Public Policy Holding (LSE:PPHC) — Interim Results Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the PUBLIC POLICY HOLDING COMPANY Interim 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 those responses where it is appropriate to do so.

0:31 Before we begin, as usual, we would just like to submit the following poll. And if you would 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, Jake. Thank you for having us again. For those of you who are joining us again, who've done these before, we welcome you back for new new folks. Obviously, we hope you can take this opportunity to learn with us. If you notice the opening slide there before, Earl moved it forward, we've changed our cover. We now obviously have a lovely picture of Westminster there. And, because owing to our acquisition of Pagefield in London, we now truly have and are building out our international network, which, again, many of you will will recognize as as one of our paramount objectives in terms of, you know, continuing our build out of PPHC.

1:24 Quickly, again, by way of introduction, I'm Stuart Hall, CEO, one of the founding partners of PPHC. And as always with me, I have my incredibly capable colleagues, Raul Smits, our CFO, and Thomas Gensimer, our chief strategy officer, and they'll be presenting with me today. Good. So just quickly jump right into the highlights, from h one. Our total revenue was 71,000,000. That was up, 8%. Our EBITDA margin was at 24 and a half percent. Our interim dividend has been declared by our board as of Tuesday of this week. Ex dividend date will be at the end of next week, and that has been increased over last year's h one dividend payment, by 2.2. You know, we feel our overall financial performance has been extremely strong, in spite of some market headwinds, owing to some economic conditions and, obviously, just the status of, us being in a, quote, presidential election year.

2:21 But, otherwise, we really had a strong performance, and we're really thrilled about it. We along with that, two things that we accomplished during the period, key acquisitions, again, owing to our build out plan that we always will talk about further in the presentation and how these fit together. We added to our presence in California with the purchase of Lucas Public Affairs, a specialty communications firm operating in the public affairs space in Sacramento. We are probably the largest single entity now operating exclusively in the lobbying and public affairs space in Sacramento after that acquisition, to go alongside of our other firm out there. And then, we also completed, again, as I just noted, our first international acquisition by purchasing Pagefield Communications in London. So we did both of those, at the end of the period, one in May and then one in June.

3:14 So we're just getting rolling with them, but so far, the early returns are very, very positive, again, from a synergy standpoint and a and a productivity standpoint. Again, you know, we, our client base continues to expand. We're over 1,200 clients. And, most importantly, you know, it's the blue chips clients again. You know, we're at about half of the Fortune 100 now that we represent, and our client concentration continues to decrease, which has always been, you know, a major feature of our company. It was a diversification of our client base and also, again, the low low concentration of key clients, in terms of providing stability to that. Finally, you know, at for the in The US with our very, very rigid and and regulated lobbying register at the federal level, especially, you know, there's a scorekeeping mechanism that you can see what people get paid.

4:10 For the sixteenth consecutive, quarter, we actually lead, all federal lobbying firms in terms of, our actual revenue intake, by clients. So, we maintain the number one ranking again, most recently, when the when the, half year rankings came out. And, again, we're very, very pleased with that, and we continue to have a strong strong base of federal lobbying in DC. Next slide. So, again, for some of you to reemphasize and for others of you to learn for the first time, you know, what is PPHC? Well, we are experts at navigating government risk and opportunity for our clients. PPHC has a broad group of bipartisan firms. That's very, very important to understand because as such, we are not identified with any party.

4:59 Therefore, election outcomes don't matter to us. People often ask, are you cyclical because of who's in power, who's not? We are not. We are really dependent on activity activity, whether it's regulatory, whether it's legislative in any political jurisdiction. It can be Sacramento, California, or it can be Washington DC, or it can be London. And, eventually, it will be Brussels. But activity is really what drives, drives our business, and it drives our business because governments are getting progressively larger. They're getting more expensive in terms of regulating areas of economy and social life. And because of that, our clients really do engage in a twenty four hour, seven day a week, three hundred and sixty five day a year, relationship with government. It is a thing that has to be spent on. It has to be maintained. It has to be paid attention to. Leading CEO identified risk factor is government regulation worldwide.

5:53 As such, we are just like legal accounting or other other entities that, you know, services that businesses have to consume. So we are really high level advisers really talking to the most important audience for for business success or or, frankly, failure. Finally, again, I mentioned earlier, our client base is pretty diverse. It's heavy on corporates, leading NGOs, and, some professionals and, business trade associations. Next slide. So, again, just to quickly, I've mentioned the growth of government is what is really the main tailwind that that drives our business opportunity. The complexity of the of the of the puzzle that our clients again face because no longer people ask, well, why do you just not do just lobbying? And that solves the problem. Well, we have we're heavy into communications. We're heavy in data. We're heavy into the ability to mobilize constituencies and shape public opinion Because, frankly, in a digitalized conversation world about public policy, you're not going to get a political actor to act. So, again, the diversity of our assets really reflects that and a desire to synthesize and provide some level of simplicity for our clients and and and coordination across multiple jurisdiction lines and capabilities.

7:06 Reflected again in these charts, what is our addressable

7:09 market? It's probably 17,000,000,000 in The US alone. We think internationally, it's at least 8,000,000,000 more. Again, those are little metrics are a little harder. Thomas will talk to you about the registry shortly. But, you know, The US is very, very, again, rigid on on disclosure. So we have a good market sizing handle on what's being spent here both in the communications and in the lobbying side. On the right hand, just a couple of quick charts to look at. US government spending top chart continues to grow dramatically year over year. It's increased six fold since the early nineteen nineties, and that's reflective of, you know, again, a similar trend, regulation of different areas of economy and growth of government bureaucracy. As such, you can see in the second chart, federal lobbying spend has grown almost commensurately, with that, you know, with that growth of the federal government. And then at the bottom, I think it it it really is instructive that, again, it shows how issues now move outside of the Washington Beltway, as we call it here, which is that, you know, policy is now being made in many places, and and being made simultaneously by people rather than simply say, I will go and look at the largest, you know, you know, possible place you can take over policy initiative, which is Washington DC. So we see progressively our clients are facing significant challenges in large and small state capitals in The United States. They're facing problems with international capitals, of course, too. But most importantly, the state spend, as you see in that

8:39 bottom chart, has continued to increase at a very, very rapid clip. So when you ever ask why did you acquire a second firm in Sacramento, that chart is really illustrative of that, that client need. Thomas? Great. We love our brands. We have lee we have 10 leading brands in their respective geographies or issue specializations. I think Stuart noted early on, they are all bipartisan brands, and I'll add to that while everyone's consumed in the election news now, we don't do campaigns and election work. We hold the hand the stable hands of Fortune 500 brands as they navigate these times, but activity is good for us. So come November, just as in your elections in July across The UK, change is good, new regulatory authorities, new policy mandates.

9:30 Here on this graphic on the top, you see where our brands sort of occupy the the the sort of concentric circles of companion services. We are building a strategic portfolio that complements each other. We're not looking for duplicative assets, though we do have to manage conflicts in the portfolio. So key particularly on the federal lobbying space, those brands that are on the far left side here, CRS and Alpine, but also key as we as we move into state and state markets and even internationally. So you see here with PPHC at the middle, we're building and coordinating the growth of the variety of assets. Many still have founders in place, but as Rule will get into with our acquisition model, we've established a sort of long term succession planning with each of these brands. So there is a PPHC presence, in the operations of all of these and more and more of a consumer or a customer mindset of PPHC. What can PPHC do for big corporate x y z? It's looking at at these sort of strategic portfolio.

10:30 The the numbers, we'll get into the updates, but we're roughly two thirds on the lobbying side. That is both state and federal and one third in in the public affairs. This is these are companion services, though. So it is dependent on the necessary disclosures in a certain geography, Washington DC or otherwise. And then we have a new newish. I guess this is the third quarter of reporting what we're calling diversified services. These are added services that help support the public affairs and policy communication needs of clients. So in this case, it is a policy tracking and monitoring as well as some compliance services that are incredibly sticky, meaning that they once you get in and help manage a client's a client's needs with compliance in state markets and increasingly compliance internationally.

11:17 We're there to provide that service to allow clients with one safe pair of hands. Next slide, please. We have 1,200 clients as we proudly emphasize, so don't let this dozen or so. Although we like to point out, these are brands that you all know know, love, respect, hate, whatever. These are all brands that operate in multiple geographies and certainly look at their policy risks and opportunities on a global global basis. Another key note about the portfolio is while it's growing, and more and more of these clients are held by more than one of our brands, our dependency on one client or even one sector is decreasing. We are down to 1.4% as the largest individual client across the group and sub 5% there as you see with the with the top five. That's a resiliency and a lack of sort of industry industry specialization and such. We cover the waterfront.

12:12 We're really when you think of a Fortune 500 need, they're operating both across many geographies and often in multiple sectors. Nice thing about our work, both the nature of our specific work and the industry when it comes to this government affairs work, is it's highly retained. We are reporting into board levels, chief communications officers, chief counsel, and into the office of CEO. And so, therefore, it is more akin to an accounting agency or a law firm by way of how these relationships weather the storm. We are not in a beauty contest with, with procurement, you know, going through 10 pitches. We tend to be quite resilient. You see on a dollar basis, this is client retention on a dollar basis, 85%. That's across the portfolio.

12:57 The lobbying assets that we have tend to score into the 90% on retaining. And then when you add public affairs, it's slightly less. But, again, we are sort of elevated because of the point of contact and the issues that we're managing on behalf of these multinationals. We focus a lot on this portfolio spend too. So clients that are spending more than a $100,000 with us, and then that which are that that are executing on multiple of our brands. You see here 468 clients, nearly a third, over a third actually, are are operating again over over that watermark. We'll update that on an annual basis. We're seeing strong growth as we introduce new capabilities and new geographies into the client mix. Here's our sector reporting. There's a lot of sectors on this, but this is also how we report to the federal government on the lobbying work that we do. So some could be consolidated or others were reporting the full gamut here.

13:53 Our driving sectors, despite sort of a key concentration risk, the driving sectors are that which are driving the global economy. So technology, financial services, health care, pharma, energy transition, transport are all really driving thriving practices for us. That said, you can see in all of the others, we really do

14:12 cover the the multitude of policy risks and opportunities that clients face. It is up to us to ensure that we are always on the leading edge of these of these offerings. So technology has been a driving force for a long time. Driving risk now is competitiveness and and AI regulation. So our shops in Sacramento as our shop in Brussels or rather our shop in London, soon to be hopefully hopefully our shop in Brussels. But that policy conversation is increasingly global. These geographies, London, Sacramento, etcetera, are years ahead of where Washington is, given the nature of the federal system on where that where is Meta spending their time and efforts? It's managing the risks and opportunities in California and Brussels, which will lead the sort of global conversation on what is a sort of new status quo by way of AI and other the issues they face. Same across energy transitions as a global phenomenon. There's state measures in this. There's federal funding in it.

15:10 All the mix of and the chessboard of opportunities that our clients face is what they look to us to manage. We are only as good of our employees. They leave our doors every day. They all come back the next day. So we enjoy high employee retention relative to our peers. And a lot of that we put in both our acquisition model. We maintain our brands and their individual cultures while giving them access to greater career opportunities and client exposures through the platform. So it is that delicate balance of of individual brands with their leaders and then the largesse of a bigger global platform. But we also have an equity ownership program that runs deep into the clientele. It is not just the founders of our original brands.

15:56 We're now more than 85 strong by way of original equity holders, and more than 75% of our stock is hold by or is held by our employees. We see that as key differentiator from some of our our peers and rivals, whether they be in private equity or other PUBCOs. This sort of deep, deeply held equity story is one that has both contributed to high high client retention and certainly high employee retention. Little bit of a deep dive into the federal space that Stuart previewed, the federal lobbying space. Here you see on the left side those quarterly reports. This is the annual for '23, but every every quarter, the likes of Bloomberg government, POLICCO, The Washington Post, etcetera, sort of ranks the disclosures that both companies and and clients put out.

16:46 We have successfully stayed at the top of this list, for sixteen quarters. That is our three federal anchored lobbying shops combined are the largest in town. It's important to note this is a top 20. There are more than 2,000 disclosed lobbying firms. So it's a highly fragmented industry. We are working on a consolidation of it, but also these top 20 are those that are bipartisan, stable, relatively oriented towards the corporate dollar versus a sort of political they they like like our three, largely bipartisan, it's representing sort of the a a multitude of policy issues and, obviously, in closely divided congressional halls now, it's important to have both your Republicans and and Democrat expertise working together.

17:34 As we move towards the right of this chart and the growth orientation of our business and the sector, the strategic comms world, I say in quotes, because we're all sort of playing in the strategic comms world. It is not PR. It is not consumer oriented, and it's certainly not advertising of the brand sense. It is a sort of c suite license to operate reputation management for global brands. And you'll recognize some of these names, whether it be the FGS Global, which has enjoyed a recent transaction out of KKR and our and our our former WPP folks, Edelman, Haneo, FTI, as another PUBLICCO. These are all driving a growth story around strategic comms. They are all aiming to have the government affairs access that we have. I think our our moat, dare I say, and certainly our defining force is this this this largess of of of government relations contracts and senior client relationships that we have.

18:30 We're more and more bidding for both project scope, client engagements, and talent with these other global brands. And so we're operating in very much the same swim lane as these Brunswick, FTIs, etcetera. We just have this strong federal DC and government access that differentiates us here in The US and more and more internationally.

18:55 Okay. I'll take a few slides from here. And let's first take a look at our long term picture that we're really very proud of. You know? In the left top, you'll see our year on year revenue growth. Every year, we've seen growth through a combination of mergers and acquisitions on one hand and organic growth on the other hand. You know, the CAGR between all these years from up till '23 was 20% organic growth. Right? Really strong. And what's also noticeable here is that we've really grown throughout political cycles, economic cycles. So really, a picture of very steady, you know, incline.

19:41 End of twenty one, we went public in London to really help us further accelerate our growth. Now then at the bottom picture, you'll see our operating profits. This has been growing more or less in tandem with the revenue.

19:56 Also shows that we're typically aimed for profitability within a range of 25 to 30% margin. You'll see that only in '22, we had a little bit of a flatter profit year, but that was when we incorporated our public company costs for the first year. So it's against this long term picture that we would like to present our, first half results for '24. I'm only gonna talk right now about this overview picture, but, the presentation that you have contains a few slides behind this so that's more, more, detail. So overall, you know, we're very pleased that, to say that the company has been able to deliver what we said we were gonna deliver.

20:41 As Stuart already noted that in, the first half year, we did two important acquisitions, Lucas Public Affairs in California and Pagefield in The UK. That really represented our first expansion out, outside The US. But alongside, our underlying results really reflect continuation of our steady growth, pattern with almost all of our key metrics showing some good positive momentum. So if I walk through the boxes here on the screen, revenues were up 8%,

21:11 with organic growth, up 1.2%. Now there's two sides to that coin. On the one hand, you have government relations, which was up 4%, diversified services up 32%. And not only are these really quite robust numbers, especially in an election year, but they also represent really sustainable growth because all of this revenue in government relations and the first one services is contracted in ongoing retailers and subscriptions. But then on the other side of the coin, we have public affairs this year really being soft at negative 16% growth, really experiencing the impact of, you know, what I call the silence before the election storm. Now it's also, possible because this is mostly project work, which goes up and down, fairly quickly.

22:04 So we really hope and expect that, following the election, clients will open their purses again, and we'll see growth in that segment as well. Now bottom line, EBITDA was up 3%. Our margins were at 24 and a half. That's a really strong margin, and especially given that it included 1,800,000 in one off costs on the one hand from, you know, the m and a advisory that we incurred as part of our accretive acquisitions in q two. And on the other hand, we, started a venture called Concordance. And in this first year, we're incurring start up losses there, but we expect, of course, that Concordance gonna start to deliver going forward.

22:49 So without those two factors, actually, our margin would have even been 27%. Now net underlying net income was up 4%. I'll go a bit faster now. Free cash flow was up triple digits, two twenty eight, but I should say that's really from a lower base because our company traditionally generates most of the cash in the second half year as opposed to the first half year. EPS is down 1% basic, 2% fully diluted. We consider this relatively muted EPS performance this year a blip because it's really driven by onetime factors that impact the growth in our number of shares. But overall, we believe we're very confident about the future performance of our company.

23:37 And reflecting that, the board has also approved a 2% increase in our interim dividends, which we intend to pay out in October with the, you know, ex dividend date being end of next week. Our net cash is really a net debt position. It's 28,000,000. This was measured, of course, at June 30, which is immediately after the two acquisitions and at the end of our sort of least cash generative season. But because, you know, we are highly cash generative, especially in h two, we expect that number to come down already and be substantially lower by the end of this year. Now looking ahead, in terms of the the future, you know, second half year, we expect to end up really pretty much in line with the analyst expectations.

24:33 Mhmm. And for the years thereafter, we are reiterating our medium term guidance, which is, continue organic growth, top line growth of five to 10%, and deliver margins in the band between 2530%. Okay. As I mentioned, I'm gonna skip through a couple of denser charts that you can for your perusal. I do want to really spend a little bit of time on this acquisition chart because one question that we have been getting from investors like yourselves is, okay, how do you structure your acquisitions, and how do you sort of mitigate risk and cash flow on this front? Now, the three of us here on the phone, Thomas, Stuart, and I, we've all witnessed firsthand in each in a different capacity how, the traditional holding companies like WPP, INC. PUBLIC, and Omnicom used to structure their transactions.

25:35 And the big problem with their transaction method was that they're they were doing everything in earn outs, which is quite, you know, normal for professional services, but they were all in cash.

25:47 No reasons for sellers to stay on after they finalized that earn out, and also very little attention to next generation management. So we all three learn from this, and we do a few things very differently. Yes. We're still doing earn outs, and we structure them very carefully to make sure that earn out payments, I e, the payment that we make after the initial completion payments, the earn out payments will only pay out if the company really delivers growth following the moments that have joined the group. So if there's no profit growth, there's no earn out payments. But what's really different from the traditional holding companies are the following three things.

26:32 We always pay in a mix of cash and shares so that everyone who has been selling the company to us ends up being a significant shareholder in PPHC, keeping them connected also beyond the earnout. Second, and this is a bit tough, but on sellers, but we do make, parts of the purchase price subject to continued deployment of those sellers. That does create some complexities in our accounting, but we feel it's absolutely the right thing to do. And then finally, we also require that the founder sellers share their earn out potential with a broader group, also with the next generation managers in the firm so that they are, exactly aligned with the interest of the founder sellers and also of the other shareholders at PPHC.

27:26 Because this way, by sharing also that broader group of managers will become shareholders in PPHC, which we believe is the best guarantee for a long term connection. Now not everybody is gonna go along with our demands on this front, and that's okay. It's really like a self selecting offer mechanism that we're offering. And it primarily attracts, of course, those sellers who still see a lot of growth in their business and want to remain active. It's not so suitable for people who are looking for a retirement check. And then finally, yeah, at the right bottom, also by popular demand, representing our anticipated earn out payments in the future in the simple table, just the nominal numbers.

28:14 So you'll see there that we expect to pay out earn outs of $43,000,000 over the course until '29, of which about 25,000,000 in cash and the remainder in shares. Now, again, these payments will only materialize if indeed the acquired companies deliver a certain level of profit growth. Okay. I hope you find that, helpful. Now does this structure work? Well, we're starting to build some statistical analysis on that. But, of course, it's still relatively early. But we can see, from KP and Multistate, which were the acquisitions that we did in '22 and '23, that in any case, they've grown significantly from the moment that we've acquired them.

29:06 We see actually good growth in the top line, plus 13% of the piece, plus 38 for multistate. And that's driven also by, you know, referred business coming to them from other parts of our group. And then the bottom line growth has been really extraordinary, and that's, you know, driven again by the better top line plus, of course, we also take care of some of the back office activities that prior to acquisition these companies had to take care of themselves. So overall, we believe this is the beginning of very good performance by our acquired companies, which will really also, you know, drive our results for the long term.

29:55 Okay. Thomas. Thanks, Rahul. I see some questions coming in. We'll get to them. I think we're gonna get some of them here, but keep keep chiming in, and I'll be mindful of time because I wanna keep questions first and foremost. Our growth strategies operate against three three sort of general levers. Go to market, as we as we build a complimentary group of esteemed advisers, more and more opportunities arise. As I've mentioned earlier, corporate's looking for global solutions, and that is that's creating the best talent and the best environment for that talent to grow. So we've mentioned only once Will mentioned Concordant, which is a brand that we have organically created, invested in this year, just launched last November. And while we encourage the cross sell and the referrals, the it Concordant is allowing us to go to market with this sort of portfolio approach.

30:48 And the talent that we've acquired there and then the relationships and the practice developments that's going in around themes like AI and energy transformation allows us to pull all of these brands

30:58 and individuals together. So that's evolving our go to market to make sure that we are ahead of the client need and representing sort of the best of by a connectedness across the group, increasingly global. Expansion opportunities, we continue to see again across the sectors that we operate in, ensuring that we are the first call that clients are getting when they're either facing an existential risk or more and more so with the growth of government, the opportunities that are that are that are afforded. We see that through both individual talents, individual talent hires, so what we call aqua hires, small practices that may come into to one of our existing brands and outright through m and a. We have early on, if we would have, you know, three years ago when we were first meeting with some of the public market investors, we were relatively unknown. Clients only knew us by our individual brands, the sort of operating company brands, as we built up esteem and recognition as the PPHC sort of family, so to speak. M and A advisers have started coming to us, so it's not just us sourcing our own leads, though it's it's definitely a mix.

32:04 We avoid processes because it tends to be people looking for the biggest checks so that they can retire. But we do sort of find really interesting through our closest clients as well as just our ear to the ground, how we found Pagefield, how we're sourcing things across Europe, how we continue to look at state capitals of note here. We are increasing our sort of reputation amongst both entrepreneurs and sort of brokers and advisers that represent us. So we have a very, very healthy m and a pipeline now. We're

32:35 again looking for strategic assets. We are not looking to double up on certain capabilities, but in continue to grow the portfolio. So whether that's in research and data, whether that's in new geographies here in The States or otherwise, we're we're a we're a small but mighty team and an increasingly busy pipeline here on the m and a front. Next slide. Here, just to recap, we have been looking across two axes, geography and then issue specialization, and it's very much a mix of those. We've mentioned our our our second acquisition in Sacramento. That was hitting on both of these points. Geographically, Sacramento is still a driving force of regulation on a global stage. We needed more public affairs, assets there. We had KP, which was our first acquisition post IPO.

33:25 They were swimming in similar territory, but but the Lucas Public Affairs was very additive to that, though important to maintain its brand for a mix of reasons. They've come on the platform in May just as the California legislative cycle was wrapping up, but they are going and California never wraps up. We've sort we've we've learned. You know, just to give a note of that, 51 AI bills were introduced in the last week of the California legislative session. So that's just against one sector, but you can see why we're adding boots on the ground there because it is of top mind to many of our corporate clients. Geographically, we continue to look to bolster our efforts in London with Pagefield. There's more sort of strategic assets that can be purchased there to deepen, both client connectivity and expertise, and we're spending our time looking broader into the continent. We're in Brussels next week. We've been, all across the map. And, again, we're getting calls in as well as finding necessary client solutions there. We're leading our clients' needs. I mean, we know where these policy conversations are happening, and we wanna be the first call that our clients make when they're addressing their global needs.

34:33 Next slide. Here's the we get a lot of conversation on this, and it will take us over time so we can welcome further conversation in in next sessions. But we continue to track the global market, though it's defined slightly differently than what we have in our Washington sort of disclosed and nondisclosed sort of government and policy communications access. But you see here just across the EU how we're measuring market sizing, and this is, again, both in what we consider to be disclosed on the public record as well as the communications apparatus that clients are investing in to support their policy needs. Along the right side, there is more and more of an orientation towards transparency, towards the American like disclosure systems. We're seeing it in Brussels individual member states. Notably, London is further behind in that conversation, though perhaps with the new labor government, it will catch up. We've seen in Germany, across France, even in India, there was recent moves towards.

35:33 So as we look for global growth, we're looking we see we see this increased transparency demands as our advantage because it's benefiting our scale and expertise in operating in The Washington and The US versions of a of a of a quite restrained and quite disclosed system that our clients find uncomfortable. So we wanna be their partner for this kind of high stakes communication. Thanks, Thomas. So quickly, just in conclusion, and we do wanna get to your questions. I mentioned tailwinds earlier. There are two two graphics here on right side. One is a recent survey of US CEOs and and and global CEOs. Mhmm. And what what the number one factor for risk in inhibiting business growth and planning is regulatory uncertainty.

36:20 That means, again, that they, again, need our services more than ever and are identifying it as their number one key risk factor, again, the stability and growth in their business. And then that little chart, a little little piece on the right side from POLICY HOLDING Which shows this is a global phenomenon. Policy communications, are continuing to grow. And as a result, the valuations privately and, in many cases, publicly for consult ancies that operate in strategic advisory space are continuing to expand. And that's evidenced by KKR bought the remaining stake in, FGS Global from WPP, just a month ago at a monstrous multiple, which you can see on this chart. And, we think, again, that just reflects the overall, you know, view of the stability and the permanency of the market and how much, again, corporate spend is going to continue to go in to strategic corporate advisory.

37:15 I just tell you, I won't do the numbers for you, but you can take our metrics and plug them in against that. You're all pretty good at math and, draw your own conclusions. Next slide. Next slide. And then just finally, you know, the things I always like to emphasize when we wrap up is we have high client retention. We have stable and sticky relationships with our clients. They're excellent excellent reputational clients, people that, you know, rely on us, for their services year after year and year over year and and day in and day out. And we have, you know, again, a great large growing industry base that that is gonna continue. Our, you know, finances, you know, we continue to perform. We continue to hit the numbers that we say we're gonna hit, and approve now for nearly three years, since becoming public that, you know, you can execute in this space and do it in a very profitable fashion.

38:10 Again, our dividend payments are are you know, we we are very committed to our dividend profile, as such, again, as the board increased our dividend again, you know, last, last, Tuesday. And, you know, we will continue to maintain a progressive dividend policy.

38:26 And then finally, as I just said, we think there's an infinite amount of growth opportunity. Thomas was just mentioning, you know, the number of targets that are out there in a very fragmented industry. The key for us is, again, to put them together a very thoughtful and complementary way, which we think we are doing and and the evidence internal that with the internal synergies and the growth of the client spend within PPHC as a whole within our constituent companies growing, we think is strong evidence of that. So I appreciate that. With that, we're gonna appreciate your time and your attention, and we're gonna take your questions now. Perfect. Stuart, Royal, Thomas, if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review the questions that were submitted already, I would just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard.

39:25 Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Great. Alright. So I've got a question here, which is, you know, probably always first and foremost people's minds I mentioned earlier. And I'll answer this, then I'm a hand the next couple over to Raul and and Thomas. But, I'm asked, what impact will elections have on your business? The short answer is whatever happens, no matter who wins, where, and what jurisdiction or what body, they will have a positive impact on our business. Again, because we're bipartisan, because we have a broad, you know, range of services, and we have a broad range of issue expertise, at the activity that will be set off when agendas begin to get acted on post election, always drives our business. So elections are a very, very positive, outcome for us no matter, again, which stripes you're wearing politically.

40:28 Next question. Following the Page Field deal, is there anything on the radar in Europe at all, mister Ginsomer? We're there next week. There there's lots. I mean, it's both helped increase our reputation as an acquiring entity. London has a very active public affairs world. Like I said, it's lacking in its disclosures on lobbying, but we we know where the high stakes poll policy communications are. A labor a rise of labor government for the first time in fourteen years is also forcing forcing a bit of change. We're seeing an uptick in the Pagefield work already as well as people looking to us for global scope. So Pagefield has already been invited in to a handful of US clients to to be additive forces. So, again, to Stuart's point, change is good across Europe.

41:17 The the business in Brussels, you know, from our competitors is known to be a little light because we're still waiting for some clarity on some of the commission appointments coming in the in the future weeks. Then again, it will continue to be a response to that those sort of changes across Europe, and we see it as a really interesting time to continue our growth through m and a into the space. So busy pipeline. We welcome your introductions in the small world that is, but we're we're we're quite busy on the m and a front. I had a question for Rob here that I'm gonna hand over to Raul. Can you provide more insight into the company's debt strategy and how comfortable you are with the current level of leverage? Yes. Very comfortable with the current level of leverage.

42:03 As I mentioned, we're currently at 28. By the end of this year, that will be down significantly. I think by the end of the year, we will be down effectively at sort of around a half times EBITDA. And with our bank, Bank of America, we have very good relationship with, we have basically an understanding that we could go up to about one and a half times EBITDA. That's also probably the max we'd file we'd feel comfortable with. But that implies that we still have quite a bit of headroom in terms of borrowing extra money for further m and a. We don't need to borrow everything because as I mentioned, we're we're cash generative and parts of our cash will be sent back to the shareholders as dividends, but there's also a part that we retain.

42:52 But and that we will use for m and a. But, okay, if we need to borrow on top of that, there is room. And as I said, probably up to about one and a half times EBITDA is where we would go. And turn quickly to another financial question while we've got Roel on stage here. What was the organic EBITDA growth in h one if you exclude the one off expenses like m and a? I don't have the exact number with me right now, but I do know approximately. So against the organic revenue growth of plus 1%, I believe our EBITDA growth is approximately plus five, plus six. Thank you. Alright.

43:38 So, question here, and, I don't know I don't know if we'll gang up on this together, but I'll start with Thomas. How do you how do you want how will you integrate and leverage the Pagefield and LPA acquisitions to cross sell services or your client base internationally? What further impact do you expect from these acquisitions in the coming quarters? So both have hit very good business development cycles. Pagefield in response to government change, and as as I mentioned, sort of Lucas just running from one cycle to another in California. We're small enough now that integrating these these it it's a human based business. So we've already sort of made great strides at building the relationship basis of these and explaining sort of where the specializations occur. We've also done a handful of sessions with clients to introduce new capabilities, and that just gets our clients thinking of their known trusted partner in Washington having added capabilities.

44:33 So whether that picks up a research piece for their London needs or even just an introduction, some of it depends on how a client budget is structured, whether they have sort of domestic policy communications as from international or whether there's a blend. More and more, there's a blend when it when when we speak to tech and health care clients, for example. And so it's an introductory thing both on the internals and externals. What we have always done since day one of the group is ref is is is bonus referrals. So if you are conflicted out or it's outside of your geography and you're a employee at Crossroads, you will get a referral bonus just for giving that business away. What we're getting better at and continuing to resource with concordant additional staff at the at HQ and otherwise is really going to market together. How do you how do you get new pitches to come from the start? Not just adding an added thing to an existing retainer, but something that is going to market to take away some some some work from one of our competitors because we have added capabilities, added issue expertise, and added dots on the map. It is an organic process of introducing our loyal clients to new capabilities, but I'm happy to say with a reasonably light effort and, again, having entrepreneurs that have sold into us with the intention of growing on our platform, it's very helpful to to to pave that road. One thing that Rule mentioned, but we didn't highlight in the in the slide about it, each of these new businesses, and particularly Lucas

46:04 and Pagefield, have come in and expanded their ownership essentially. So we have 10 employees in a 30 headed Pagefield that are incented to grow. They are part of the conversation on how Pagefield becomes the sort of hub of PPHC International. And so all of them are personally motivated and professionally motivated to sort of drive clients towards expanded growth. The same is in the Sacramento shop. We came we had two founding entities, two founding sellers. They've identified four of their sort of next tier leadership and all are incentivized to grow with PPHC both as shareholders, and as owner operators of their firm. So all those sort of pieces work together. Great.

46:50 I'll I'll try to take an initial stab at this this next question, from Marvin. How do you explain the valuation discrepancy between the multiples that KKR paid for FGS and where your shares are currently trading? I think, Marvin, there's a there's a multiplicity of answers for that. I mean, the first, I think in some sense, it's it's how well known are we. I think one of the things that really has been changing in recent months, and some of this is due to our account, you know, both publicly facing and and private efforts to to build bridges to to significant players in the industry, both potential m and a targets, but also people that are operating on on the investment banking side, on the sell side, representing people that you know, there's there's a limited number of players in the high end strategic advisory space. So I think as we've gotten more known in there, at least in in in private opportunities as far as being able to have opportunities brought us to acquire things that are that are nice complements to, again, our mix, You know, that's growing. Awareness of us is growing. I think from a public market standpoint, there's certainly a prejudice toward toward large cap stocks.

47:58 FTI, which has a very large strategic consultancy practice alongside of their other other core businesses. You know, last I checked is rate trading at 23 times PE. So it's I don't think it's a public versus private valuation thing. I think it's just really a matter of of people continuing to understand our positioning in the space and what position we hold. You know, I I I really admire what they've put together over at FGS, frankly. But, you know, if you look at where they stand vis a vis our size, you know, they're only about two and a half times larger than we are in terms of revenue. So I think we don't have a very far to go to really be one of the the basically, of the largest strategic communications players in the world. And we already are the largest government affairs vertical, which is, again, just a specialty line of strategic advisory. So, I think those multiples will come with time. And, you know, we put a lot of effort into it. We'll be over there in London next week, again, working public face investors.

48:55 And, you know, I think, again, this this will start, to pay off at some point. I think then, you know, the the kind of a follow-up question, which, again, goes to public markets. There's a question on liquidity. Given that 75% of your shares are owned by employees, how are you gonna address your liquidity issues? Yeah. I mean, it's it's it's right up there. It's right out front. I mean, you know, everyone can look and see what our trading volume is every day. It's gotten bigger, but it's not by any stretch close to big enough. And that is a matter of getting shares more shares in private hands, both retail and institutional. We you know, our employees coming up this year on, the third anniversary of the IPO will have approximately 60% of their shares vested. Some of those shares are starting to be sold off through the exchange.

49:44 I think, you know, we will see more and more of those shares start to to leak out in one fashion or another, both again into institutional and retail hands, and that that will begin to change the mix. Certainly, we could issue shares right now to, you know, help finance cash portions of acquisitions. The problem is is when we go in when we're trading at a seven times multiple and we go in at a seven times entry multiple on closing, really is no use to you all as shareholders who have to hold our shares or us as shareholders to obviously, you know, take the dilution, to do those placements. So, you know, we we wanna make sure that, you know, when we do that, it's gonna be, you know, accretive to shareholder value. So that is another method as as the share price rises, though, we will be able to eventually be a be an issuance metric where, you know, the numbers make sense from, again, an EPS standpoint, and that'll get more shares out there as well.

50:40 Stuart, Raul, Thomas, if I may just jump back in there. Thank you very much indeed for being so generous for your time and addressing all of those questions that came in from investors this afternoon. 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 the company, If I could please just ask you for a few closing comments to wrap up with, that'd be great. I just say, Jake, again, we're we're in the third year since the IPO, but, you know, again, you know, his role had a chart earlier that really showed, you know, more like an eight year period, you know, that we've been we've been doing this. And, you know, we set out with a very clear and simple vision, which was we're operating in a space where, again, corporates, NGOs, and trades have to spend more and more money to manage issues that no longer live inside of one political ecosystem or or set of boundaries.

51:41 And they have to deploy more tools than ever. So we set out to have a diversity of assets, both, again, geographically and capability so that eventually we could build a platform to simplify and to bring to managing all of these pieces of the orchestra that you now have to do to manage the constant interface of government if you're of any size and economic impact. And in terms of execution, we're doing that. We're doing it on time, on plan, and, frankly, on budget. And, so we're really, really excited. Again, I can't say enough about our m and a pipeline, and also, again, you know, how we feel going into next year as far as, you know, the level of, again, activity that will drive our organic growth. So, the plan is continuing to come together, as we envisioned it, and we've got a great team. And, we're we're dang dang excited about the future. So thank you all.

52:34 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 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 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. Thank you.