Public Policy Holding (LSE:PPHC) — Full year results

0:01 Good afternoon, ladies and gentlemen. Welcome to the PUBLIC POLICY HOLDING COMPANY, INvestor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. And before we begin, I would like to

0:32 submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Stuart Hall. Stuart, good afternoon, sir. Afternoon. Thank you for all being here. We appreciate your time. We'll try to, take, obviously, all questions at the end and, roll through our results presentation for full year '23. So without further ado, quick introduction for those of you who haven't joined us before. I'm Stuart Hall. I'm the CEO of PUBLIC POLICY HOLDING COMPANY, was managing partner of PPHC from its inception in 2014,

1:09 until, until our IPO, in December '21. And since that time, I've been acting as the full time CEO.

1:19 Good afternoon. My name is Rule Smiths. I'm the CFO for PPHC. I've been with the company two years, but prior to that, worked at WPP as well as in private equity. There's a mix of experience in CFO and in emerging acquisitions. Thomas Gensimer, chief strategy officer. I've been with Stewart and Co since 2019. Also, like Rule and Stewart, share a past in having exited, sold a business to WPP in this space some some some years ago.

1:59 So very quickly, just to jump in, you know, again, for those of you unfamiliar, you know, every market every company has to have a market opportunity. Our market opportunity is based on a very simple premise, which is is that if you look at those two charts on the left hand side, if you can see them well, government, especially here in the context of The United States, we have worldwide and developed democracies, has increased in both size and regulatory reach dramatically over the past three decades. Simultaneously, the amount of money that corporations, NGOs, and trade associations are spending to manage political risk and opportunity. Important. Remember, it's opportunity, not just risk with government, has grown exponentially and accordingly exactly along those trend lines. So as a result, what we've seen here in The United States is that the complexity of trying to deal with governmental affairs, interspace, which is now a constant need, again, as a threat or opportunity metric for businesses, has become more and more difficult for them to manage both geographically and in terms of the technological tools that have to be deployed, to be successful in managing the public policy space. PPHC is simply put designed to create the scale and the ability for clients to be able to address both their g their opportunities.

3:15 But, again, their geographic dispersion of risk, can in US parlance can be state capitals, local governments, much less Washington DC and the federal government, and similarly across a number of international, again, developed democracies. Next slide. Quickly against PPHC, our client base, is really, made up of blue chip corporate clients, again, leading nongovernmental organizations and, business trade associations. We have over 1,200 clients at present. They represent almost half of the Fortune 100, as far as client concentration goes within those business metrics. We operate essentially in what we would call three lines of business or three buckets. On the left hand side, you'll see basically what was originally our kind of core DNA, which is CRS Alpine Group, which are companies that are pure, which we would call registered federal lobbying firms.

4:11 Very important to to remember, and Thomas will point this out later, is that in The US, lobbying per se, which is direct person to policymaker on behalf of client, is a highly regulated, highly disclosed, and, highly scrutinized business. Ergo, it is a much more developed industry as far as its relationship vis a vis a public registry and or regulatory body. And then on the right hand side, you see what we call in The United States public affairs, which really means communications in support of policy initiatives. And as our market has developed and changed over the years, and, again, it has worldwide, constituency mobilization, public opinion shaping, media management has become absolutely critical to any entity engaging in the public policy space, to manage a successful outcome. Simply put, a, quote, lobbyist can no longer accomplish, you know, objectives on a large scale simply by virtue of power of relationship.

5:13 So PPHC was designed from inception to provide those ancillary assets, which are now becoming more and more critical to the central core of execution for our clients. In the middle, you see a number of firms that offer both public affairs and, quote, traditional lobbying, but also, provide geographic coverage for in the in the case of KP, a public affairs that is the largest, the largest, one of the largest lobbying and public communicate affairs communications firms in the state of California located in Sacramento. Multistate actually provides coverage in all 50 states. So we actually can provide our clients the ability now, to provide, you know, coverage at any state capital in The United States as well as in Washington DC. And we also have the ability to cover certain key state capitals with freestanding flags like O'Neil and Associates, which is the largest in New England, Boston, Massachusetts based.

6:09 Thanks a k. Honest. Here, we'll get deeper into financials, but just talking about those segments a little more. We started with this anchor of lobbying revenue in those three shops that Stuart mentioned. That's representing roughly 70% of our revenue overall. The the the magic with that business, it is remarkably resilient. It is client the the the tier of client into the c suite chief corporate counsel and such is long standing, mid nineties percent renewal on an annual basis. Many of our lobbying contracts have been with us in various forms for a decade or more. So it's much more akin to a global consultancy, an accounting firm, a law firm. As we add related services that are both essential to the delivery of that work, the successful delivery of risk of of managing risk and chasing opportunity, the public affairs and the diversified services are the growing bit of the portfolio from an m and a perspective and where clients are spending more and more on more and more things. So that's an example of you have your lobbyist anchor. You're activating in a handful of states. You're doing some research to ensure that your stakeholders are aligned. All of these more and more work together and clients as opposed to having many, many vendors out there are looking for the one solution that can both check the geographic boxes, but also then provide the services necessary in the toolbox for effective management.

7:38 Here on the I'll start with the right hand side. Stuart mentioned in the setup over 1,200 clients, so remarkably wide portfolio of corporate and nonprofits. We do not do politics, so we'll all be asked questions, I'm sure, about the upcoming election. It is noise that is in our in our zeitgeist, so to speak, and we manage client risk through that noise, but we are not engaged in electoral work. We are not managing campaigns and such, so a differentiator for us in sort of the notion of what happens Washington. The largest client, this sort of client concentration, under 2%. So you see they're 1.6 and down even it's consistent on on year on year. The the nice thing with that, and and you take that times two of the top 10 clients being less than 10%, which is quite contained for a services business, many of those in the top 10 are also owned by or held with scope in multiple of our operating companies. So we could be working in Washington, Sacramento, and doing research for a brand, for example. So that sort of consistency matched with the the high retention and sort of stickiness of these engagements. We're not facing procurement challenges this year. We're not sort of in in the pitch and role that happens on more broad case marketing led and consumer facing public relations.

8:54 We focus a lot go back one more because it's a growth story on the bottom line there. Client wallets over a $100,000. That is a sort of level of which it's not a super high client. You know, these clients have spent much, much more than that. But it's it it is representative of a sort of consistent spend across the year and growing that piece of the portfolio. Now you see up 23% is where the direction of travel is, adding more and more services into those into those client wallets. You see on the left here, we are spread across all industries. As in the economy writ large, you have sort of tech, pharma, energy, etcetera, leading. But you see here across the sort of 15, categories that are represented, we cover the water of both the policy risks and opportunities that these clients, corporate clients, and NGOs are facing.

9:44 Next slide, please. Here you see the longer term picture going way back to 2015. As Stuart mentioned, it started in 2014 when two lobbying firms came together and thought, let's start swapping conflicts and figure out how we can make one plus one equal three. Upon that base, we've grown both in-depth of service and range of geographies, getting post our IPO in late twenty twenty one and continuing that buy and build, support of the of the platform. On the right, you'll see and some of you have joined us in past of these IMC, meetings. We've done two asset acquisitions post IPO. First was in the geographic power center of Sacramento, California. California is the fifth largest economy in the world. It is both light years ahead of Washington by stance of reg regulatory, zeal, shall we say, and just the scale of the client opportunities there given the size of the economy are such that we knew we needed to open that port of call. Next was multistate, which checked all the other boxes in a 50 state sort of federal system. They also provide monitoring services, some some screening services, compliance services.

10:54 Not you won't necessarily have full time lobbyists in Wisconsin, Wyoming, and Michigan, but you are facing opportunistic opportunities. Can we say that? Opportunistic opportunities

11:05 and risks as you either have sort of activist legislative bodies or other sort of exposures to public policy that makes it worth the corporate dollar to have representation. Multistate can handle that multi jurisdictional challenges and fits nicely in the portfolio.

11:23 Here is sort of just a a one zero one on the lobbying industry. Again, our sort of super resilient base upon which we're growing the sort of permanent c suite budget. We now are the lot the largest, collectively, largest lobbyist in town, having three of the top 20 shops. This group of 20 as published in POLICY HOLDING and other sort of trade related digest is published quarterly. This is the annual roll up for 2023. There are more than 2,200 vendors, firms, not individuals, firms that report under that, under that sort of federal guidelines of lobbyist registration. So as Stuart pointed out, a very sort of transparent registrar. The industry has been such for thirty odd years since the last tightening of these disclosure regimes.

12:09 We have scored, again, the top three of the of the top 20 that provides a great base, multi multifaceted, multi industry, great base upon which we're growing the rest of the portfolio. That is not a like for like dollars. That 68.3 does not represent everything in that segment, but that is which in which which is reported to the federal government, in this case, by our federal anchor shops. We are more and more moving into the, what you all call, public affairs and broader communication services. We see these near peer and and and aspirational peer equivalents into some of these brands that you will know more than us. They all do have anchors in Washington. They do some lobbying on behalf of clients in most cases, but are known more for the strategic comms, the broader portfolios.

12:57 We are moving in that direction of adding more and more services to the base of this highly resilient lobbying and issue specializations that we've grown. Okay. And I'll take it over from here. So, our '23 results. '23 was our second year post IPO. That means we were operating under our new sort of, compensation regime, new tax regime, and we were delighted to see that, again, our model has proven itself. It's been a very good year. And, let's me take you through a couple of the key numbers. Just our total revenue, yeah, for '23 was $135,000,000, up 24%, and that was really a mixed growth of 2% organic growth combined with the impact of the two acquisitions that Tom has already mentioned, KP and Multistate, who both did really well.

14:01 EBITDA, we delivered right on expectation, 35,000,000, up 12%. And as a percentage of revenues, this is 26%. That's not depicted here. That is really within our, you know, traditional band of 25 to 30% that we sort of deem as our target profitability band. Underlying net income was 26 and a half, went up a little faster, 14%. And this underlying net income, that broadly translates into cash from which we then pay the dividend. Then let me first talk about underlying EPS. So the EPS, was up 10% on an outstanding basis, 8% on a fully diluted basis, so both up. And that was really driven by the aforementioned growth in profits, but partially offset by the expansion of our share base due to, on the one hand, the use of stock in acquisition payments, and on the other hand, the impact of our annual LTIP plan.

15:05 But still up sort of at, you know, high single digits, and 10%, which is good. Nonetheless, we increased our dividend only by 2%. That's still 2% up from prior year, and, you know, it's still two thirds almost of, you know, our total EPS. So we're paying, you know, actually, to be exact, 62% of our, underlying net income, we pay as dividend. So we pay a relatively high dividend. But, yeah, we're growing that consciously a little slower than our EPS because we would like to preserve from, for cash for future m and a.

15:52 Diving a little bit deeper, at the p and l. Now the top side shows how we as a management look the performance of PPHC on a day to day basis. Yeah. It really depicts our underlying profit concepts, and it demonstrates that we're very, very profitable. The underlying net income here mentioned is the primary driver of our cash flow. And, you know, all the other measures that I that you see in that top part, you know, already touched on in the prior slides, and I really, demonstrate good performance. The bottom part, yeah, we've since the IPO, we've shown the bottom part in tandem. You see the trail from our underlying profits to our reported profit per US GAAP.

16:40 Yep. All of these items you see at the bottom are really noncash items don't really impact our cash flow, and most of the result were the fact that almost all the shares that are held by, employees are subject to a condition of continued deployments. And under US GAAP, that requires us to amortize the value of those shares through our p and l. Now it's all described at length in our RNS announcement, also in our 22 annual reports and the upcoming 23 annual reports. But we believe for our business, it's important that we have these vesting conditions on those Ab Initials in place, and we're willing to accept that it leads to some ugly accounting.

17:26 But and that's why I have to explain that to you all. But by the way, also,

17:33 tellingly, when the US IRS, uncle Sam, taxes us, it is on the profit concepts shown above, really, on the on the cash that we're generating, not on the reported GAAP income. So let's go to cash flow. First, you know, you see in the upper buckets that we generated, operational cash flow of almost $22,000,000, which was up 4%. And that could have even been more were it not for, you know, some timing of our quarterly tax payments that disadvantaged us for this year's Kefla. And we also saw that incorporation of multistate actually required more than average share of working capital investments, but still we were going up by 4% in our cash.

18:26 And the multistate, you know, working cap requirement now sits in our system. The second bucket in this cash flow statement are the investments. Yeah. We hardly spend money on traditional CapEx. The only thing we have are, office improvements and and a few laptops for our people, but we do make acquisitions. So in '23, we spent, $3,600,000 on, earn out payments to the owners of KP. And in tandem, we also spent $17,600,000 on completion payments for the acquisition of multistate. Now any future further earn out payments for these companies, because they're both subject to an earn out, will only happen if these companies continue to grow past the moment that we acquire them.

19:19 Now then the third bucket is, financing cash flow. So our acquisitions were partially funded with debt. In March 23, we attracted $17,000,000 in debt facilities for acquisition of multistate. And by the end of the year, we used $11,000,000 of debts because, yeah, we already repaid the debt during the year.

19:45 And then last but certainly not least, we paid in '23 almost $16,000,000 in dividend payments. That's dividend payment is important for our external shareholders as well as for all our agreed shareholders. And when adding all that up, we used $6,000,000 of cash in '23, ended with a cash balance of $14,000,000. And after deduction of the net outstanding debts, we had a net cash balance of 3,500,000 notes. Okay. And then, you know, zooming out, always good to take sort of a high level picture. Our aim as a company is to deliver a very steady, reliable performance over a very long period of time. And I think those two pictures here show that we're making safe progress on that goal.

20:35 So at the top, you see the revenue picture. You've already seen it before, and Thomas talked about this. Each year, we showed growth. And each year, that growth was driven by a mix of m and a, you know, characterized in light blue, and, organic, which was characterized here in red. And sometimes the m and a was higher. Sometimes organic growth is higher. This past year in '23, we had very important contributions from KP and multistate, creating a situation where most of our growth was driven by, them. But next year, that mix organic versus m and a will likely be different again. So for the midterm, you know, we as a management, we believe that our sweet spot organic growth is always between five and ten percent each year.

21:24 And then at the bottom, you see our long term profits. And looking at the blue bars, you know, we also here, we see a steadily increasing line. In '22, you saw, however, a bit of a pause in our absolute profit growth, which was primarily due to the company just having gone public, and we took on all the public company expenses and invested in our platform. But then in '23, we really resumed our profit growth. Although we continue to make, you know, investments in in our platform. And, Thomas will soon talk about Concordance, which we set up in the course of '23, which is also baked into these numbers. For the future, you know, we maintain that we have a pretax margin always between 2530%.

22:15 We're comfortable giving you that guidance.

22:20 And that gets us to our growth strategy. PUBLIC POLICY HOLDING this is a people's business people business. So and it gets into talking about sort of geographies and specializations. There are men and women around the country that are these experts. So, right, we are we're continuing to invest in our platform by way of the people that we hire and the scopes that we pursue. I'll start with Concordant because it is the first time that we've launched an offer short of sort of an m and a effort, and this is about sort of repackaging some of the depth of our services that have been oriented towards government relations and the budgets of government relations. And as we look more and more to the geographies and to new wallets within these corporate buyers, There's more and more need for strategic comms and advisory work that we our shops may not come as top of mind, for some of these buyers, but we have deeper expertise in some of the key industries than others would. And so how do we present a brand with an advisory angle that allows us to build customized teams for those solutions, both appealing to new kind of buyers within existing brands and new sources of capital altogether. So PE funds do not have many assets in Washington. It hasn't been a been an excess upon which they've needed. More and more so as they pursue either nondilutive capital or other sort of growth opportunities in areas of green energy and technology and other things, how do you think of our experts under slightly

23:51 new label? And that's sort of the orientation of Concordant with both a CEO that comes out of a sort of c suite advisory role in big corporates and and then some of the other talent that we're bringing to fuel that cross sell and also repackage some of our experts. Otherwise, the areas that we need to invest and continue to invest, and I see some of the questions that people are digging into where our lobbyists are, which is very helpful. Financial services, renewables, the ESG conversation, continued research analytics. Again, the toolbox of risk and pursuing opportunity is getting more and more complex for these corporate buyers, and we ultimately want to be both the source of reliable, transparent services and more and more geographies.

24:37 So adding adding adding these sort of specializations down to the person in various pieces of the portfolio and then packaging them as a whole is really where the orientation we're going. It does lead us conveniently to the next slide, is finding growth in in the global markets markets because more and more international businesses or global businesses are looking at governments around the world and looking for a cohesion in how they manage public policy. This is ever more so in the sort of post COVID era where government stimulus, the move towards renewable energies, the move towards added sort of pharma coverage and such has led various capitals to both get into dramatic stimulus spending and to sort of tighten at the same time the sort of requirements of transparency in some of these corporate representations.

25:29 So starting with the right here, we see this transparency movement as our net advantage. It's wind in our sails. We can talk to her blue in the face about how clear and transparent and governed by by criminal statute, the federal and state model is. Right? Every every quarter, every person, every client reports on what we do, say, meet with. As the EU, you know, in Brussels, as areas of, you know, the the both tiers of government in Germany, as folks in in France have all taken moves in recent years to tighten up those requirements, it is again to the advantage of our large corporates that participate in all these geographies and to us as the sort of specialty provider of these high touch, high power solutions.

26:16 You see on the left here just how we're market sizing. This is admittedly dated from 2022. We're awaiting some new rounds of both disclosure data from governments as well as some of the media reporting that happens to put these numbers together. It's the blue. It's the it's the disclosed approaching $4,000,000,000 of federal lobbying, and then that surround sound, that communications, that research, that sort of mobilization piece in the red, and go through different territories here from Brussels to Germany, The UK, and France. And you see the market exists. Corporates are paying and playing in those markets, and we see opportunity to unlock the nexus of referral and consistency of coverage for those clients.

26:59 Yep. So as we're looking at our m and a, you know, we're looking both at geography as well as, you know, expanding into certain specialization slash capabilities. We actually have a lot of things under consideration right now.

27:19 You know? And we're looking, you know, when it comes to geography both in internationally, as Thomas just already alluded to, as well as expansion into certain key states in The US. Because although with multistate, we're already covering all the states, there are certain larger states such as New York State, Florida, perhaps Texas, where it also makes sense for us to be present already of an sorry, to be present. We're already active in the Northeast, yeah, in Boston and in Sacramento.

27:54 Now, typically, we would make acquisitions through earn out transactions because really very custom, of course, in professional services. But the future payments are always conditioned upon there being growth post acquisition. We're paying through a mix of cash and shares, and that's important because, yes, of course, sellers love to seek cash, but we want them to also accept shares. And if they don't want to accept that, then we're probably not meant for each other because we want people to take an interest in the long term health and prosperity of the PPHC group.

28:36 And finally, you know, also covering a question that I think one of you already asked. Okay. How do we fund this? You know, the the shares, well, that part is easy, but, yeah, where our current share price is, we can only use the the, you know, share issuance sparingly. Therefore, we also definitely using, cash now. We generate cash ourselves as you have seen, but to the extent, we need to pay more than what we have, available on our balance sheet, we have an understanding with our bank. Our bank is Bank of America,

29:13 and, they've already funded us in '23. And, basically, we have an understanding with them that they can fund us to up to about one and a half times EBITDA, which means that we definitely have enough cash for the next three to four, acquisitions depending on size, of course. We put pretty strong criteria on the various m and a opportunities that we're evaluating. Tom has already mentioned, you know, compliance. We really only wanna talk to those companies that are highly, compliant, highly ethical, and fit our sort of structure and and, you know, our best in class premise. They, of course, need to be you know, meet certain financial profiles.

29:58 We want the acquisition to be accretive to EPS immediately. And, you know, in The UK and in Europe, France, it's also important that our first acquisition there has a certain critical size because it will operate really as the hub for our further international growth. K. Bring it back to Stuart. Just by way of quick conclusion because we wanna have enough time to take as many questions as possible. Like this slide because it really shows that this is not just an American phenomenon. This this cover you see, is from a POLICCO Europe publication, which they really emphasize, again, the rise of policy communications and how corporate corporate corporates worldwide are having to address these these factors.

30:48 And, again, we really believe that based upon the corporate wallets that as it continues to expand again in both policy comms and and, again, direct advocacy, that there there really is no let up. But, again, in a worldwide basis reflecting back to that chart Thomas went through just a few minutes ago, as far as where our opportunity lies. And, again, showing again the increasing geographic complexity and dispersion of our clients' challenges, which, again, is exactly what PPHC is designed to take advantage of. Go ahead. Next slide. Yep. Just quickly, just to reemphasize, our board met early last week, to approve results and, again, feels confident, in our guidance, which, again, is five to 10 organic, incremental growth that's gonna come from future m and a as well and that we will, maintain, you know, our traditional, EBITDA margin, adjusted EBITDA margin of 25 to 30%.

31:45 Again, when you consider why PPHC is an investment vehicle, again, as I just said, we're in a large and growing industry. The one thing is we have very low correlation to economic cycles. It's always important to remember that government tends to get more aggressive when things get poor, and so conditions deteriorate. So oftentimes, we're almost we can be inverse at sometimes, to what's going on, especially in a deep economic crisis.

32:10 Importantly, to remember, I don't know if it's been mentioned in in the course's presentation, we do not do political campaign work. It's very important for us. It's cyclical in nature. It's can be a bit controversial, so we shy away from that. We prefer, again, the kind of steady state engagement our clients need to have with government, to sustain us, on a consistent basis. We have really high client retention against some statistics we went into earlier. But on average, we retain 85% of our client revenue year over year, meaning that unlike, you know, traditional commercial, quote, PR and advertising companies, who might be considered in our peer group, we don't start a year with a lot of unidentified revenue. Eighty eighty plus percent of our revenues are already locked in, going into the next year.

32:57 Again, I think our margins speak for themselves. I think our net profit speaks for themselves. Our dividend payout, again, while, you know, it is progressive in nature, our intention is to, by some percentage, increase it each year.

33:11 The fact is is that, you know, it it is at the higher end of the range, and we're committed to that dividend. It aligns both our internal employee here, shareholders, very well with the objectives of our outside income focused shareholders. And then finally, again, we feel our growth prospects are are superb. Our pipeline of m and a possibilities is as robust as it's been since I've been with the group. And, frankly, again, our market segment shows no signs of let up. But, you know, if we stick to our m and a strategy, which is very simplistic at one level as we said and and really insist on deal structures for very sticky, acquisitions that will last, you know, well beyond the period of of the immediate deal term, you know, we feel very, very confident in our future. So Yeah.

33:59 We'll take your questions. And we have quite a few. We have a lot pouring in. Yeah. Let me let me let me let me do there's a couple of probably what I would call, easy hit them off the top questions that I wanna get out of the way before we get kind of deep into some of the financial, questions. But, first off, I think, you know, there was there was there's a question, that we've got from, from, Jonathan that's asked question about the number of lot registered federal lobbyists that we have in our firms, and it's gone down by gone by down by two over the last year, at least through '23. I don't know if that's accurate now. I'd have to check the actual headcount, Jonathan. But, really, that's kind of noise, and I would tell you why because that register,

34:44 anytime you have a person, it could be a little staff assistant. But if you send them to Capitol Hill or you have them call a friend, even if they're not really a regular lobbyist, they have to register. So in some ways, a fluctuation of one to two is noise. Lobbyists, the big the topper end the top end ones in the middle to top tier, they typically can carry a lot of business. So, yeah, I got this question last week from from a potential new investor, and it was, can, you know, do you have to hire x number of lobbyists if you get a new assignment of x? And I said, no. It it actually is a business that tends to have a lot of capacity built into to a specialist or a really high quality individual that works with you. So, it doesn't require a lot of body up.

35:29 So, you know, our when we add people, they tend to be strategic, not necessarily always based on existing capacity needs. So some ways, you know, again, I would say that that that is probably a little bit of noise. And then, you know, finally, you know, it was you know, we're talking someone else asked a question about about, you know, again, you know, what type of you know, I think it's it's Mark Mark here. And he says, you know, what percentage of revenue swing according to where you are in The US? What's the revenue swing based on economic I mean, political cycle. We're really politically insensitive. You know, it it there can be slight fluctuations based on level of activity in Washington generally, you know, but it it is on balance pretty steady.

36:23 So we just really don't really don't see that. I think, you know, there can be brief kind of pauses in growth that occur where we're very close to an election or what have you, but those are really two, three months at most, and it's not a loss of clients. It's a pause in growth. And then we resume and and and and fill fill up very, very quickly beyond that. So it's really what what drives us is activity in the sense that changeover in congress because our firms are deeply bipartisan. We don't really care who's in power. So lots of activity. Like, you see '21, that was the first year of a very activist presidency and the Biden presidency. You can see how much, you know, extra additional spend was attractive, especially on the public affairs side. So, you know, activity really drives what we're doing much less than what the election process or the election results are.

37:16 So to get to a couple of more structural questions, I would say I've got a couple of questions here, Raul, on the the sustainability of our dividend policy, based upon, several factors. You wanna take that? Yes. Certainly. No. I think there's a deep a great commitment in a company to maintain sort of that progressive dividend policy, albeit at a very sort of modest level of about 2% a year. To what extent we can maintain it, well, as long as we remain profitable, we'll remain cash generative, and we'll be able to, I think, pay that to DPS. Of course, we might get into a cash crunch if there's a lot of m and a activity.

38:02 But, as I already mentioned, we would fund that through attracting extra debt, or perhaps once our share price will have recovered a bit, we might also issue some new, shares and raise cash that way. So I got a couple of questions here, on m and a, both from Tom. One, we answered some of this in the presentation, but maybe if Thomas or Roe wanna expand on it, so are you considering expanding your footprint to reduce dependency on The US? And then the the corollary follow-up to that is, what are you looking for particularly in target identification? I mean, on the first, definitely, though less about reducing dependency on The US and more unlocking the referral nexus and the fact that many of these industries are facing global opportunities and or global threats of of regulation. Right? Whether it be at g seven conferences or otherwise, alternative minimum corporate minimum taxes and such, there is more and more of a move towards the looking at the chess match overall.

39:08 Strategic assets always. We're not doubling up on on areas where we have sort of standing for example, the three shops that are in the lobbying space in Washington are all multifaceted, multi industry, and bipartisan. We cover the water's edge, as Stuart says in that. The natural first place to go post IPO was Sacramento because it's non duplicative. It's where clients were needing representation and expertise, fifth largest economy in the world. We needed to sort of add you know, unlock that opportunity. Those folks, those entrepreneurs that are motivated to drive client solutions and build the platform in California are now pushing us to say, I got a lot going on in Brussels. I mean, my tech clients, my pharma clients, my energy clients, you know, Washington might be four or five years behind from a regulation standpoint to where California is, but they're taking cues from or deriving change that is more of a global policy situation. So we are looking, as Rul had pointed out, all of the requirements of steady corporate portfolio profit margin that makes sense, sort of accountability into c suite. We're not sort of looking for a cottage industry type player. We need those anchors that represent both the geographic spread, but also the issue specializations that we're driving the the the growth from.

40:25 So it's a yes and conversation more than a more than a duplicative revenue build. Yep. Got a question for Roel here from Ian. Roel, how does the company view its current liquidity and financial health, especially in relations to ongoing and future investments and acquisitions? You wanna give a general overview there? Yes. We feel really good about it. No. I feel definitely feel very good about it. No. I feel like we've actually covered this question a little bit already because we have it did we're generating a lot of cash here. We take our net underlying net income. Almost all of that translates into cash. The only difference is a little bit of investment in working capital. So that cash is to our avail.

41:11 Now we have, on the one hand, the dividend payments that we like to make to our shareholders, which we know our shareholders appreciate. And then on the other hand, the the the remainder of the cash, which is now 40% and now become 50%, yeah, is then available to us, you know, either for m and a or for share buybacks. But, frankly, the state where we're currently in is that we foresee it's gonna be used for m and a, so for the foreseeable time. It's probably a good lead into this other question, from Mark. Regarding the share price, what do you see as the catalyst to an improved price on liquidity? Is there a selling of overhang from selling overhang from companies acquired? So in in general, Mark, you know, we we have, you know, our our the way our shares are currently distributed.

42:00 If you actually looked at our register, it's hard to really tell what the true true free float is, because 40% of our employee shares are now fully vested, from the IPO. So they technically count as fully tradable shares. There's no restrictions on those anymore. But so, you know, there's quite a few free shares out there right now beyond the 25% that are in external, hands as far as either retail or institutional. That that employee overhang, you know, employees, I can tell you, I survey them every time we get ready to exit a blackout period. And, you know, I ask, are you are you interested in possibly selling, trading? The answer generally comes out over out pretty much no. That then that's really, you know, I think at one level, it should be reassuring to people that the employees truly believe in the story. They don't wanna sell short. They don't want to, you know, leave anything on the table, so to speak, as the value of of of their ownership.

42:59 But, you know, I feel like, you know, with a little minor share price improvement, we could probably see some of the employee overhang move out, at least some portion of it. And then, of course, when we're doing m and a, if if our price is healthy enough that we can justify it on a EPS basis, we'd certainly be happy to go back out to institutional investors and issue new equity, as a means to, you know, raise cash for acquisitions. So, yeah, we just need a small amount of movement in our share price, to reflect, you know, we think, you know, the true value of the company. And, you know, we're working diligently on that, role of Thomas and I spent the three days after our board meeting Tuesday to went straight to London, on and, we're working diligently on that, on that that puzzle to, obviously provide greater liquidity. So more more to come on that front.

43:51 Stuart, may I suggest that we take Terrence's question about what the firm will be in five years time, which I think That's that's the loaded question. I was gonna say to the end, but we'll go ahead. I'll I'll go ahead and and and take that one. And and, obviously, we have to be careful what we're gonna say. I would say this. If you look at, again, why did we do an early stage IPO? Why is the equity instrument so important to us, especially for both employees and for act use in acquisitions, is that, you know, we want the stickiness of our talent. You know, we are not a widget manufacturer. Our people really do matter. They are the client interface. They are the drivers of our business. And we think, you know, the employee ownership and and the equity model, is extremely, extremely important for building long term sustainability and also to recruiting and attracting new talent and acquisitions.

44:39 So, you know, the commitment the commitment to that plan really, I think, is a reflection that we're thinking long term. We're we're not thinking, you know, immediate and out. So, you know, this is a long term project. Many of us came out of, you know, sales and then, you know, you know, left after the sale and then went somewhere else. I think that, you know, we're trying to build for the long term. We think our market opportunity is tremendous. Probably in terms of market positioning, I can tell you in five years, we will not be nearly as DC centric as we are today. That's already changing, as you can see by our first two post IPO acquisitions, but we will ultimately have a worldwide global network, both in communications, public affairs communications, and in, quote, whatever definition of lobbying exist in in varying international, capitals.

45:33 And then secondarily, I think you will see our service line moving further and further into some of those companies lines that Thomas showed you earlier, the strategic communications group that are really kind of all all weather corporate advisory work. And, you know, we feel like at PPHC, the most everyone talks about corporate communications, reputation protection, branding, etcetera. We think the most critical audience this day and age to any any entity, whether it's nonprofit, for profit, institutional, makes no difference. At the end of the day, the the the place where you can be made or break broken as an enterprise is absolutely with government. And so we feel like we've got the best connectivity in The United States. Eventually, we will in the world to that audience.

46:22 Now that's the most critical audience. We're happy to go back and help you figure out how to talk with the others, and we think we have the skill sets and the people to do that. Hence, again, as Thomas talked about concordant. So, you know, we really believe that in five years, we're going to be, if not the dominant player in strategic and corporate communications with the best political policy advocacy network attached to it, you know, we will be darn close. So, again, we're we're in this for the long term, and that's where we wanna go. Couple other other other quick ones. You know, someone said can competitors undermine your plans and margins. May I take that one? Role, you are this is right up your Alley. Yeah. That's exactly what I was thinking. Go ahead. No. That's okay.

47:08 Listen. Actually, we believe that chances of us getting underpriced are pretty slim, and I'll tell you why. You know, as Stuart just mentioned, you know, other than communicating to their clients, indeed, companies have to do a lot of communication now to its government. But the cost of communicating with government through like us is absolutely minimal compared to the giant marketing budgets that they need for talking to their own end clients. So from a client perspective, we don't expect too much price pressure. You know? If they wanna save money, they have other places to go. From a competitor perspective, we don't see price pressure either because, you know, this is a a people business, and people have very little incentive, I would say, to start underpricing because they basically would cut into our own compensation.

48:07 So, no, we don't see price pressure. Obviously, we're always trying to increase our prices, which in this business is typically it follows a bit of a a step stair pattern. So you you you agree a certain retainer with the client. You keep it for a couple of years until, you know, the scope of the work that we're doing for them has grown so far that it justifies going up a step. And, that's when we then significantly increase the price of the retainer. I'll just leave say this in conclusion as a follow on what Raul just said. I've had an old saying going back twenty five years, everyone deserves representation, and they deserve the representation they pay for. Quality and the level of what we provide, we're very comfortable with our pricing.

48:55 Got one last one here. Is not an issue. It's a good research. Yeah. I think I think we'll, I think we'll take that offline. I'll just say, Donald, that that, you know, that that we are working very hard. It's a question for the rest of the audience about, you know, our our efforts to to really talk more like we're doing today to the retail community. You know, we are working extremely hard on that. And, and I think, again, you're gonna see some some things that that will will, be coming about, you know, in the coming weeks that that will, again, get a greater connectivity to retail investors. So, again, stay tuned. That was, again, part of what we were working on last week and continue in London. So thank you. With that, I'm gonna hand it back over to Jake.

49:41 Obviously, happy to answer any follow-up questions as they come in, and, we really appreciate all of your time. Perfect. Stuart, Roe, Thomas, thank you very much for your presentation and for being so generous of your time then addressing all of those questions that came in from investors. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Stuart, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. I mean, you know, again, all I mean, we've been at this, and I think there was one chart that really summed the case up well on this deck, and that was is that if you look at the the growth of our revenue and our profit, this has been a steady state, you know, increase over a number of years. And I think it it it it was initially many years ago.

50:40 We used to call that the hockey stick graph, and it was all theoretical. And the interesting thing is the curve of that graph is almost exactly as we modeled it out back in two thousand and thirteen and fourteen. So, you know, again, we feel like there's been good validation even, you know, pre and post IPO for our business model. And, you know, we're incredibly confident that that, you know, we are definitely in the right market segment at the right time, you know, executing on m and a, creating that global network that I spoke of, and then, you know, obviously, continuing to attract and retain top level talent, which, again, we think, again, the public instrument helps us with, is gonna be the key to our success. And there's nothing in the first two years and now nearly a quarter that that that tell me since IPO that tell me or anyone else that's been involved with this company since or before then that we're not gonna be successful in that. So, again, we appreciate any of your your support and always happy to interface and engage to, again, try to win that support.

51:45 Perfect, Stuart. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of PUBLIC POLICY HOLDING COMPANY, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.