Well, welcome everybody to our Six-Month Results C all, in January 2024. We plan to go through our slides and then take some questions in the usual manner, and so it's really great to have such a great turnout today. As we've done for many years, we have this slide called KPG in 10 seconds, and I think it nicely summarizes the progress of the business. Revenue continues to grow strongly, which is important, primarily with respect to the opportunities we can own. We can show people within our group, and so we focus strongly on growing that, that opportunity set. The EBITDA margin remains strong, and the underlying NPATA growth remains strong.
Our return on equity, I was recently asked why it's green, because it remains strongly above our benchmark of a reasonable return that we would expect on our equity, and that I trust you would as well. It'll go up and down from period to period, but at 35%, it represents a more than fair return on our equity as fellow shareholders. Our net debt to underlying EBITDA remains moderate. Our operating cash flow continues to be very strong and has grown substantially, and our cash conversion remains above a hundred percent. So our group return on invested capital is at 21.9%, when you take into consideration the expected full year contribution of acquisitions.
Given the level and consistency of acquisition activity in the business, the numbers are from time to time more difficult for people to understand than they might otherwise be if we're a steady state, non-moving thing. Very pleased with these numbers, but not complacent, and more than anything, it demonstrates that we can continue to operate our model in a successful manner, in this, our eighteenth year. One of the first things I would share with any shareholder of our business is that we have a business system that knows how to consistently double the business. We make that statement because we've done that five times in a row, and we expect that that can continue for a long time if we stick to our model.
We have a clear view of what the next five years might look like, that we share in this slide. We're very careful not to create unrealistic expectations for the business and our teams, and put pressure on ourselves and our team members that frankly would lead to behavior that's not in the long-term interest of all shareholders. But we do like our shareholders to have a clear view of what we see the future is. It's always been about building a business model that we think can be deployed on a consistent and scalable basis, and ultimately on a global basis.
But we're not anxious as to how fast that happens, although we think that we can continue to move at the sort of rate that we have in the past for a long time, and that's why I would draw your attention to the growing addressable market for our business model on a global basis. Now, I'll take many of these slides as either already known by our shareholders or read, and so I won't exhaustively run through them, but we believe that Kelly Partners Group Holdings is a leading platform for the business that we're in, which is helping our people, our clients, and our communities be better off through the provision of very high quality accounting tax services to private business owners.
We know that our model is different and practiced, that we have an excellent track record and discipline about what we're doing, that there's an annuity- style revenue mix, that we have this Partner-Owner-Driver model that we invented and have continued to look to improve over and over again through more than 50 transactions and used with more than 50 partners. We think there's a significant runway for continued growth in Australia, in both our core services and our complementary offerings, and we think that's true outside Australia as well. We also know that founder-led companies have proven to deliver clearer strategies with higher shareholder returns over time. We think that will be the case in our business here as well.
Revenue mix continues to look essentially the way it always has, and we think that we can continue to grow the business and that as we grow, the mix of revenues will be somewhat consistent. The performance slide is really to make the point that we're running a business system that we continue to try and make better. I don't wanna be as bold as to say perfect, but we really do try to improve in all areas of what we do, every day, and we have had that ethos now for a long time, and I think it's been clearly demonstrated. There is no intention to change the way we do business. So I think these performance indicators are likely to look very much like that for a very long time.
Now, we have our Partner-Owner-Driver Model that we invented, and that we've trademarked, and that we've tried to improve over time. It's worth understanding, but essentially, our business is about helping work with our partners in a structure that reflects the best of their human nature, aligns them to doing the best that they can, becoming the best people and professionals that they can, and reaping a compounded long-term, superior financial return, for their superior values behavior over a long period of time. It really is our insight into people that has allowed us to develop that model, and particularly the people that operate at a partner level within accounting firms. The succession opportunity remains enormous in Australia and growing, and it also is enormous in other English-speaking markets like the U.S., the U.K., and such markets.
We believe we're very advantaged because we have a clearer understanding of what we're doing with a very well-developed model, with a unique structure, in both the way that we structure the, the businesses and the way that we run our central progress team, and that comes together in our programmatic acquisition system, which is quite cool. Fundamentally, if you've got people doing what they love, serving a need in the world, where you can be paid and what they're good at, then, that alignment creates outsized opportunities for those people, for our clients, and to the communities within which we operate. The programmatic acquisition activity of the business, I think, is pretty well laid out here. We still have 49,504 contacts in our database that we're working through on a consistent basis.
There's 193 leads in there, and we are seeing increasing levels and cadence of contact and an increasing quality of that contact. We believe that our ability to execute those opportunities, if we manage the company well, will continue to accelerate. Capital allocation is something that we're very focused on and always have been. We think this slide clearly lays out that we treat the share- owners of the firm as partners of the business, and we don't go willy-nilly throwing extra shares into the issued capital, and we are trying to get a per share return that is appropriate for the risk and investment that people have made on a very long-term basis.
And as one of my great heroes, you know, had exhorted me and everyone who'd listened to him for years say, "You know, do what you can to not interrupt the compounding." And so while we're showing a, you know, a couple of years here, a couple of halves in a year, on this slide here, we go back further. But for me, it's been nearly 18 years focusing on compounding. 16, I think it was 14 when I took my first job, 18 when I first started working in a chartered accounting firm, so that's 31 years this year. And we're really focused on just not interrupting the compounding of our efforts. The return on invested capital remains strong, and there's no indication or reason that that can't stay at those levels for a long time.
It'll move around a little bit, but rest assured that I and our senior team are closely aligned and focused on these types of metrics and ideas. We've outlined where we've made additional investments to grow the business. We think we're getting a more than adequate return on the investing that we're doing, additional to the 9% that we receive to run the businesses, and that buying other companies, investing in existing operations just makes sense. We'll talk more about the dividend later in this presentation. We are investing in software engineering to build tools that sit between and run around the leading pieces of software we use in each functional area of the business.
For anyone that wants to understand our thinking in that area, I direct you to this Harvard Business Review case that makes clear that you can duplicate most things, but a combination of activities is very difficult to duplicate. Our focus with respect to software is building a set of activities that are very hard to duplicate, rather than trying to own all of the software of a particular vertical aspect of our business. Now, we've previously published that we've undertaken a strategic review with Jefferies. We've invested heavily in the process, principally legal fees to do a bunch of interesting and excellent work. I call out Jefferies for their support of the business and interest in what we're doing, and really excellent work.
Jefferies have not been paid a fee for the work they've done and are working on success. But the investments that we've made are largely around legals and other costs. Now, Mark Leonard's a great hero of Kelly Partners Group Holdings, and in 2012, I believe it was, he mentioned that, you know, in the beginning of time and Constellation, they had a dividend, but the dividend was a tactic rather than a strategic move. It's a nice way to phrase it for Kelly Partners, in that when we sought to take the company public, it was important that we demonstrated that the cash generative ability of the business, so that people could clearly understand how well operated the business was.
After, I think it was about two years, we started to pay monthly dividends to further underline the fact that this business should treat its external partners that own shares in the same way that it treats its internal equity partners, who are paid their share of profits on a monthly basis. Now, it was my hope that over time, we would build a quality shareholder base that were long-term focused, understood capital allocation better than most, and that they would support the idea that we would retain more of the cash generated by the business and invest it in further growing the business.
And as Tom Murphy would quote it here, says, "You know, as the goal is not to have the longest train, but to arrive at the station first, using the least fuel." We have built a business with, less than AUD 13 million, I think around AUD 13 million of external capital, in a pre-IPO and IPO round. And today, our shareholder base of quality shareholders have said over and over again, "Please stop paying a dividend." And so it will be our position going forward that we will stop paying dividends, and accelerate our investment in the business. In particular, in the U.S., there is an enormous amount of opportunity that we want to access for the group.
And we will need all the capital that we can pull together, to really make the impact that we can see that we can make, not just here in the U.S., but also in the U.K. So the dividend reinvestment, when we published this, slide that Jefferies helped prepare, as part of our strategic review, there was a lot of commentary about, you know, what might happen, what might not happen. Let me assure all shareholders that the initial two firms that were bought in the U.S., have been bought on excellent terms and fair terms, and that they will deliver the sort of returns that we have achieved in Australia, and that there are numerous opportunities to continue to deploy our model in a consistent way in the U.S. and also in the U.K.
In other regions of the U.S., outside Los Angeles, we have a lot of people approaching us to work with us, to use our business model in partnership with them to grow businesses with us, and that's particularly exciting. So whether people believe this number or, you know, this version of the numbers or a different version of the numbers, obviously everyone's free to model that themselves and come with a view that makes sense for them. We think we can continue to grow the business if we avoid the behavior of the Big Four firms. And I'll make not much more comment than that, other than to say, in the fantastic work of Bain & Company, they talk about t he book's called Founder's Mentality, which I would really recommend you read.
They talk about incumbents and insurgents, and how an insurgent can grow and become a scaled insurgent, which is really what we're trying to do. I believe that the Big Four firms and second-tier firms don't have anything particularly going for them in terms of driving future innovation and growth, and frankly, the values that have been demonstrated potentially strongly mitigate against that future for them. So long as we avoid these westward winds, as they're explained in that book, of not scaling the founder, not listening to the front line, erosion of accountability, and revenue growth path and talent, it's almost, you know, certainly a workbook as to what to do and what not to do to scale the business. I just direct people to read it and enjoy it.
It's a really great book, and it'll help you with your investing. In terms of offices, we've grown offices again by 2 offices, and there really is a tremendous amount of opportunity to keep doing that. And we feel very excited about that opportunity, to be fair. In terms of revenue and earnings per share, you can see the year-on-year growth. Complementary has been affected by our finance business not growing or acquiring, in fact, shrinking in line with the increasing interest rates and less refinancing, but the gentleman that leads that business is absolutely world-class, and it's no reflection on him, that's simply the market. But the accounting businesses continue to grow strongly, and, you know, we're pleased that we're making some ground.
In terms of organic growth, the real opportunity is more standardization of pricing, better engagement, a clearer driving of price increases wherever, and I expect that, you know, that will do okay. We're often asked for an owner earnings calculation, and you can see that we've got a 20% CAGR on our owner earnings since 2020. It's probably about the same since IPO in 2017, and I trust that that's acceptable to our fellow shareholders. EPS and owners' earnings continue to grow as we grow the business. Owner earnings always been, you know, right back to the Warren Buffett Way, book by Robert Hagstrom. I first read that as a very young man. Nothing's really changed in terms of that focus. Great Place to Work .
We recently were nominated again for that award. We won an award, I think, AFR, with respect to great place for women to work. We're trying to build a great place for all people to work, cross-culturally, notwithstanding their age or aspiration. And I really could not be more pleased with the people that we get to work with every day within our organization. They're an incredible group of people. Revenue breakout looks about the same as always. It's pretty exciting, and NPS is very strong. In terms of USA growth, we're really just seeking to take the business model that we are working to improve every day and have that deployed into other markets where appropriate. It is our overriding strategic ambition to be Australia's global accounting firm for private business owners.
Given that there's no competition from anyone else to do that, and that we are the first Australian firm, to our knowledge, to have a 51% or more owned firm in Los Angeles, we are well on our way to achieving this ambition in its most embryonic stage and building out the spine required to bulk up a global offering for Australians that are ambitious and wanna grow their private businesses. So I don't want to distract any shareholder with the size of those market opportunities. They're enormous markets. We only need to do great business for our clients in those markets in order to assure a long-term compounding and growing business for all shareholders. So while the numbers are huge, our occupation has never been around the size of the firm.
We believe that by running excellent businesses, they're very likely to grow, and that excellence leads to long-term sustainable growth. If you're trying to build a hundred-year business, or as Jim Collins says, "Be on a long march," being long-term people in a short-term world, then we don't need to be too concerned with the size of those markets, other than to underline that we are not going to run out of opportunity in Australia, the U.S., or the U.K., you know, at any time in the foreseeable future. I would also mention that I was approached recently by an excellent gentleman in Canada who wants to partner with us to build out our platform or our model as a platform in Canada. These are the sorts of opportunities that we're completely open to without getting distracted.
It's a Commonwealth English-speaking country with a very similar tax system to Australia and a cultural similarity that makes that easy. And so while you see those three big markets, which is where we will definitely stay very focused, it doesn't mean that we're closed-minded to our, ultimately, the opportunity. There are global accounting firms out there, which is a good news, and so there is no reason that there's not an Australian global accounting firm, and we intend to pursue that, that mission with some vigor. As anyone who knows our team would be, would be confident that that's the case. So the U.S. opportunity, it's 15x larger than the Australian opportunity. We're focused in Los Angeles. We're being approached by firms all over the country. There is no shortage of opportunity.
Our largest challenge at the moment is securing appropriate finance at the scale that we need to take advantage of the level of opportunity that we are being offered. So, the debt financing piece, to find a partner as good as Westpac have been in Australia, and to keep Westpac continuing to be an excellent partner there while we find a equivalent U.S. partner, is one of the primary focuses over the next six months for the firm. The U.S. demand drivers are the same. We'll leave that with you.
Our U.S. expansion continues with four offices, our group office in Malibu, a rep office in Balboa Island, near Newport, in the south of Los Angeles, and Woodland Hills and Burbank, two operating businesses that have joined the group, one on the first of December and one on the thirty-first of December. And so I think we can see here now, we're giving you a U.S. view of some statistics. To be at $6.5 million of revenue from a standing start is well beyond what we achieved in the first year of our Australian business. And so it's pretty obvious that the opportunity is real and that, you know, when we turned up here, we didn't have any friends.
We did facetious, but we do now have 2,000 client groups, and if you think of life as being about relationships, the opportunity to scale those relationships is exciting. We have around 20,000 client groups in Australia. We now have 2,000 in the US. Having spent a lot of time here now, I'm confident not only in the opportunity here, but also in the energy that that has added to our core activities as a group. Ultimately, our business is about the attraction, development, retention, and frankly, the full flourishing of the talent that joins our business. Talented people that join our business.
Anything we can do that animates that talent and engages that talent and makes them even more excited about our group and the opportunities that it offers is only going to be a very strong situation for the business going forward. Now, I'd like to take you briefly through the highlights of the financial highlights and hand over to Kenneth Ko, our Group CFO, to talk about the finances. Needless to say, I'd like to start by thanking Ken and his team for the phenomenal work they've done over January to get these results out so quickly. We believe that given we're an accounting firm, we should lead and demonstrate that we can produce a set of accounts that are clear and easy to understand, and transparent for our shareholders in a very timely manner. That allows us to not focus on what happened.
You know, really what we're presenting today is the accumulation of work that's been going on for years, and so it's very much yesterday's news and allows us, by getting these results out quickly, to get on with, you know, the forward move, moving of the business, that is the business. So, enough from me, and I'd love to hand over to Ken.
Thanks, Brett. Hi, everyone. Great to present the half year results to everyone. So we have-- in this highlight slide, we can see that there's a significant increase in our revenue for the half, 23.1%. And we've also, in this half, improved our margins, compared to the prior year, 29.3% underlying EBITDA margin. That includes the additional investments we've made in the parent entity. Excluding that, the underlying EBITDA margins for our operating business is at 30.6%, and we are pleased with that and hope to continue to improve that. Our underlying NPAT A for the parent, has increased 25% to AUD 4.4 million. And, I'll leave most of the other measures for you to review. Those are the key metrics. Revenue growth, we've covered.
We have obviously grown very strongly in the last two and a half years with the number of acquisitions we have completed. And again, this half, we've grown 20.4% of our revenue from acquisitions that we've made in FY 2023 and the first half. In terms of our income statement, I've covered the revenue and EBITDA margins in the previous highlight slide. A couple of things to note, because of the number of acquisitions we are doing in the last two and a half years, you'll see that the statutory numbers are impacted quite significantly because of the amortization of the customer relationship intangible assets that we recognize when we acquire firms.
So, normally, when we're presenting the underlying numbers, we add those back, as those are really non-cash items, but they depress the statutory bottom line significantly. Depreciation and amortization has increased because of the acquisitions and increase in the right-of-use assets from new leases and offices. In the last, you know, 18 months or so, we've added a lot of offices into the group because of the number of acquisitions we've completed. And the finance costs have also increased because of the increased debt that we've taken out to fund acquisitions, as well as the generally high interest rate due to the macroeconomic environment. Gross margins are, you know, again, quite very strong at 58%, and we've included the comparison here with other market participants.
This is a great slide I like to present to everyone because this gives a really good breakdown of the cohorts in the business and shows how the underlying EBITDA margins of our operating businesses are made up. So that 30.6% you can see there in the far right, being the underlying EBITDA margins for all our operating businesses. You can see our established businesses is doing 32.4%, our growth business is at 23%, and the acquired business is at 26.4%, and we look to improve that to 30% over time. This is a reconciliation from the statutory NPAT to the underlying NPATA attributable to our shareholders.
As Brett mentioned, we've spent costs, legal costs in relation to the strategic review, which are one-off and non-operating, and we've added that back. We've also spent legal costs in redocumentation of our Australian legal agreement. So we have now a set of U.S. compliant agreements that we've used for the two acquisitions that were completed in December and January, and, you know, those costs are, I think, very, very good investments in ensuring that we have the systems and the documents in place to do further partnerships in the USA. These are the key measures for the parent that we presented here.
19.9% ROIC, earnings per share increasing strongly, net debt to EBITDA 1.94x, and cash flow conversion of 94.8% for the parent. And again, we presented similarly for our operating businesses. Our lock-up days at 55 days. Last year was at 56 days. So, with the number of acquisitions, we're still, you know, controlling that very, very well, managing that very, very well, and we're very pleased about that. And we've covered off the revenue and the EBITDA margins there, and strong cash conversions. In terms of balance sheet, we still have a very strong balance sheet. Our gearing ratio has increased slightly to 1.94x, but this is impacted because of our acquisition.
So again, because of, you know, us having the full amount of debt as the denominator, but only half a year of EBITDA contributions from our in-year acquisitions. If we adjust for that, then the gearing is actually at 1.75x. Our group return on equity and parent return on equity still continues to be very strong. But again, a lot of these measures are impacted by the fact that, you know, of these part-year contributions from our in-year acquisitions. Debt and liquidity, we have added AUD 5.7 million in net debt across the group, mainly because of the in-year acquisitions that we've made, as well as the partner buy-ins. New partners. We've increased the partner counts to 91, and we've also spent money on refitting two of our offices in Southwest Sydney and Bendigo.
We still maintain a significant headroom of AUD 18.8 million in cash and undrawn facility limits. We are comfortable, again, with our gearing currently because it's well covered by our working capital, and we're repaying it over a 4-5-year cycle. Net debt per partner has stayed the same compared to the prior year, because, you know, we've increased our partners to 88, and another three new partners have joined us in January, taking it to 91. So the net debt per partner currently sits around AUD 500K. Our cash flow remains very strong. Cash conversion is very high at 101.4%.
Again, I think it's the number that I'd like to see from this table is the scheduled debt reductions and the additional debt repayments. You can see that in our first half, we've repaid AUD 5.4 million of debt across the group. So that's very pleasing to know. While we're increasing the debt from funding our acquisitions, we're also repaying it at a very high accelerated rate. In terms of dividends, Brett has covered that off in terms of you know, our perspective on what we should do with that in the future. The final dividend for FY 2023 of 1.65 cents per share, we have not declared and not paid that due to the funds that we completed.
Used to complete the Burbank acquisition that we completed just this month, just last month. And the rest of the slides I'll leave you with, in terms of just some reconciliations that helps you understand more on our numbers. I think that's it for me, Brett.
Thank you, Kenny. And again, thanks, Kenny, for sharing those numbers. Ken, if you could just share the slide 60, the five-year plan. We did publish a five-year plan some years back now, when we were finding that our shareholders didn't fully understand how we expected the business to progress. But be assured that we always have an internal plan and an external plan, and the internal plan is much stronger than what we will publish externally, because we don't need to create unnecessary pressure and expectations for ourselves.
You can see that the 2024 run rate exceeds the of AUD 100 million-AUD 110 million in revenue, exceeds very materially the five-year goal revenue that was published externally of AUD 80 million, and represents a step up in EBITDA, group EBITDA, and a likely strong step up in group NPATA. We will continue to invest strongly to grow the business into, you know, the fully flourishing version of itself that it can be. One of our great heroes, Bernard Arnault of the LVMH group, has consistently emphasized that out-investing your competition in the short term, if done in the right areas, is likely to build significant competitive advantage or moat over the medium and long term. And so we shouldn't be fearful to be long-term people, notwithstanding that increasingly the world's full of short-term people.
But the compounding benefit of investing in people, and business, and our clients and communities on a long-term basis are real, as I think you can see over time. When we started the business, we had AUD 200,000 of my own personal accounting fees, and we had AUD 160,000 of Scott Elwin's fees in the Central Coast, and we borrowed about AUD 160,000 from Westpac. In total, I think we borrowed another AUD 50,000 from one of our partner's fathers, and so we had AUD 210,000 of capital, AUD 360,000 of billings. On an annualized basis, that was not much. Call it AUD 6,000 a week.
We're now billing well in excess of AUD 2 million a week, and if you run the model well and continue to preserve the mission, values, vision of the business, a clear strategy with private business owners and our structure, then there is no reason that you can't take those numbers forward on a consistent basis for a very, very long time. I believe the oldest of the Big Four accounting firms is over 180 years old, and so in our 18th year, we shouldn't feel that there's not an enormous amount of opportunity, and so we should focus on the long term and make all of our decisions in that context.
And so for shareholders that are comfortable with that, then I believe that our stewardship of the company represents a tremendous opportunity to be involved in an organization that's making a real positive impact with our people, our clients, and communities. And that is very likely to give you a very substantial financial return over time. Now, that being said, we'll have to remain very vigilant, very diligent, and very careful, as we always have, to pay attention to the details to get things right. And with that, I'd like to thank everyone for attending today and take some questions. I can see the Q&A, which is great. "Could you please elaborate the power of network effects that we have, thanks to the growing number of our clients?
And is there a valuation, multiple, or cap maximum that you'll not go over in relation to a targeted acquisition?" So thank you for that question. In terms of network effects, fundamentally, every person you meet isn't a single person. They're 1,000 people, at least. And they're everything that they are, and everything that they will be, and everyone that they know, and everyone that they will know, and everything that they know, and everything that they will know, and all of those things that they can contribute. And so if we build a structure and an environment of trust and quality behavior, then it's likely that people will ask us to help them in more and more ways over time, and that there will be a growing multiple of the impacts of those people.
I frankly cannot believe that the people that I've met through the business and the things that they've been prepared to help us learn and do over time, and I know that we are quick studies, and that we work hard to take notice of what people share with us and to implement it in our business, to improve ourselves in the business. And so there is, without question, a conversion of our clients to other service lines, to other geographies, and to other technologies that we wouldn't have if we didn't have the expertise within the client base.
There's a very good example at the moment of a client that's been a long time, tremendous client, and when I explained to them what we're doing in the U.S., they just opened their Rolodex and said, "Go and meet these people. They're the right people in leadership in our business in the U.S., and you should meet them and grow that opportunity for your group." Now, that person's a s-- you know, a shareholder and has been since IPO, and they said, "And why wouldn't I do that, Brett?
That's who I am anyway, but it's also in my interest because I'm a shareholder, and I want to help you build the group." So I won't tell you today the details of that because it's a particularly exciting opportunity, but rest assured that the quality of our people and our clients, and the organizations that we're involved in, is the quality of the future of the organization.
Now, is there a valuation, multiple, or cap, or maximum that we won't go over?" I don't really want to share too much about the way we think about that, but you can see from our focus on return on invested capital, return on equity, generally, that we think from the perspective of your capital and ours together as partners, what's an appropriate return for the risk that we're taking on, the capital that we're investing? I think we've got a long track record of delivering returns that make sense, and, you know, it's unlikely that we will change that approach at any time in the future. There's more and more people trying to understand what we do and our particular insight about how to get that return, we're not particularly keen to share, at this point.
But don't worry, I'm substantially invested in the business, and I'm not interested in investing at below the returns that we're earning today, just to make, you know, our teams more busy with busywork. We're not focused on being large. We're focused on being excellent, and that goes, that applies absolutely to the financial returns that we would demand for contributing our expertise, time, and energy to anyone's business. So another question. "Terrific work for the entire team. I know that California is a highly regulated and taxing state with net migration out to lower taxing and regulating states like Texas and Florida.
Can you share a bit about why California is an attractive starting point in the USA, and your thoughts on acquiring firms in states like California, where people need more help navigating the tax rules versus states like Florida, which is likely to have a higher growth of wealthy individuals and business owners in the future? It's a great question. California is really in the middle of Sydney and London. It also happens to have the second or third largest population of Australians, and so there's a natural and obvious way to enter the market by working with Australians that are trying to come from Australia to the US and from the US to Australia. So there's a natural opportunity there.
It's also a very similar culture to Sydney and Melbourne and Australia generally, a very open culture, not a you know more meritocratic than aristocratic, and it's the fourth largest economy in the world. It's also a small business state, in that the big huge businesses that you know of, like Apple and Disney and others, are really you know get all the headlines, but it's an enormous state for small- and- medium-sized businesses. And while there is net migration out, and while you know both sides of politics in all developed markets have a tremendous love of taxing people on an increasing basis while I might think that that's not necessarily great for society, it certainly is great for business.
And so the more rules that politicians make, the more you'll need your accountant, and we aim to be the person that you most trust, to give you the expertise that you need to protect you and your family from, from that type of behavior. There will be migration to Florida and other, states like Texas. I wouldn't rule out being in those states in the future, but I want us to win first in Los Angeles, where there is an enormous Australian expatriate community as a good starting point. Next question: If the plan is to stop paying dividends in order to seize opportunities to grow the business, at what point in the future or what metrics does the, the company need to hit in order for dividends to be paid again?
Well, I have always been a fan of Mr. Buffett, and Mr. Buffett's never paid a dividend. And so I hope that we don't ever run out of opportunities that have us again think that it would be better to give that money back to shareholders rather than pursue the returns available to the company by further investing. And so, I have no plans to suddenly pay a dividend again, but hey, things can change. But, you know, we've made clear that we wanna be the Berkshire Hathaway of the accounting industry, a permanent capital partner with huge expertise in one domain. And, you know, we're trying to do everything we can to duplicate the structure, you know, and strategy of that group.
We wanna be the preferred buyer for a founder of an accounting firm that cares about the clients, the people in their community. It's gonna take a lot of capital over time to get anywhere near the opportunities that we think will be ultimately offered to us. Being very diligent and intelligent with our capital allocation gonna make sense. Can you talk more about M&A? How big is your team currently, and do you still personally look at each acquisition or have these duties? So the duties of acquisitions won't ever be delegated to any great degree. We have team members scouting deals. They send them to me. I'm involved in every acquisition on a very hands-on basis.
The most important thing is screening the people that enter our group, because you're unlikely to be able to convert the heart of a bad person that you let into the business. And so if I've made any missteps along the journey of building the business, it's where I have allowed into the business somebody that didn't share our values, and they cause a lot more grief, suffering, and time wasted to themselves and others in the business than they can ever possibly add in value. So, personally screening, not just on the M&A side, but interestingly, on the employment side, who comes into the business, remains my great love and sensible thing to spend time doing.
We have one person in the acquisition team, which is one more than we've had for the first seven, eight years of the business. To that shareholder, please read The Outsiders if you haven't yet, and you'll note that all of those eight CEOs were personally involved in all acquisitions and resisted the urge to have large teams that would create an institutional imperative to do deals that otherwise you wouldn't do. Thank you, Brett, Ken, and team, for another great half year. Can you please elaborate on what you mean by non-acquisition partnerships with firms in North America? Yeah, so very good question. We're working on a growth platform strategy, where we can partner with management teams to use our intellectual property to build a territory out for the group.
We'll have more to say about this imminently, but ultimately, if we can find CPAs who have the requisite leadership and management ability to lead our platform into a territory that's so, that is so substantial that it makes sense to do that, then we think we can accelerate the growth and share the economics of that growth with that person on a very long-term basis. So the first of those opportunities that we are working on at the moment is a territory larger than Australia by population and GDP.
We've simply said, "This is a CPA, mid-40s, very good experience and a good leader, I think an excellent person." We've said, "We will share the economics of the opportunity in that market, if you want to partner with us to build that business on a 20-year timeframe." And so that's very, very exciting, and we'll share a lot more detail about that. But it should mean that we can deploy, you know, multiple management teams in and partner with those management teams in substantial regions, both here in the U.S. and around the world. I have always said that we will help anyone who shares our values reach their potential in our industry. Emphasis on share our values. We are not geographically constrained. This is, you know, fundamentally an intellectual and behavioral pursuit.
And so we're getting approached by tremendous people, and we want to find ways to help them realize their potential within the context of our group. I hope that makes some sense. With the recent acquisitions in the U.S., can you share what the process was like from initiation to contact to time of closing? Also, length of time? It took 11 months to do the first one. How is it similar or different from M&A in Australia? The process was basically exactly the same. Took 11 months to do the first one and two months to do the second, which is really one month. It's always the first in a chain of dominoes is the hardest to move. The senior leader that agreed to join us is a wonderful guy, entrepreneurial, very bright, and a senior leader in this industry.
He's now been joined. It was a 51, 49. A young partner has bought 10% of that business, so it's now 51, 39 and 10, proving the attractiveness of the model to a young partner out of a, you know, a young, senior leader out of another large firm, who then came across and took equity or bought equity, which is terrific. And then the second deal is with a 42-year-old senior leader, who teaches at college. He's a wonderful guy, very bright, and could see that notwithstanding that he had, over the last 6 years, built a very good sized firm, that he thought the next 15 years it would be better to work in a strong team than try and do that himself. We have a real pipeline here. The process is not different.
The agreements were very complex and very different, and the licensing is different. We've spent a substantial amount of time and money working across three law firms and with some independent experts on the licensing side, to make sure that we completely translated our Australian agreements into U.S. agreements. It has been complex and has required a large investment of time and money, but we believe, as I undertook that process in the first instance in Australia, the amount of money I spent on that and the time I spent, was regarded as pretty crazy, but we think we've got a pretty good return on that over time. And here, it was similarly crazy, but we think we'll get, you know, we'll get a similar return over a long time.
Interestingly, it was AUD 18,000 in 2007 that we spent on the first deal. Spent about AUD 300 on this one, in terms of legals. Market's 15x the size, and that's 15x the number. So a little bit of symmetry there, just to amuse those who are following things closely. How did you get to the TSR on slide seven? Does this not exceed the returns on price and dividends paid? It does, and it was prepared by an external party, and we'll check it. We have had some commentary on that. What I would emphasize to that shareholder is, everyone's free to do those calculations, and we'll revise that and make sure that it's completely accurate.
I think the point of that slide is to say that the return's likely to be substantial. Yeah, I'll try to add no humor with that. Regarding the gearing ratio, we are comfortably below 2.5 net debt to EBITDA ceiling. Are there any plans to increase debt levels? We tend to buy into these businesses, and then we pay them off. Well, you know, we have been advised that we could carry a much higher level of gearing. Certainly, if we were to undertake a take private, we could have carried much higher levels of debt. We're just not really inclined to do that.
You know, Ken and I are focused over the next five years on this project with our board of what was called Project Fortress Balance Sheet, to become more and more Berkshire in our style over time, where we just have an impenetrable financial fortress. And so the move on the dividend is part of that. And I hope that makes sense. Can you please define what you mean by success under the remuneration structure with Jefferies? Well, something has to happen. Success would be, we have to do a transaction. But look, they've been great partners.
They've done tremendous work for us and, you know, what we are contemplating is, if we are, to raise debt or equity capital in order to undertake a significant, growth of the business, then we will, then we will work with Jefferies and, and remunerate them appropriately. They've been really excellent partners, and I wanna publicly acknowledge that thank them. You know, we're, we're still a small business, and so most investment banks, you know, treat us like a sort of correlation with leprosy. And, Jefferies haven't done that. They've been really tremendous, and I look forward to, you know, a multi-decade relationship with them. And that's Paul Griffiths, who's led that, at Jefferies for us. Thanks, Brenton.
Ken: "Can I know your views about leverage as a growth in the business funded by debt? Could it be seen as adding fragility to the business, whereas our aspiration is to make the business anti-fragile. How do you think about use of leverage, especially in this high interest rate environment?" Well, it's interesting. High interest rates are contextual. The first deal that I did within Kelly Partners Group Holdings was at 11.1% interest and was 100% geared. And so today, the interest rates are materially lower than that. Our margins are materially higher and proven to be higher than they were when I first embarked on that experiment of the first transaction. And so the business is much less fragile today than it ever has been.
But I agree with your commentary in that we want to structure with, in every way that we can, to make sure that the debt sits next to the responsibilities and those partners who have that responsibility with us, that there's no contagion risk, that the debt is managed intelligently and aggressively. We aggressively pay off our share of the debt and don't look to take any profits from anything we buy until the debt is, or buy into, until the debt is fully extinguished. So we have a particularly conservative view of that, and by ceasing the dividend, it'll give us even more ability to extinguish debt as we undertake transactions. But I agree with you. I share your sentiment. The Chief Executive Officer's first job is to be the Chief Risk Officer, and I take that incredibly seriously.
We will not do a deal where we can lose money, and we will not do a deal that could threaten the group. And so you will see continual small acquisitions, and if any acquisition is larger, it will be buttressed in every way it can be to reduce the risk to zero. Now, the impact of that is that our view of valuation is that we just stay within our tiny circle of competence and do things where we don't think there's any risk. And so we take a, you know, a view that what we're doing is very, very low risk. But if there's any suggestions how to make it more risk-free, then I'd be very interested in that.
There's a question: "Could you elaborate on Project Fortress balance sheet?" I can't share all the avenues we've considered, but you will note that we have sold two businesses in the last six months because they weren't meeting our return metrics, and I didn't think that they were world-class in their behavior and delivery, with no negative commentary on anyone, just not where we saw ourselves advantaged. And so we have sold our retail financial planning businesses so that we could reinvest that capital into the business. We have now ceased our dividend. We will do everything we can to strengthen the financial position every day of the business, take on little to no risk, and stick to our small circle of competence.
The ultimate way to build a you know an anti-fragile fortress business is to just do the things that you understand and get better at them over time. And so if you see us venturing off into strange activities that we don't understand, you know, be concerned. "Is the business adequately capitalized to be able to optimally participate in the opportunity set?" That's a very good question. I don't think that we are capitalized in the most advantageous way. So we're very adequately capitalized to continue to do what we've always done. I think there's an opportunity to improve our capital structure to access a much larger opportunity set over the next decade, and we continue to explore ways to do that.
We do consider the, you know, having a strong shareholder base and certainly a dominant shareholder is likely to hold the values and strategy and structure and form of the business for a long time, which we think magnifies financial returns. We think there's quite substantial data on that. But that also puts some limitations on our ability to raise capital and do some of the things we'd like to do. So we're, you know, you can see the investment we've made in our strategic review, and at this point, all I can say to, you know, my fellow shareholder is that a lot of that investment has been to make sure that we can really deliver the full value of the business to our shareholders over time.
Hey, Brett, could you give us an update on the UK expansion? We are working to find a suitable partner in the UK market, partner or partners, and we think there's a real opportunity there. It's a market that excites us and that we like and enjoy. And so I hope to have more information on that by the thirtieth of June. We have appointed our first team member in that market who started today. So I'd like to share that with you. That person was leading an international accounting network with 550 accounting firms globally, and their job is to build that network for our group of like-minded firms, 50 firms in 50 countries, that can partner with us, to help our clients over the next 50 years.
What's very exciting about that is we're really just focusing or following the David Ogilvy growth strategy playbook of, you know, he was strong in the U.K., strong in the U.S., listed in the U.S., and then built, you know, a 100-country presence plus. But he formed relationships in interesting ways, and over time, brought those groups into the business, and that's what we're aiming to do there. It's a very stealth, low capital, cost-required way of building relationships, hopefully ahead of the opportunity to acquire a 51% interest in those firms, which is pretty cool. One of the shareholders, "Brett, may I know your view on CEO compensation as the company continues to grow?
What do you think of the approach Mark Leonard and Warren Buffett have taken on this matter, taking a salary of $1 and $100,000 while retaining significant equity ownership of a growing company?" I think it's a very long conversation with my friend there, but I wouldn't encourage you, me, or anyone else to work at a number far below their market value. You'll note that I think my average remuneration since inception is about AUD 200,000 a year, and you can check those numbers, but I will too, but it's basically not anything. And all the shares I own in the company, with my wife, Rebecca, we gave ourselves. No shareholder has ever had to issue a share for awesomeness to their CEO.
I try to lead in the most appropriate way for a very long time, nearly two decades. And in a world where most people can't hold a consistent thought for two minutes, you should feel quite comfortable with that. I intend to grow the business with our team to a very significant level and follow in the footsteps of people like Warren and Mark. I would draw your attention to the fact that Warren is funding his lifestyle with capital outside the business. It was never part of Berkshire, and that's allowed him to behave in the way that he has, and I intend to follow that path over the next number of years, and I'll give you more information about that. I've done a lot of work on researching exactly how that's been achieved.
With Mark, I'm less familiar with how he's funded himself over time, but as I find out more information, you can expect that, you know, our behavior will be that of our heroes, Warren Buffett, Bernard Arnault, David Ogilvy, Mark Leonard. Ogilvy sold his equity. Bad move. You won't see that from me. "Do you have a timeline for the decision around a U.S. listing? Do you plan to match U.S. dollar borrowings mentioned with U.S. dollar cash flows?" Great question. A couple of things. We have applied for an OTCQX listing, which we expect will be Kelly, that has been approved or will be approved?
It has been approved, Brett, the application.
So that application's been approved. It's going to our board today, if not yesterday. We're just making sure that the appropriate insurances are in place, and we expect that that will start trading very imminently. That'll give us an opportunity to start to allow our partners and people within the group here to access the stock more easily. But as I always say to people, you know, it's much easier to buy shares in Kelly Partners today than it was when it was a private company. So I don't have much sympathy for those people that have told me it's been difficult to buy shares. But we're trying to make it easier. We do expect to conclude our investigations of the U.S. listing imminently.
The market cap of the business at the moment doesn't support the investment required to take the company public in the U.S. We do expect that that market cap will rectify itself and tend towards intrinsic value more over the coming months. I think you can see from the numbers that the inherent cash profit-generating ability of the business is substantially more than it was a year ago, and very substantially more than it was two years ago, although the valuation of the group remains largely the same. And so until that changes, it wouldn't make sense to invest the amount of capital required to take the company public in the U.S. But I don't expect that that will remain the case for very much longer.
And so, you know, when the planets align, then we will do the next thing. We are engaging with the ASX around whether we could structure on the ASX in the way that we would like to. We think that it's not appropriate that in Australia, you can't have a dual class structure, but you can in Hong Kong, and in China and the U.K. and the U.S., basically everywhere in the world except Australia. We see that as a little unideal, as a gentle version, and we hope that that'll be rectified at some point. If it's not, then we'll look for an exchange that welcomes our approach to life and business. Do you plan to match U.S. dollar borrowings with U.S. dollar earnings over time? Yes, we do.
You know, in an ideal structure, we would have a U.S. bank under a U.S. Holdco lending to those U.S. businesses. The discussions with the major banks to date in the U.S. have been a situation where those U.S. banks want to bank the whole group, Australia and the U.S. We have tremendous, nearly 20-year partnership with an Australian bank that has never put a foot wrong with respect to our group, and that's Westpac. And so we don't have any interest in a global banking offer at this point. We just don't think it makes sense. So yes, we'll look to just have U.S. dollar borrowings against U.S. dollar earnings, but, you know, we've completed the first two acquisitions with cash, with no borrowings. We will need to find an appropriate partner imminently. Great question.
Now, there's a question on a light note that fills my heart with great joy from Brendan. He knows who he is. Any book recommendations? I have some book recommendations. My favorite book of the last 12 months is Brunello Cucinelli's life story. It's right here in English, The Dream of Solomeo. Really talks about human-centered capitalism and is there a way to run a business that, you know, properly recognizes and rewards the contributions of all people? That's a great book. The one behind me that I really like, just here, which is worth a read, is called Going Public in the US. If you haven't read that, that's really worth reading. The... You know, you've got me on the books now, Brendan.
So The Dhandho Investor remains a book that, frankly, could have been written about our approach to life and business. And the Les Schwab book that I've almost finished. Brunello got in its way and overtook it here, Pride in Performance. If you haven't read that book, you can see I'm chunking through it at the moment. It's a really good book. I was also given a book, Kenny, your recommendations that the book on Rackspace, The Rack We Built.
Yeah.
I was lucky to visit San Antonio very recently and met Lorenzo, the author of that book. It's a really good book, and I'd like to call that book out and recommend that you go and buy it. The reason is, in the Rackspace experience of growing, you know, a tremendous business over time, they emphasize the importance of values and behavior and culture. And, you know, if I've learned anything over time, making sure that we bring missionaries to the cause and not mercenaries is fundamentally important to the business.
And so that bit, that book talks about, you know, upon the impending IPO of Rackspace, they attracted after having built a great business and a near-death experience around the global financial crisis, they, you know, pre-IPO, had to get these people in that had, you know, that I call resumes, not people, big company resume people. And they really destroyed or damaged the culture of that business, and disrespectful to the people that had grown the business and behaved like nutbags. So that's a really, really great book. I know Kenny's read it as well. We share the books around and love it. Who's gonna be next on the Be Better Off Show? Well, the Be Better Off Show will resume at some point soon.
I'm working very hard on the business over the last 12 months here in the U.S., and have not made that a focus of my attention. But we will bring some good guests to bear over the next 12 months, I suspect. They can share, you know, some continuing wisdom with our people, our clients, and shareholders. I think that's all the questions. That's not too bad. That was 17 questions. I wanna thank everyone for attending today. It's always good to get together with people. We really enjoy pulling the accounts together, pulling the presentations together, and thinking through the business. We genuinely appreciate your questions because, you know, I was asked, "Well, Brett, what's good about running a public company?" Because most have a pretty negative view of the experience.
I say, it's the people that we meet who ask intelligent questions and encourage us to think harder about all aspects of the business. And we have a shareholder base that is an incredible group of people. I feel very privileged to work with our people on our mission of growing this company. The people that we have as partners, partner shareholders, are incredible. We couldn't have met them any other way. And so, you know, even if being public as a public company, if that was the only thing that was delivered to our group, it would be worth it. Just a final comment. Somebody's popped in: Would we have a Berkshire-style AGM down in Sydney? Yes . We have planned more than once to do that.
We will do something imminently and as long as we can manage the time and cost of the exercise. But yes, we will. We'll put more effort, Kenny, into the AGM this year. If we had a larger team, we'd be doing more extraneous things, but if we can, we can definitely do. And how do you think about opportunity cost professional, personally, with the limited time you have? We all have limited time, and so we try and spend that time on the most valuable things. There's really two approaches to life. One is balance. You know, murder somebody one day and be a saint the next, on average, be okay. The alternative is right order. What's most important? What's the next most important? What's the next most important?
Much like capital allocation, your ultimate capital is your time. And so, you know, the most important thing is your health. The next most important thing is your relationship and your family. The next most important thing is the business. And I try to do them in that order. I don't socialize, you know, much outside the context of the business, and I don't have any other businesses than the business of our business. And I think it's very important for somebody in my role not to be conducting side businesses or side hustles. Everything that I undertake commercially is undertaken within the context of Kelly Partners, and so you, as a shareholder, get to share in that full effort, and I think that that's appropriate.
That's the way that we thought about time. We have no monopoly on wisdom, and we have no fully developed perfect views of anything, but we're working hard to continually improve our understanding and outcomes. I wanna thank everyone for their time today. It's been a pleasure to get together. I wish we had a screen where we could see everyone, Kenny, and have a bit of back and forth, but we'll do that. I will be in Sydney next week. If there's any shareholder that wants to meet up, just send me a DM on Twitter or Instagram or an email, whatever works best for you. I look forward to a continuing, very exciting 2024. I always like to, at each of these periods, force ourselves to reflect.
We're in a tremendous, you know, tremendous position to deliver a real difference to our people and our clients and our communities. As shareholder partners, we can do that together for a long period of time. I think it'd be, frankly, very satisfying and also a hell of a lot of fun. So thank you. Thank you, Ken. I want to thank you, thank Joyce, who's our General Counsel, who has run the meeting today, our board, who moved heaven and earth to accommodate my moving diary to get our board meetings and everything done yesterday and signed off. There's more than 550 people in our group. They are all making a world-class contribution, or frankly, they wouldn't be within our businesses. It is a privilege to be able to represent those people.
I don't represent myself, I represent our business. And if you get to meet our people, you'll be tremendously impressed and pleased with the quality of the people that we get to spend time with. So thank you. And as I love to say, have a great day!