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

0:01 Good afternoon, ladies and gentlemen, and welcome to the PUBLIC POLIC HOLDING COMPANY, Full Year Results 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 our responses where it's appropriate to do so.

0:30 Before we begin, as usual, we would just like to submit the following poll. And if you could 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. Thank you. Welcome, everyone. Good evening. Just very quickly, for those of you, who are familiar with us or not familiar with us, I'm joined as usual by my capable team and colleagues, Roel Smits, our CFO, and Thomas Ginsomer, our chief strategy officer. Again, it's as you've seen us before, you you know us as the three amigos. Go ahead, Roel. Push forward. So, it was a fascinating year for us. We released our 24 results this this morning. I think, you know, we stand on the cusp of the transaction that we announced, that will be effective April 1, toward realizing a full vision that was stated long ago at the IPO, and that is to be the preeminent strategic communications and government relations provider by uniting a diverse group of leading specialists around the world for the collective success of our clients, employees, and shareholders.

1:36 That is a vision that we had, going back, really before 2014 when we kicked off operations. And now with the addition of Trail Runner International, which is a strategic communications, advisory firm, corporate communication specialist. We have now realized our dream of becoming a fully rounded corporate c suite focused advisory. Go ahead. So highlights from 2024 financially. Revenue was up 11% to just shy of 150,000,000, of which 2.7 of that was organic. Underlying EBITDA increased to 36,100,000, up 3%. Role will talk to you a little bit more about some one off charges that it would have actually been higher if we had not had those. Our underlying PAT was up 5% at 27,700,000 USD.

2:25 Our balance sheet is excellent, and our free cash flow is up 4% to 22,200,000.

2:33 Obviously, you know, our free cash flow, again, is critical to us, and it's we are highly generative. Again, and we'll talk a little bit more about how, we intend to continue to deploy those proceeds. The board is very, very confident in the group's interim and long term prospects, declaring a final dividend yesterday or rather Tuesday of, 0.047¢ per common share, for the second half of the year and then for the full year 24 second half payment. And then we remain highly profitable and cash generative, as I've mentioned, and our we have an interim plan, for the near term and medium term, to get us eventually a $500,000,000, in net revenues. Go ahead. Just quickly, again, for those of you who aren't familiar, PPHC operates a portfolio, of strategic advisory firms, with bipartisan expertise.

3:24 Again, our core pretrail runner has always been government affairs. We live in a world where we are not partisan. We do not do campaign and elections work. So as such, you know, we really focus on the outcome of elections, whether they be in Germany or The UK or The US or in our various states here, and work to address opportunities and policy challenges for our clients as advisers. We're headquartered in Washington DC. Again, with the addition of Trail Runner and our other assets, we spanned the country from California to New York City and Boston, and a presence now deep presence in Dallas Fort Worth with, again, TRI. Also, extension through Pagefield into London, which we acquired last year, and also Abu Dhabi, Dubai, and Shanghai. So we are truly global network now.

4:17 We serve circa 1,200 clients, and next month, that will jump to over 1,300. Our earnings, quality, remains strong this year just like it does every year. We're largely a retainer based enterprise. So as such, we retain 80 to 85% of our revenues year over year, which allows us to continue to grow from a strong base each year rather than try to make up ground loss from the previous year. We employ specialists. These are highly paid advisers, and they are also highly valued advisers who, charge very, very good fees for the clients, and the clients are happy to pay up to the level of expertise they bring to the table. We're at circa 400 employees now, and we'll be over 450 again, shortly on April 1. Very important to us. We'll talk more about it, as we go through the deck, but, employee ownership is critical to us. We think the equity instrument is what binds, these experts to us and their client relationships in a way that you wouldn't normally get if, people were strictly, in the enterprise for cash compensation.

5:19 Next slide. Just quickly, the quadrants in which we operate. On the left hand side, bottom left, you see companies that engage in direct advocacy, sometimes defined as lobbying, but, it's practiced differently in different jurisdictions. Bottom right, those are extensions that we have that give us capability to operate, on issues across the entire range of all 50 US states and actually all Canadian provinces as well. And then on the top, those are purely communications assets that occupy, that center box. So those communications assets can provide, again, corporate comms, investor comms, but also, you know, like, the one at the top seven letter can be purely political policy comms related to supporting a client's initiative and shaping public opinion, and moving constituencies to support issues.

6:10 Go ahead. Again, I mentioned earlier our revenue retention rates, being at around 85% group wide. Again, you could see in this revenue build chart over the years how, again, we don't typically go backwards. Even in years where we're not terribly acquisitive,

6:24 once we get to a certain level, we tend to stay there. Our clients stay with us. So, again, in years where, again, we won't necessarily buy a lot of companies, you can see that we don't go backwards and we don't lose ground. So, again, highly predictable, highly sticky revenue stream that, again, allows us for good planning and good execution for our growth. Go ahead, Thomas. You're muted. Thank you. They're warning about background noise. Thank you, Stuart. And hello, everyone. Here's where we sort of the rubber hits the road. Who do we do this for? These are corporates that you all know. This is, of course, just a small segment of our nearly 1,300 clients. Particularly here on the right side, you'll notice that we cover the waterfront of both sectors and the policy and communications interests of it. Dominant dominant, sectors are obviously things like tech, energy, pharma, health care, but we really represent all the needs of individual clients. And many of these corporates that you can imagine in this box are those that exist in many policy areas. We may be registered as representing Uber in a variety of private spaces and a variety of geographies as the footprint continues to grow. At current, we represent more than half of one half of the Fortune one hundred as just a quality of client that you that you know globally.

7:48 Next slide.

7:52 Here, we really speak a lot about the the client, the stickiness of these clients, and it's unlike we all collectively work at WPP in the past, and it's, ad agencies and others which are facing more and more procurement pressures, pricing pressures, and sort of project related, scopes. Once we get in the door, we tend to stay in the door because we're handling the issues that are both near and dear on both a risk and an opportunity pursuit. So you see the gradual increase of clients to now the total. You'll also see the revenue concentration of these clients coming continuously down, and that's not that the scope is decreasing. It's just the portfolio ends up growing. So to have a top 10, clients group wide represent such a low percentage of the revenue as you see. This is this is about sort of long standing sticky relationships with the c suite. We rarely face a procurement pressure. This will evolve. As we mentioned, this kind of capabilities evolve, but what we look for in both m and a and our continued organic growth drivers is that which is near and dear to the c suite of the of the corporate and trade association or institution that we work and never more so has that client connectivity vis a vis government expertise globally been been been important.

9:11 Here, you see a client spending analysis, and this sort of goes hand in hand with the lack of client concentration. But as the portfolio has grown, the toolbox of services that we provide and the referral incentives and cross sell efforts that we put in place to familiarize our operators with the availability of things in both different geographies and different capabilities, we traditionally, from IPO onward, had measured client revenue in excess of $100,000. We've moved that up to $250,000 this year just to show in somewhat parallel lines where that wallet share is growing. And that so you continue to see double digit growth in that level of client engagement with our expertise. The bulk of these these clients at the higher end, those that represent, the top 10, say, are also engaged with multiple brands in the portfolio and or multiple geographies.

10:03 Key numbers, though, takeaway, again, the emphasis on client retention, quality clients that come back for quality service, and that is in the eighties 80%, 80 to 85%. Revenues derived from retainer based relationships, which is a slight distinction, is in the nineties. And, again, that speaks at the aggregate level. So we have lobbying lobbying retainers that are on the higher end of these ranges. When we get into public affairs and strategic communications, there is a reality of some of these projects that they are subject to just project timeline. But net net, across the portfolio of complementary services, we range in this high end margin and high end retained services. Next slide. Here's just a zoom back at the industry, which we'll have a couple of slides on, and this is familiar that those of you who have seen our, our show before.

10:56 We we talk about the total addressable market. This is a legacy slide, and this is sort of looking backwards at 24 results. And this speaks to the global nature of the work that we do. You see the the the the segments there of revenue, both public affairs, international lobbying, or lobbying under whatever term one jurisdiction may want to use, and The US sort of state and federal measures, all growing as you see here on the right, particularly at the federal and state, though with different different dynamics at play. For example, in the last ten years, the state market from a US perspective has grown more than the federal market. That's not just by happenstance. That's a result of gridlock in Washington and the fact that if you are advancing or objecting to a a certain policy, you

11:43 go to New York State, California, Texas, Florida, etcetera, and you can literally move on the chessboard of federalism where the policy discussion and actual implementation goes. That could circle back and affect Washington legislation, but it's still in different reporting environment and a different legislative environment. What is not in this total addressable market as we speak to the broader advancement into strategic communications is another addressable market that is nearly double what this all is. And it's sometimes hard to differentiate what is marketing communications from that, which is more and more strategic communications. That said, as we look towards both clients, what they actually spend and what various surveys of CCOs, chief executives, board directors talk about as their things that keep them up at night, It's things that are near and dear to the upper the the license to operate and growths growth prospects of of their business, and that's very much the sweet spot of what our services are intended to offer.

12:41 Next slide. Here's a sort of double click at that as it relates to how these things work together, and it's a it's a it's a bit of vernacular. But let me try to try to just be be a little more clear on it. Across the top, you'll see clear, clear identification of critical stakeholders for one's business, be that from trade journalists to investors to policymakers. All have sort of different channels to reach when you get get into policymakers and regulatory authorities, different levels of transparency going into those interactions. On the on the left side, rolling top to bottom is sort of the strategic intent of the communications. So versus many of our peers, which we'll talk about, we started with the lobbying. We saw the the the need to both professionalize, consolidate, and make a more bipartisan solution, from a very fragmented federal lobbying space. The natural adjacency from from that was moving into state markets, which has the same dynamic of lobbying plus then public affairs. We move then into the red box of public affairs, and it speaks to all the communications, research, and media that goes into what I call the surround sound around the policy debate.

13:52 Important, as Stuart mentioned, we don't do campaign and election work. That is we're not buying ads for Donald Trump and Kamala Harris. We're not doing the sort of field work that goes into getting out the vote. What we do is hold the hands of corporates, trade associations, and institutions that that await the outcomes of these and then help manage their relationships with government and government authorities

14:16 as as change takes place in Washington, Sacramento, Albany, London, Brussels, etcetera. When we get into strategic communications, that is, again, very adjacent Because right now, what we're seeing is a lot of noise from the White House and other regulatory authorities and not a whole lot of policy yet. That doesn't mean CEOs don't need the advice that goes into what do do you engage, do you participate, what kind of coalitions, what kind of response to budget battles, tax battles, etcetera. The strategic communications world is very much of similar margin and keeps a both retained highly, highly specialized kind of service that is different from, if we were to continue this box these boxes, the even next bigger one would be marketing communications.

15:06 That goes into brand building via paid advertising, other things pushing product to individuals. We deliberately don't do that. We saw the opportunity years ago to say high end, high margin, high touch, starting with lobbying and growing from there. And now we've put more and more points on the board by way of adding those capacities and introducing them to our clients.

15:28 Here, just one more on the competitive set. We'll start with our our our initial moat, if you will. Coming out of acquisitions and past roll up efforts, Stuart and I both had sold businesses to WPP in the past, what we saw was the opportunity within the federal lobbying space to try consolidation effort, which we've we've we've we've been quite successful at bringing together three of the top 20. And when I say three of the top 20, there are more than 2,200 registered firms. Therefore, tens of thousands of registered individuals that every month, every quarter get reported on on who they work for, who they meet with, what fees they are paid with, and various levels of detailed scrutiny into the engagements. That is true also in states like California, New York, Florida, this level of transparency.

16:17 More and more so, it's happening across Europe too. We've all we've long acknowledged that The

16:22 UK is a slight laggard when it comes to transparency and it when it comes to how government and corporates can work together with Sunlight, you know, that that allow, operators and professionals and expertise to manage those public private partnerships, so to speak. As we look at that note, what we're moving more towards when we speak of strategic communications are perhaps more well known names to to to to this group as they are to some of our clients. The FGS Globals of the world, the Edelman's, a publicly traded FTI, the APCOs Brunswick, etcetera, etcetera. These are all places that, in our view, over time, may have sort of over indexed towards creative and advertising like services for growth and are now in recent, call it, five years, recalibrating and regaining, their efforts towards advisory services, high stakes communications, crisis management, transaction comms, litigation comms, all the things that are decidedly not marketing oriented, but in fact retain but in fact has a higher price point, a higher margin, and

17:25 a higher talent profile than that which may be commonly associated with advertising. They're moving towards our direction actively both in geographic sense, Sacramento, Washington DC, etcetera, as we're moving more into their c suite relationships to leverage our talent across the network.

17:45 Here, as Stuart mentioned, these are these are, numbers as of calendar year, approaching 400 employees. That will quickly shoot up to 450 as we bring onboard formally, April 1 and onwards, the team from Trail Runner. As we've said, they also have outposts across the world from The Middle East, London, China, and here more and more markets in the, what we call, heartland of The United States, those places outside of Washington, New York, and Los Angeles. The flyover states, those of us from those states speak to, are actually growing a lot a lot faster, from a market perspective, and corporates are relocating to places like Nashville, Dallas, etcetera, etcetera. We have said also in Stewart's origin versus the private equity that has pursued some of the near peers that were on the previous slide. We believed in our public instrument because it has a both level of talent retention and a differentiated from an acquirer perspective.

18:41 How do you keep these specialty assets whole and build for, transitions in ownership, leadership, and sort of a graduation? So what we've done is bring in through the equity instruments. Now roughly a quarter of our staff are actually holding stock units subject to dividends, all of the sort of efforts that vernacular of of common, employer experience and compensation even while maintaining brands, which is a unique thing to us from a from a consolidation perspective. We believe in the brands, the legacies of the brands, the geographies of those brands. Yet we have a very active cross sell and talent retention model vis a vis the ownership. Over to you, Raul. I'll take it over from here. Hello, everybody. My name is Raul Smiths, and I would like to take you through some of the financial sections here.

19:37 I will only go over the main conclusions and not dive deep dive into each of the tables. So let me just give you a couple of highlights. First of all, this was our third year post IPO. We're very happy with how we ended the year, especially in the context that this was his pre election year. So as you've already seen, our revenue reached a $150,000,000, was up 11% with 3% rounded organically, and the remainder coming from the two acquisitions that we did in '24 and one in '23. EBITDA was up 30, was 36,000,000, up three percent. Now that 3% is less than what one would expect with revenues going up 11%, but that lower number very much, you know, relates to the fact that we had an increase in our one off m and a related cost. Every year, we have m and a related cost, but this year, it was a bit, more exacerbated, as well as the startup of our, you know, incubated, company called Cochorlent.

20:40 Now the m and a costs were so high because we we did our first international acquisition, used more advisers than what we're used to, plus we set up the infrastructure that, frankly, is also gonna serve us in the long run. Now without those that increase in the one off costs, our profit would have been up 12%, and that's very much in line with, you know, revenue increase of 11. So margin ended up at 24.2, very close to our target range of 25 to 30%. And with the pro form a adjustment that I just referenced for the one off cost, we would have actually been within the target range at 26.2%. Now net income was up 5%. I'm just going here, to the right top now.

21:28 And that's actually a nice growth, against this context, especially given the fact that we're paying more interest because we have more debt on our balance sheet. But that was more than offset by also having some lower taxes, which has to do with the way here in The US, we can amortize goodwill on the acquisitions that we've made. Then going to the left bottom, free cash flow was 22,000,000. It's a great conversion from our net income. It was up 4%, right in line with profit growth. EPS, both at the basic and fully diluted level, ended somewhat flattish. It's not what we're used to presenting or want to present, but this year's flatness in this area was really anticipated already, and it's due to, on the one hand, that muted profit growth that I just talked about because of these extra one off costs.

22:25 And on the other hand, we had a faster normal increase in our number of shares in relation to what we call the Alpine reinvestment program. That took place at the end of twenty three, but really, you know, weighted through in the average weighted shares, in '24. These both have a one off character. So, again, had it not been for increase in one off cost, we would have been increasing our EPS at 8%. Now dividends. In January, we did announce that, going forward, we're going to reduce our dividends by 50%. And, just as a reminder, especially for those who are new to us, we cut this dividend for very positive reasons. We're generating a lot of cash. In the past, we returned more than 60% of that directly to the shareholders, but we see so many significant investment opportunities.

23:18 And in order to be able to fund these, the board decided it was better to retain more cash in the company and deploy on these, yeah, investment opportunities. So what does it mean for '24? For '24, that means we will pay 9.4¢ per share. That is a transition year because, you know, the interim was paid at the old level, and now the final payment will be paid at the new level. Once we're in a new steady state, we're thinking over '25, you know, we will be at about, you know, 7¢ per share or a little bit up from that, effectively having halved our dividend from where we came from. And that also means that, as next year, our payout ratio is gonna be more in the 30% area.

24:04 Also, next year, we'll be returning then to split between interim and final of one third interim, two third final that we were used to. Okay. And then finalizing this chart, cash situation. So at the end of the year, we had a net debt of 17.5, which we consider so prudent. Effectively, that's half times our EBITDA. Now the gross debt was 32,000,000, but that was offset by cash on the balance sheet. Even the 32,000,000 gross debt was still below one turn of our EBITDA. And therefore and and by the way, we didn't have the acquisitions that we did in '24 fully loaded into that EBITDA number yet.

24:52 So we think we still have room to go on the the debt level, without, creating a dangerous situation. Now, let me take you through a few of the next charts with the relatively high speeds. The revenue picture you already saw was commented on by Stuart. And the one area that I would like to just do a slightly deeper dive in is on the top row of numbers. That's the organic growth each year. We've always said our, we continue to say our, medium term outlook is, organic growth between 510%, and that's our sweet spot. Some years were lower, some years were higher. And you see that in '23 and '24, organic growth was somewhat lower, two to two and a half percent.

25:42 And we wanna deep dive a little further into that. And for that, I need this graph because when you look at the organic growth here by segments, you see here are three segments. The first one is government relations. That's our largest segment, and that increased over both these years nicely at plus 4% each year. And then on the very right side, you see DS, that's diversified services. That's actually growing off the charts, grew 23% here in '24. But it's a segment and in the middle, public affairs, that was down four to 5% in both years, and that was really depressing our average. But for understanding the go forward picture, it's also important to look at the the bottom half of this graph where I split it down by half year.

26:34 And here, one sees that the negativity in public affairs was really focused on the second half of twenty three and the first half of twenty four. And, what drove that? A mix of economic concerns, let's say, primarily in '23, and then, pre election, you know, stagnation in '24. But it's traditional pre election stagnation, something that we had anticipated. But then once the elections came in near sight and we were beyond the elections in The US, then public affairs took off again and and really restarted its growth. And that's also why we're optimistic about '25. Because after elections, once the cards have been dealt, a lot of policy messaging needs to be done.

27:25 In this chart, it just gives you a flavor of the absolute size of each of these three segments. GR is still our biggest segment and very profitable. And you'll see that also on the reported basis that we saw increases in all three segments. Now just a reminder, the left two segments, government relations and diversified services, are both fully based on retainers and subscriptions. It's fairly reliable income stream. Public affairs is part also retainer, but also part project. That's why we see most of the variations already in that segment. Now going into profits. This is a picture that we talked about at the top page. You know, we again expanded our profit further in '24, and that sort of steady lineup is really starting to become a pretty magnificent picture.

28:18 Now as I explained, you know, in the beginning, the profit in 2024 could have been 3,000,000 higher were it not for those incremental one off costs we incurred. And that's what's depicted by that light blue bar of $39,000,000. Now with respect to the next, three charts, I won't, go into these tables, but I'll leave them for your own perusal, and we'll happily take questions, during the q and a round. I'm now gonna give it back to Thomas who'll talk about our growth strategy go forward. And just note this deck will be published on our website or is currently available to get into the details. I'm excited about the questions that are coming in, so I'm gonna go added added speed given the timeline.

29:06 Embedded growth opportunities here. You could just say Donald Trump in disarray. Right? But in fact, there's more secular things that go sector based things that go hand in hand on a global perspective. Global trade and tariffs are headlines every single day. Energy transition, we could call it by a different name, but it's still the the need for energy enhancing grids, return of nuclear fueling AI, etcetera, etcetera, is a major driver across state, federal, and international lines. The regulation and use of AI, that conversation is just beginning. California introduced, for example, I believe the number, if I recall, was 51, legislative, measures in the last cycle alone on the would be regulation of AI. Obviously, Brussels moved perhaps too quickly on it and everywhere in between. Washington is yet to fully grapple with it, in in in all.

30:06 What we see here is then continuing let let's stick to the the issues at hand. Let's make sure that we field the best policy expertise and communication expertise that's available in the market. Let's retain the high end of these services. We're not going just for revenue growth. We're also going for convertible profit. That means staying high up the stack of the procurement level, high in the c suite from an advisory perspective, and more and more first call to make in times of of crisis. Next slide. Here, you've seen before, but we've added a couple of points. We continue to look at a quite robust m and a pipeline and a competitive market to be the acquirer of choice. Since we've been doing this on the public markets, PE has swung into this space in a major way, playing paying premiums. You see the first bullet point of the bottom half of the chart. KKR, bought out of our legacy WPP alums, an entity called FGS at an 18 times.

31:06 That's a high watermark. FTI, very much in this in this part trading at 22 times on the public markets. We see everyone from Texas specific group on to to to to, INC. On on the acquiring and having platforms at play here in this one hundred to five hundred million dollar range. CBC Capital to Mayo, Erie Street within. The list goes on and on as to where we are playing. We're differentiated. We spoke to the reasons why we chose the public market. It's not for everyone. But when we're looking for assets that both have their fit in our portfolio of services, the right margin profile, and most of all, the talent and client connectivity that is differentiated, that's where our that's where our conversation really hits a chord with sellers looking for a platform for enhanced growth. So we look against geography and specialization.

32:00 With Trail Runner, we hit both of these. We were growing again to that matrix of where the addressable TAM is, c suite advisory in the stratcoms world. We also added boots on the ground in London. We picked up people in in China and some great folks in Abu Dhabi and Dubai as well as deeper coverage here within The United States. We continue to have active conversations in Brussels, in India, across The Middle East, and certainly in key states that we've identified that are necessary beyond just what our current coverage with multistate is from a US perspective. One more thing that I've added in earlier calls today is eighteen months ago, shortly after our acquisition of multistate, which is again the sort of talent network and sort of compliance research operation that services 50 states, They moved into Canada. Never as an American do you say, yeah. Canada is the the next port of call. Right? It's just sort of there, stable, and everyone's happy with Canada. Read the headlines today. Them working across all provinces in in Canada is super interesting from a US, Canada trade, political, border control, etcetera, etcetera. So it's an investment that is paying off to be ahead of where our competition is, which is, again, sort of pretty fragmented, pretty, small and midsize operators that offer expertise, or those global giants that that offer, yes, coverage, but not necessarily the depth of policy expertise and client service that we do. So, again, the matrix of m and a is very much in play. We're thrilled

33:31 with the Trail Runner acquisition. It's it's firing on all cylinders despite not even officially closing until April 1. Folks are down in Dallas today on the sports effort that they have underway. There's research being deployed today in California to a group of clients about the sort of new vernacular of resistance within California. I could go on and on and on. The integration of these assets were designed to work together despite maintaining the cultures and client conflicts of the of the individual brands, and that has borne out in the way our clients are perceiving us more and more in the realm of those bigger players, and yet we're still driving on the specialization and high margin services. So onward we go with a very active m and a agenda into 25 and beyond.

34:20 We've stated for the first time at our Capital Markets Day in January, which was a good fun because we also had some of our operators there. You could watch it on our website or other channels. The sort of near term ambition, call it 2030, call it, you know, 2029, where we can build, as you've seen here, from 77,000,000 trailing upon our IPO to today's 150 or shy of to the run rate of a 180 that we have upon bringing on bringing on Trail Runner onwards to a $500,000,000, which we see is very much in sight given the movements of the market from an m and a perspective and the rebounds that we're seeing from an organic growth perspective. Clients need our experts, plain and true. We're not just seeking growth for growth's sake. This is about deepening connectivity within the clients, differentiating ourselves from a competitive perspective, and maintaining the talent maintaining the talent. It's all we need to do is keep fueling our talent and making making sure that we're fielding the best, most connected experts globally for the biggest the biggest challenges our clients face.

35:28 So just quickly, in conclusion, Thomas mentioned a lot of this. So, again, I'll gloss on it. We love to get to questions. It's the most fun time of these things. But we are really, really in a in a in a hot market, And I it doesn't really show any signs of slowing down. While you hear about, you know, the kinda depressed nature against Thomas mentioned the people that that do commercial and consumer marketing, etcetera, you know, we really concentrate again on high end advisory services, And both the government affairs side of that and the corporate communication slash, you know, reputational management side of it, investor comms, all continue to work together, and companies continue to invest in those services simply because the issues that they face with both of those on both those accesses are existential.

36:14 Again, lots of activity in the space. Collins mentioned KKR, most recently, ONCURA, another consultancy backed by a PE firm out of Chicago, Madison Dearborn, actually acquired an EU based lobbying firm called Red Flag. So, again, as Thomas said, a lot of activity moving our direction just like we're moving in the other direction. And these, top level, corporate consultancies, you know, continue to grow pace in a great market. Lastly, so I just again, to sum up, you know you know, the takeaways from today. Again, what I just mentioned and Thomas mentioned, you know, we have a strong and steady growing market. You know, we've now cracked open another, potentially large very large table of strategic comms. So, you know, we're really excited about the potential again for growth and also consolidation in some of these areas.

37:04 We're not again, our core business of government affairs is not politically dependent. We are you know, we may all have party affiliations at one level or one time or another in our lives, but we are thoroughly bipartisan. You know, our dependency is really about activity of policy making around the globe. And, that is what, you know, we tend to look to in terms of driving our business. And right now, because we're in the first year of US presidential administration, we just had a number of elections in Europe. We've had state level elections in California and other places. You know, we're looking at agenda driven actions, and it doesn't really matter to us whether those are bigger government, smaller government makes no difference. Our clients must adjust and and must deal with that or recognize opportunity within those environments.

37:50 Again, low client dependency and high percentage of retained work that renews year over year, 85%, as we mentioned multiple times, which again brings about, you know, a great level of stability in terms of our revenue and profit streams. Again, our employee turnover is relatively low for our industry. We think, again, that's part of the success that we've enjoyed as a result of our equity retention plans and our ability to create employee ownership. And, you know, our m and a similarly is designed to reduce personnel risk, to reduce the key person risk of somebody or a group of people leaving after a sale or earn out. And we work very hard to make sure that we ensure that continuity of the asset, some of the lessons learned from when we were all with WPP years ago about maybe, in some cases, how not to do it.

38:43 And then finally, you know, we have no our CapEx to speak of is is very low, you know, few office chairs, some desks, and some computers. So, again, you know, our business is people primarily, and that's our largest call center, but it's also the most important investment we we make because, again, you know, we are being paid for our skill sets relating to what we bring to our clients in terms of our abilities to think, deliver, and to, navigate them through through difficult or, again, opportunistic situations. So with that Questions. We will jump into questions, and I tell you what I'm gonna do. I've got, I'm gonna answer kind of a general market condition question for the government affairs side. And then, there's a couple of, I think, important ones for role to take on the financial side, and then I'm gonna let Thomas talk a little bit about m and a as well. So, and you could feed more in here as we go.

39:39 I got a question from Jonathan and also, one from Tom that are similar about just business development early in the year, you know, with respecting boundaries of what I say. I will say this. So as Jonathan noted, the number of new registrations for our companies, you know, that are in the federal lobbying register, you know, we don't have any type of scheme or whatever to other than complying with the rules to register with the next days with clients and also to terminate, you know, clients appropriately when they do a trip. So there's no magic formula that we're doing all this at once or anything. So our our three federal firms, you know, operate on their own schedules within the rules. But, yes, we have had a number of new registrants. We've I think the phone has been ringing, but that, again, does typically happen in the first year of a presidential administration.

40:30 There's a lot of activity right now. The the tax the expiring Trump tax cuts need to be extended, presumably, so they're gonna act on that. Obviously, you have the tariff situation, which is driving a lot of people into Washington because it's very industry specific challenges they may face either on the consumption or production side. And so, simultaneously, we're seeing a lot of incoming in in DC. But, again, I would say, you know, we see a lot of inbound in California. Obviously, things changed out there. You know, the fires created some new challenges on top of other things. So, you know, we feel really good. I mean, this is the first year post election, and and, typically, these would tend to be good gears for us for for organic growth. So we're very optimistic two months in. Role, we got a question from Marvin down here.

41:18 Actually, no. Sorry. Yes. Marvin wanted us to allude to, to address both share based comp issue and those numbers and what that really means on an ongoing basis. And also, also, if you could, address, the post combination charges on the acquisitions. Yes. We'd be pleased to. Okay. For that, I'll bring up this chart, which is our p and l. And, you know, the top part is the part that, frankly, we as a management look most at because that represents all our cash streams, obviously, accounted for under US GAAP rules. But and frankly, it's not only us who look at it this way. Also, the IRS, the tax man, charges us on the cash EBT that you see there as well.

42:10 Now the parts at the bottom that, make up the difference between our underlying net income and our reported net income, they're all, noncash items. And the two biggest ones, and those are the ones highlighted by Marvin, are share based comp and Polish combination comp. The first one, share based comp, really, directly relates to our IPO. Because at the time of the IPO in 2021, all the then sort of employee shareholders signed up to a five year investing, schedule. And their equity was, seen as compensation under US GAAP rules. And, that's why we're writing down over five years the entire value equity value that was in the hands of employees at that time. So that means every year, see this 30,000,000 approximately come through until the end of twenty six when we will be completely done with that. But it's a noncash charge, and there's no bearing whatsoever on our business or on our cash flows.

43:21 The other one, that Marvin mentioned is, post combination compensation. That, is a way no. That's a consequence of how we structure our m and a transactions. You think about it, a typical purchase in m and a, basically is being put a 100% on the balance sheet and then perhaps some goodwill, gets written down over time or gets impaired. Not in our case, and we make quite a part of the purchase consideration subject to continued employment, and that particular condition makes it actually under accounting rules compensation. And that's showing up in our p and l on that line. So post combination compensation is really the part of the purchase price that is subject to further deployments of the beneficiaries.

44:20 Thomas, do you wanna address Jonathan's question on, the position and the lobbying rankings in DC Sure. Revenue and also our thoughts about expanding further into that area? Sure. We, it it isn't the first priority because the the work that we've done to date and the expansion opportunities both in geographies and capabilities outside of Washington. That said, the margin profile of lobbying, entities, particularly in the federal level, are such that it's hard to not look where there is opportunity. As you can imagine or know personally, it's quite a small world in Washington. So there is a bit of who do we wanna be in business with and what what kind of deal can we do. A lot of these are sole proprietors.

45:08 A lot of these, on this list are basically an office that then has a bunch of independent operators that operate within a brand, but isn't really acquirer, role, and whole. The other dynamic versus, you know, call if you look at this list ten years ago, global law firm has moved into this space. It is, yes, lobbying as disclosed under and defined by a federal rule, though it tends to be work that is done in conjunction with global litigation. So while we look at that from a talent acquisition perspective, it's not acquirable as an asset purchase or otherwise. We do look and have had active conversations with others that are sort of either on or on the many, many below this list, either to fill sort of capability needs or to round out, the the you know, adding a fourth a fourth brand to our three pillars in this space.

46:00 It, again, though, has been sometimes a harder deal to get done or just doesn't align with. It's also just a generational reality of you getting people within their growth curve. Are you able to sort of bring in the other ownership the way we've the way we've described of having owners, yes, be part of subject to earn out, but then really building in the longevity of these businesses. And the other big part is we have bipartisan bona fides. We're not coming and going with the coming administration or leaving administration. We're not all damn, all Republican. We cover the waterfront of issues. So as we look at this list and particularly the longer list that you can see on open secrets, political and otherwise, there's different stories to each each entity that has a degree of scale, and then the conversations obviously take take the route of what we know about them. But great question. We love the margin profile. We believe in the moat that it provides and the client connectivity.

46:53 It's just finding the right the right ingredient parts to add to our existing investments. 100%. So we've got a couple of questions here about the possibility of The US listing. It's something that we did mention in January at our investor day in at the LSE. I would say this. It's it's actively under exploration. We are certainly exploring it to the option and and doing it with in concert with legal counsel and other advisers. I think for us right now, the most important imperative of a US listing, if we do it, is to really decomplicate our trading. Right now, we have American investors who would have no problem buying our shares, but, you know, run into certain roadblocks, you know, simply because of US regulations and and difficulties difficulty in clearing transatlantic trades because of those.

47:48 We have employees who would like to either buy or sometimes sell shares. They also run into certain encumbrances. And so, you know, priority number one is official trade. And so we're continuing to look at that. You know, someone mentioned the cost factor. You know, depending on how we do it, we can take that cost against the balance sheet. I'll let Roel speak that a little more in a second. But I think, you know, if if we get to the point where we can put do a US listing, certainly, I think it's gonna help liquidity tremendously, just again because of the efficiency of trading and then, again, the greater access that that US investors will will have to the shares. So, Raul, you wanna address cost? Yeah. No. I would like to do that.

48:33 And there's the the one off costs of making a move, and then there's recurring costs. The recurring costs, to give you an idea, right now, we're spending on public company costs about 1,500,000, and that would roughly double going forward. So that's $1,500,000 extra. Now one of my colleagues has this team, like, every penny is a prisoner, so we're we're pretty frugal in many things we do. But and therefore, we don't take that decision likely to add 1,500,000 to our cost base. But, okay, for the reasons that Stuart just mentioned, we would consider that. Now then there's also the one off costs, and and we're still investigating how much that would be. And, of course, it also depends on the way we would be listing. If it were a IPO with a raise, we could potentially offset the cost against the raise proceeds.

49:32 And if you don't do a raise, then we go through p and l. Yep. I mean, I would say our commitment to the public markets is such that, you know, we have designed our talent model around, you know, equity ownership and and the ability through LTIP and other incentives for future employees and present employees who were key to, you know, again, you know, gather and maintain and build equity and build equity value. So, again, you know, the public instrument was perfect for us in terms of our overall theories, again, on talent retention, a client basic service business. So we remain committed to that path. Again, now increasing liquidity for shareholders who are on this call, for shareholders who are presenting, All of these are are are critical items to where we think we can get our share value up to the appropriate level with our publicly traded and private peers.

50:27 I have one last question. I'll take it quickly about security clearances. I know there's been a lot of talk in DC about the administration canceling clearances. We don't have to my knowledge, I don't think we have a security clearance in the entire organization. Even our ex members don't carry them anymore. All of our work exists in, you know, what we call the wider nonclassified world, even our defense space work. So not a concern to us. So in conclusion, if there are no other questions, I would just say thank you all again who've returned to be here today. Thank you for anyone new. We're always accessible to answer questions. We have a lot of materials online, including this updated deck that that that you'll have access to as well. And we're always happy, you know, for inquiries and and to discuss more about the presence and the present and the future of the company. So we appreciate your time today and and appreciate your interest. Thank you. Thanks, everyone.

51:23 Perfect. Stuart, Thomas Roth, I may just jump back in there, and thank you very much indeed 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 the management team of the PUBLIC POLICY HOLDING COMPANY, we would like to thank you for attending today's presentation. That now concludes today's session. So good evening to you all.