, a little performance scoreboard there. A little bit of commentary when we did some buybacks a year ago, 2 years ago, as there often is, what was that all about? It's earned shareholders about $12 million year-to-date or to date, and that's worked out well. We do believe we're in the best position to understand the value of the group. And so, you'll see us do that from time to time. If the opportunity presents, we'll do a lot more of it. EPS and free cash flow per share continues to grow strongly. There's a summary of buybacks there for your interest. I guess in terms of the macro climate, which we're not really focused on, to be fair, we're very focused on running the fittest business we can in the best way that we can. But there's a huge amount of private equity activity in the market globally. We've stepped out here what we think makes the Kelly Partners offer very different. But we draw your attention to the increasing understanding of the quality of these types of businesses that's occurring around the world. I'll leave the rest really for you to read in your own time. I want to thank Ken and our whole team for the work they've done to pull together the accounts and this information. I draw your attention to Page 22, which continues to make clear that we've got a better grip on target firms in a better search system than we ever have before. And I had a look yesterday, and I think there's -- we're engaged in discussions with about $320 million of revenue, which is, again, more than 2x our current revenue. And so, we know that not only is the market opportunity large, but we know that where we're engaged in conversations. There is a huge amount of interest, and we feel that we're getting our -- better than our fair share of discussions from people. We've stepped out, I think, a lot of really great information. I want to hand over to ken -- Kenneth Ko, our CFO, to take you briefly through the financial highlights.

Thanks, Brett. As usual, we've published the financial highlights section. And the first page is a summary of the financial highlights for the group for the half year. A lot of these will cover off in the later slides, so I won't repeat myself here. I do note that some of these measures, for example, I saw when Brett shared in the KPG in 10 seconds, some measures such as revenue per FTE, return on invested capital, these type of measures -- and return on equity, these type of measures are impacted by our part of the acquisitions, as it has been in the past, where some of the acquisitions we completed during the year, they only contribute part year profits into the group, but their entire capital is considered as part of the calculation of the returns. So I just want to bring everyone's attention into that. In terms of the income statement, as Brett said earlier, revenue of $64.9 million increased 22.8% from prior year, and it's driven by mainly acquisitions completed in the prior financial year and in this half year of 18.8%. Our operating EBITDA margins for our Australian businesses are at 31%. That compares to 30.6% in the prior half year and a total of 28.1% for our operating businesses. Underlying NPATA attributed to shareholders increased 12% to $4.9 million. And as usual, as we shared in the past, again, the amortization expense continues to increase significantly. If you look at that table, it's increased 26% on the prior year. And again, due to the partnerships that we completed this year, resulting in an increased amortizing of customer relationship intangible assets, as part of -- as part of the requirements of the accounting standards. We continue to present some of the measures pre-AASB 16, and we still think it makes a lot of sense to do so. So for those of you that are not aware of the accounting standards, in 2019, the accounting Board required the capitalization of the rent expense onto the balance sheet. So any numbers that we have pre-AASB essentially considers the rent expense, as an expense item in the P&L and which we think makes sense in terms of assessing the performance of the business. In terms of the balance sheet, we continue to manage our lockup days very tightly, 51.6 days, as at 31st of December, and it's reduced both from 30th of June 2024 and 31st of December 2023. So we're pleased that even we've accelerated the amount of acquisitions we've completed, we've still kept this under very tight control, and we see this measure as very important in driving the cash flow of the business. Our gearing ratio is at 1.49% of underlying EBITDA, which we believe is very sensible. Our group return on equity and parent return on equity measures are still very strong. And as per previous comments, again, intangible assets and borrowings increased due to the acquisitions that we've completed. In terms of debt and equity, our net debt increased $10.3 million to $55.5 million for the group since 30th of June 2024. And again, mainly to fund, the 4 acquisitions we completed during the half year, as well as partner buying loans into the business. What is good to see is our principal debt repayments for the half is $5.4 million. So if you analyze that, we're repaying our debt, $10 million to $11 million per year, and that's in line with the 5-year amortization of our loans. We still maintain a significant headroom in cash and undrawn facility limits of $25.8 million, as at 31st of December. And our liquidity remains very strong. In terms of cash flow, our cash from operations increased 26.7%. Our free cash flow to firm after the scheduled debt reductions increased 18.5%. And as we said just now because of the increased debt, there's increased debt reductions. So that's the proportionate increase in the free cash flow to firm after debt reduction is less than the cash from operations increase. Our cash conversion is, again, very high at 103% compared to 101.4% last year and very consistent with our cash conversion metrics in prior periods. Again, drawing your attention to the debt, we drew $13.1 million in debt, but repaid $5.4 million of debt during the half year, just to highlight the accelerated debt repayments that we're making. And as Brett said, we made share buybacks of around 800,000 during the half year, bringing the share count total to 44.9 million shares. Again, we get asked frequently by shareholders how to reconcile the 51% to 49% interest of the parent and NCI to what it is in the statutory accounts. We've provided a waterfall here for everyone to have a look at, which is, again, consistent to what we produced in 30th of June 2024. Just to recap again, primarily, the parent has its associated taxes that we account for in the accounts that because of the structure of many of our operating businesses as partnerships, our minority interests do not pay for their taxes in their own entities, and therefore, the tax is not included in the consolidated accounts. So primarily after the parents associated taxes, interest depreciation and additional investments -- that is how you -- one would reconcile that back to the 51% to 49% interest. That is the financial highlights, Brett. I think we've got 2 more slides just on the...

They are a highlight. Kenny, well done.

Thank you.

Again, I want to call out Ken and his whole team. They worked extremely hard since the 1st of January to get these accounts done, consolidated, the tax done, the audits done, and we did change the auditors. Now there was a question as to why did we change auditors some time ago? And the reason is that our auditors, William Buck, who'd done a really great job. So we had Deloitte when we IPO-ed, I think, for 2 or 3 years, and then they took us through the IPO process, did a very good job. And I definitely recognize their terrific work, and then we moved to William Buck because the price was better and the service was still excellent, more appropriately sized for the business, and they did a great job for, I think, nearly 5 years. But the business has expressed a desire to consider a U.S. listing, and we did visit Toronto, I think, in October, met with the Toronto Stock Exchange as well and had discussions with them about what might be possible. And so, the Board is considering the U.S. versus Toronto. The U.S. looks more likely. We've met with the New York Stock Exchange at around the same time, I think, in October. Is that right Ken? September, October and looked at what the New York Stock Exchange Main Board requirements are, which we have been advised we would meet. So we had incurred significant costs last year of over $1 million, which I think everyone saw working with U.S. law firms, Mayer Brown and Munger, Tolles & Olson to design an appropriate structure and give us an understanding of likely timetable and costs. In the book written by Andrew Wilkinson, Barista to Billionaire, there was a quote that I had never seen before, which we published in the last results, but it was very interesting. They had commented that they met with Charlie Munger, him and his friend, and they made a pretty strong statement that they would never want to be a public company. And I've never seen this so well expressed by Charlie Munger, but he mentioned that being listed does create a slew of opportunities. For Kelly Partners since being listed in 2017, when we were too small in Australia, it's increased the number of deals that have come to us by more than 10x. So the pipeline increased dramatically. It also attracted more talented people to consider us, as a quality organization, and it did drive a level of quality right through the business in terms of financial reporting and our sophistication in terms of understanding of financing and strategy and how to better communicate the plans for the business, et cetera. So really, there has been no downside to being a public company other than some, what I would call P&L costs, some expenses. There were some large expenses at the time relative to the size of the business for the IPO. There's ongoing expenses from being listed. But if you consider those expenses as education expenses and an investment in the brand of the business, I think that they make sense. And so, if as Munger says, you're honest and diligent, you slowly build a reputation for doing the right thing, then being public is a good place to be. And we think that doing that in the U.S. would be a particularly good thing. So there's a timetable that we're sharing, and all of this is able to be executed. The business is large enough and profitable enough and has the right counterparties in place to be able to execute this. And again, today, we'd emphasize we're not making any public commitment to do anything. But should we be able to attract the equity that we would need to deal with some of the costs of running this process and to properly capitalize the balance sheet to take on more of the large number of opportunities that exist for our business and that we thought that, that was value accretive at the types of return that you as fellow shareholders have become used to and that I believe is the right standard for the deployment of our joint capital and certainly that all of our stakeholders believe in, then we will pursue this opportunity. We believe that being New York listed would give the business a global platform from which to operate and really allow us to build Australia's global accounting firm over the next 25 years. So if you're a shareholder with a 25-minute attention span and focus, you might find this level of complexity hard to understand and not sure of its short-term impact on a P&L. But let me assure you that I remain strongly invested in the business and aligned to outcomes for all of us as shareholders, and that the Board and all of our senior management partners continue to want to do everything we can to advantage the business. So that's the mindset with which we take this consideration. We see that this is a positive and very likely potential future situation for the business, and we've tried to be as transparent, as we can here to share that information. We're getting really good interest from people to work in the businesses, people that own businesses to join the group. And really couldn't be more humbled by the support and interest of all of our people, be they the most junior people in the businesses, the most senior people looking to bring their firms into the group, shareholders looking to hold shares or suppliers that are working right across our network to help us move the business forward. It's an extraordinarily exciting time to be an accountant. And as I've always said, it's one of the world's great professions, whose impact is often not fully appreciated. So with that, we'll take some questions. And if anyone, like we normally do, wants to just drop their question in the chat, we'll do our best to answer them.

Question from Kevin. Can you shed some light on the franchise chain store business development strategy? So I wouldn't describe our business as a franchise, although it's got some franchisee elements, shared services, shared brand. We did learn that from McDonald's and other great franchises. But rather than having a system fee, we have a shared services team and a direct equity interest to ensure that we've got real alignment. We continue to pursue the strategy. We have for nearly 20 years, firms that are $2 million to $10 million in revenue that are operated by founder partners, typically founders and people that really want to make a difference and share our values of doing the right thing by others, keeping their promises and knowing that a team can do more than an individual. Thank you for that question, Kevin. Question from Harrison. Thank you for your hard work. I'm wondering how U.S. listing will affect current shareholders. Current shareholders be transferred? Our understanding at this point would be an ordinary equity owner. We only have ordinary equity on issue would be issued with ordinary equity, likely in the Cayman Topco, and they would likely get some other benefits in that structure. It should be seamless stop trading here one day, start trading there the next day, and you'll be up and running, as a shareholder in what would then just be a U.S. listed entity. A question from Arnold, congrats on the results. There are some different ranges mentioned in recurring run rate and NPATA, especially for the lower end. Arnold, we keep putting ranges to manage expectations. We're very confident that we have a long track record of driving results that are very consistent. I would direct you to look at those and make your own assessment as to what's likely to happen. Past performance is no guarantee of future performance, but it is -- typically has a ream to it. So that was me, Arnold. I'm pretty conservative. I think Kenny had 12 to 13, as a range, and I told him to put 10 to 12. I'm always looking to talk down expectations and overdeliver. I think there's a fair track record of that at this point. Doug, with your international expansion in the U.S., obviously, you want to focus first on the large expat communities like our IPO on this. How do you prioritize your search? Is it growth by local market? Yes. We do -- Doug, we do want to focus on Australian U.S. expats, L.A., Texas, Florida. So that gives us East Coast, West Coast. It's very much about values fit rather than cultural fit. Culture is sort of an outcome of values. And at the end of the day, if somebody thinks we can help and we agree, then we're keen to help them. Question from [ Anup ] U.S.A op margins are less in Australia. Do you believe you can get to level in Australian? Yes, we do believe that. I think -- and if so, why? Why? Because the P&Ls are the same, interestingly Anup, but the market is so big that you -- the industry is about 10 years behind in terms of digital adoption. And frankly, modern business practices in terms of how to manage a firm. The average age of a partner is about 10 years older than it is in Australia, and that translates into an older culture within the firms. But we're very confident we can do that. Typically, it takes 6 weeks to 2 years to do that within a firm, and that really depends on the size of the firm, who's really got the influence in that firm, how quickly the partners want to change. It's ultimately a leadership play. But our playbook is remarkably applicable. And so, I wouldn't have said that when I went there. But I'm certain now that -- very certain now that the playbook is basically exactly the same and completely applicable. Our focus, frankly, is on getting the right businesses so that we are at the right level of growth. I think we're on track to be about AUD 30 million. And I'd direct people to understand that the business had about AUD 30 million of revenue at IPO, and we've got to that level within 2 years of being in the U.S. So we have prioritized getting the business to a size that makes sense. You get the right size piece of marble before you try and carve it and get the finishes right. We've got the right IT provider, everyone on the same IT. We're working through the same software stack. We're working through the same management methodologies and starting to build out essentially our playbook of cultural norms. So pretty excited about that. That's a great little project that I think can grow a lot. Edward, do you survey staff at acquired firms for job satisfaction? Is staff churn higher or lower than expected? So the staff churn is very low in the acquired firms in the U.S., which is great, lower than expected. Do we survey -- Ed, it's a little bit like a marriage. If you ask your wife, she loves you every week, you'll soon get an answer you weren't looking for. So it's better to treat our people well and try and move the business forward intelligently. But yes, we found very good people, and we're confident that we can build a core group of people aligned to what we're doing. Quintin, could you elaborate on the 9% reinvestment flywheel? What returns are you seeing? How does this benefit the partners in the business? It's a great question. So the firms paying 9% of their revenues is to run the central services team, and we keep investing in that. We've now got a 4-person software engineering team working on software development, for example, that we keep very quiet, but that is adding value and increasing efficiencies of the firm. That's just one of the things we do. So there's a full people function, a full ops function, a full IT function, full marketing function. We think that gives partners between 25% and 40% of their time back, certainly manages the businesses better than they have before, reduces their working capital by 2/3 and doubles their profit. So it's best to think about if you've got a firm, say, doing $5 million, you've got another firm on the same street doing $5 million. One of these firms that joined Kelly Partners now has more than $10 million a year, in a minute be $15 million a year being invested under that business. And that other firms just got partners trying to do some of that stuff on a part-time basis. The impact of that today is enormous and the impact of that going forward is going to be gigantic. Question from Christian, are you intending on creating a dual class structure in any U.S. listing? I presume that means we have got advice that we will have a version of a dual class structure, but it won't be dual class as such. So everyone will get ordinaries for ordinaries in the Cayman Topco, and we're looking to create a structure there that will give the existing shareholders at the time of that an additional benefit than they currently have here in Australia. But it will be ordinaries for ordinaries plus something extra for existing shareholders in the U.S. structure, which is pretty excited -- exciting. And that will reward long-term holders over time in terms of their proportional influence over the company. So the longer somebody is invested over time in the new structure, the more likely they are to have more influence, which is, we think, aligned with our values and the way our company should be operated. In terms of Oceanside, thanks for your time. I'd love to know more about our plan to drive organic growth at the co-ops level. And what is your expected growth rate in our industry? So the growth rate in the industry is somewhere between 2% and 3%. We expect to do between 3% and 5%. We think if we take out the organic growth impact of newly acquired businesses in the first 2 years, then we've averaged around 6% over the duration of the company. When we first buy into a firm, often, we will take clients out that don't meet our criteria, either bring too much risk to the business or where we can't ever earn the appropriate margins on those businesses. So we'll get a bit of a shrinking of organic growth in the first instance. We'll get organic growth on the good clients. We'll get rid of some clients that affects our organic growth and affects our total growth. But we're confident that if we can do 5% to 6% organic growth, long-term CPI in developed economies is going to be about 2%. So it will be about 2.5% times long-term CPI. Now that could change with the changing dynamics of the world, but we think it's probably a fair thesis, and it's one we felt for nearly 20 years, it's worked out okay. Doug, there seems to be somewhat of an irony with having Singleton, as a hero and you're asking accounting firm owners to work someone else, you're going to work with Hughes and then [ Linton ] found leadership on both and eventually found his own company Teledyne. How why do people choose to serve a co-partner to work for someone else? Doug, it's a great question. We don't think of the business as being KPG with subsidiaries. We think of being a partner in businesses, where we are serving these other businesses and lifting them up and taking the weight off those partners shoulders. There is no way a partnership. Any of the partnerships are involved or a partnership generally could add the value to themselves that the business -- that the KPG Group can add to them. So what do you get as a partner? You got more than 100 partner colleagues in a collegiate atmosphere, where they will help you and work together, but you retain control of your P&L and your balance sheet. You get a team of more than 35 central services people working on your business. You've got more than $10 million, $15 million a year being invested under your business. Most of these firms, the partners don't have a second to scratch themselves. They certainly don't have a team to execute. Now we know that most partners know what they should do in their business. And when you ask them why they haven't done it, they haven't done it for 30 years. The answer is I haven't had time. And they don't have a team, and they don't have the capital to build that team. So we feel very confident that, that works. I'd be confident that the Teledyne style of decentralized management, which is really what we're practicing with some assistance is very, very attractive to partners. Now look, there might be the odd partner out there that -- and I've met many of them over the last 20 years that wanted to run their own show and was going to do what we do and all sorts of good stories, and that's great. And I'm always encouraging of that. I just think that essentially, our third core value is that a team can do more than an individual. I'm a talented individual, but I know that our team, with me, our team can do more than any individual, and that's certainly true of any of the firms I've met. Just to clarify, U.S. listing intend to be a dual listing. No, dual listing. We intend to leave the ASX and list in New York. If we do that, we won't have a dual listing because the costs make no sense and there's no benefit. Serge, great presentation. Thank you. Thank you. Bradley, would you talk about anything that's changed in your thoughts on the future KPG in the past year? So the biggest thought, Brad, is that if you look through -- each year, you'll see me put a little slide in and say, lessons from this person or lessons from that person. I was very privileged with Ken to attend the Constellation Software M&A Conference in Toronto, where Mark Leonard interviewed me in front of 300 of his people, which I haven't spoken public about. I won't say more than that. But what I learned from that is they have 56,000 employees around the world. They have 600 people doing M&A, 300 of them were in the room. The quality of those people and the more than 50 sessions that went on over those 2 days was mind-blowing, utterly extraordinary. And obviously, meeting -- had dinner with Mark and his Board and meeting those people if your mind can't be shifted and grown in the presence of those types of people, there's not a lot of hope for you. And so having met Mark and his team and observed that conference, having gone back through many of the books I've read, Stephen Schwarzman's book, What It Takes first chapter, think bigger, 3G Capital book called Think Big, the original book, the Magic of Thinking Big. I'm trying to breathe and imagine the 25-year future of the business and giving myself and our team the permission to think and dream about what the scale of the opportunity really is. And it is much, much larger than we've ever really given ourselves permission to think about. And we want to stay focused and not get distracted. But we know that, that's the big insight is that the U.S. having been there for 2 years now is gigantic. It's an enormous market, much, much, much, much, much bigger, than really big. I could just feel the back of my head in terms of just how big that market is. For us to make a dent on that market is going to take decades. That doesn't mean we're not going to great returns in the meantime. But the largest firm that, I think, is Deloitte doing USD 27 billion in turnover. So it's really just how big the market is on a global basis, how big the U.S. market is and sort of the idea that we've got to think a lot bigger to fully realize the value of the business system that we've created for everyone. Jonathan, congratulations on the results. Were any of the U.S. office in California impacted by the wildfires? So no, but look, one of our team members' house has burned down. I must say that the last 4 weeks has been probably the worst thing I've experienced in my life. It's been horrendous. And there's a lot of people impacted. Financially, the businesses are not impacted, but it's been really horrible. Our Florida office was impacted by the hurricane last year, September, October, 5 of our people lost their homes. We've had to be very gentle in terms of moving that business forward through what's been a very ugly situation. So we're just gently rolling on there and confident of the people and the partnerships we're building there. Doug, with the potential U.S. listing, what are the pros and cons of creating a dual class structure to ensure that you maintain control? Yes. So it's a good question, Doug. The dual class structure, we've worked with Munger, Tolles & Olson. Ron Olson has been a lawyer for Warren Buffett for decades and designed the Berkshire structure, the Snapchat structure, the Alphabet structure and has done some work on a structure for us. We think that gives us the best chance of retaining control of the group in the long term. We know that if I tried to explain our weird partner owner driver model to people and got them to just agree that it was a good way to run an accounting firm over the last 20 years, I'm not sure that I would ever have been able to maintain that structure. It means a lot of people who look at your business for 3 seconds and express certainty that they know more than you and your whole team do and time has proved that that's not the case. So we've got a structure that allows us to keep control, while dramatically expanding the capital available to the business, so that we can dramatically grow the business over the next decade. We're very confident that, that's executable. But again, if we can't make the numbers work in the right way, we'll be very patient as to when and if we execute. Serge has got a question. M&A takes time and effort. That is true. How do you propose to manage this? Yes, it's a great Serge. So we've stepped up a dozen of our partners into what we call an Eagle group. They're scouting -- Eagle Scout group. They're scouting new opportunities involving themselves in integration, as they have for more than a decade, and I'm working to train those people. You will see us add to the management team, grow management and invest in that, train those people. That path is good. It's well traveled, but it's not a new adventure. And so, we feel confident that, that's a riddle that can be solved. The key there is we've grown a lot over the last 2 years, 2.5 years. We've always said we're targeting 5% organic, 5% by acquisition. But many of you might have worked out that we've got aspirations a little beyond that, but we're not going to grow at a rate that's unsustainable. So we'll be very, very careful to do a great job with the integrations and look after businesses that are part of the group. Thanks for excellent razor sharp focus on execution. Do you see any concentration risk? No. So we don't see any real concentration risk with our focus on McDonald's franchisees, very small part of the full group, but a meaningful part of the opportunity in the U.S. And no, we -- McDonald's is such a large opportunity for us. We're not looking to service a quick service like restaurant QSR competitors. We're going to stay pretty focused there. Are we seeing additional requirements for cyber? No. We've invested heavily in security always. Insurance is very expensive. So that's annoying. Kieran, do you see the buyback shares and in case you believe shares are below your intrinsic value? Yes. We continue to purchase -- we will continue to purchase shares when and if the opportunity presents and we've got the capital, but not regardless of price. How do you see the number of shares outstanding over time in which you choose to issue more? We will choose to raise some equity capital at some point, but we'll be very, very diligent about that. Congrats on the results. Yash, would a U.S. listing result in issuance of new shares? Yes. And what are the consideration internally to share buybacks? We do share buybacks below intrinsic value, and we won't issue shares as part of a U.S. listing unless we think it's in the interest of shareholders and reflective of an appropriate deal on intrinsic value. LA fires haven't impacted the businesses or the market. Last question regarding franchise, yes, we continue to look to service good groups, be they franchises or other is really the answer there. Kevin, our cash Brett, and as usual, thanks for compounding. I think the reversal of the -- is that question go on? Reversal and contingent consideration was a Palm Beach acquisition that we made in Queensland, where they didn't earn their retention payment after 2 years. Have you considered -- Craig, have you considered also providing a simplified non-GAAP summary of your financials? We try to get the results out very quickly, fully audited, and we're Craig, letting people make their own simplified non-GAAP summary of financials. Craig, Edwards is a great guy for me. You can call Craig and see if he can show you what -- exactly what he means, it's a good idea. Great results. I was wondering if you can discuss your recent contact with Mark and the crew from Constellation. Look, really, the takeaway there, I don't want to say too much other than it was confidential and he's just been -- it's great to meet a legend that has reviewed the business and understands the business and invited us to see to meet his team and interviewed me in front of them for, I think, 75 minutes, and that went very well. Big thing is, as you grow up and get older, and I am getting older, you tend to -- when you're 20, you're looking up at your heroes and I'll just turn 50 team. And it's important that I sort of understand that we do know what we're doing and that we push on and we do that at the right scale. And Constellation is a massive, massive inspiration. So if we can be as effective, as they have been, then we'll be 15x the size we are today and we can be 150 bagger. So that gives you a sense of just how amazing their business is. Congrats on the results. [indiscernible] you guys have answered that. Scott, hi, Brett, great results this half. I was wondering answered that Craig, Quintin. Yes. Great question, Quintin. One problem Constellation has faced in recent years is copycat firms. Do you see any copycats trying to replicate KPG? We do, Quintin. In the U.S., there's a number of -- there's 2 or 3 that are trying to do what we do. But the good news is they all -- they've got private equity money. It's very fast money. So they need to buy everything within 3 years and leave. And that's not going that well. There's enough bad news around private equity involvement in the accounting industry that's going to increase considerably, I think, over the next 3 years. And I think our model is very substantially differentiated. It takes a lot of patience. I think it takes somebody more than 20 years to be in the position we have today. I think we've done deals with 88 different partners, long track record. I think that's impossible to duplicate quickly. And so, the market is really bifurcating between if you want to do a deal with us, where you stay an owner and you partner in an intelligent long-term respectful way with your people and your clients, or do you do the PE thing? I call that the diddy party. You sort of go there. You see the big house, $50 million house. It all looks impressive. The music is loud. Night gets on, some dodgy things happen. And a few days later, you wonder why you engaged in that sort of behavior. I think PE is not going to go well in the accounting industry, and I look forward to that being very helpful to KPG over the long term. The difference is we've got a 100-year view and they've got about a 100-second view. So I think that's going to be quite helpful. Second question from Scott. What is the strategy for tech to retain people in headquarters? Yes, we are decentralizing the team. We've got the headquarter team globally. We've moved one of our people to the U.S. and moved them back. We've moved another one over now. So yes, it will be a global decentralized team. And we are putting an LTI program together for that team. We did -- we bought a lot of shares into the business, and we've handed those out on a 10-year basis for those key team members. And so, their value will grow with the business over the next 10 years. What do you feel with KPG partners' greatest challenge? So Sam, the great challenge in life is to stay focused. Focus is the thing that can offer the most upside, but it's also the most challenging thing to do. So to perform at a very high level, you've got to stay focused and committed, and there's a real human cost to that effort. And so, we need to make sure that we balance that in a way that's sustainable so that we can continue to compound for the next 25 years. And so, that's true of each of our people right across the businesses. We've got to make sure that we look after the business in a sustainable and intelligent way for the very long term. So I hope that makes sense. I'm happy to take any other questions. I'll just look at the time, which is 10:53. We've got 7 minutes, 7 minutes going once, going twice, if there's any other questions. I'd like to reiterate our gratitude to our team, our clients, our partners and Board. We really do have an extraordinary group of people with shared values trying to make a difference with a real ethic of making people better off. And I do think that people that are on that journey with us are having a good time and enjoying the difference that they're making. And obviously, if you do all of those things, you get a financial return over time, emphasis with over time. No more questions? 26 questions, answered those. One more open question. One last question from [ Yen ]. Can you talk a little bit about what you do and how long it takes to improve the EBITDA margins of the opcos? That's a great question. And guys, typically, the question we get asked a lot, can you talk a little about what you do and how long it takes to improve the EBITDA margins of the opcos? And the answer to that is we could, but we won't. One of the questions I got or one of the firm instructions I got from my time in Toronto was say less about how we do what we do and just keep that to ourselves. So you can see the consistent doubling of EBITDA margins. And what I would say is we have a 206-point checklist that we've refined over 20 years, and we keep that pretty tightly between Ken and I and -- we just work through the magic of 100% improvement typically done through 200 small tiny steps on a consistent basis. And I can't say much more than it can take up to 2 years. If you've got a 2-year retention, it can take 2 years to actually change that out because sometimes the people holding the margins back at the senior partners, who don't want to change anything, and they're worried about their retention. So they won't let you do that. Question from [ Chin Moi ] moved to U.S. especially California. See the amount of distraction increasing. No distraction from California. just working like a slave. So that should be fine. Given KPG has been excellently performing, a lot of interested parties in getting involved for the money, if not the values. That is true. There is an increasing number of people looking to get involved with the group for the money, not the values. One of our shareholders was heavily involved in the building of rack space, and they gave us a great book on the story of rack space. If you haven't read it, you should read it. It's called the Rack We Built, and it talks about making sure that you get missionaries, not mercenaries. And we've made the mistake from time to time of sort of getting people that are more focused on money for themselves in the short term. But yes, we've got to be very, very aware that there's a lot of people attracted to the money less than the mission. So we're doing a lot to protect myself and the business from that. Yen, is the financing environment in the U.S. significantly different? Yes, it is significantly different, and we will need some equity capital to be able to access the sort of debt deals there that we have here. But at the moment, we're finding alternative ways to find debt that looks very, very, very promising. Question from Arnold, is there a difference in NPS between Australia and U.S.? Not at the moment, Arnold, because we haven't run our full NPS process out in the U.S. offices yet, but we will in a minute. So certainly, by 30th of June, we'll have that data. I think what we've largely seen in our NPS scores is the firms that have been with us for a long time have very high NPS and the firms that have just joined have less high NPS and that, that grows over time. I expect to see the same thing in the U.S. firms. I might leave it there and just say that we've never been inundated with more opportunity at every level than we are today. We've never had better access to high-quality people, services and capital than we have today. And frankly, the business is more fun to be involved with today because of the scale and scope of opportunity and the quality of the people that are looking to help the group internally and externally than there's ever been. And so, I couldn't be more pleased with our team and with the opportunity. And hopefully, we've provided since 2017, an appropriate financial return for our shareholders, and I expect that we can continue to do that for a long time to come. And with that, I just want to say thank you, and have a great day.