Welcome and good morning to the Kelly Partners Group Holdings Limited annual general meeting for the financial year ended 30th of June 2022. My name is Brett Kelly, Executive Chairman and CEO. It's now 9:30 A.M. It's actually 9:33 A.M. There being a quorum present, I declare the meeting open for business. I confirm the meeting has been properly constituted. In opening the 2022 AGM, I'd like to introduce the board of Kelly Partners Group Holdings: Stephen Rouvray, Deputy Chairman and non-executive director; Ryan MacNamee, non-executive director; Lawrence Cunningham, non-executive director. He's on the screen, I believe. There he is. I hate having my back to you, Lawrence, but good morning.
Good morning.
Awesome. Paul Kuchta, Executive Director, and Ada Poon, Executive Director. Beautiful sunny day here in Sydney. Stunning. Also in attendance is Kenneth Ko, our CFO from Hong Kong. G'day, Kenny. There he is. He's given us the wave. Joyce Au, Company Secretary. Good morning, Joyce. Who, without all of her hard work, this meeting would not be occurring. Leo Tutt, partner of William Buck, our external auditors. Lloyd Crawford, Senior Manager of William Buck, our external auditors. Chris Dostoevsky, Computers hare Investor Services and the returning officer for today's meeting. Good morning, Chris, and thanks for all of your hard work. I'll now make a quick presentation about the company and its activities over the past and coming year. The presentation has been released to the ASX prior to commencement of the meeting, and largely will take the presentation as having been read by everyone.
We have published for some years now KPG in 10 seconds. Why do we do that? Because over the years we have met many investors who say, "I have only got 10 seconds." We made them a one-pager. Revenue has continued to grow strongly. The business has compounded revenue at about 30% a year, cumulative average growth rate on average for 16 years. We expect that we can continue to grow revenue: 5% organic, 5% by acquisition, at 10% a year, essentially indefinitely. There are 12,500 target firms. There are 10% of those firms that we think would be really great to have join the group, which is 1,250 firms in Australia. Realistically, of those firms, there are 10% of them that are probably the best of the best, which is 125 firms. We have done now more than 60 transactions and partnerships with different organizations and individuals.
We think we're moving through at a good rate the target group. That said, over time, frankly, we've been humbled and pleased that really very, very good people and their businesses are regularly approaching the group. We work hard to try and accommodate a partnership with them that makes sense for their business and the group. How do we filter those people? Essentially, first, the values of those organizations. Are these people for others that keep their promises and work as part of a team? If they're those, they focus on private business owners, then we can work with those people. We expect revenue to continue to grow strongly. Over the last decade, there's been a very sharp decrease in the number of people qualifying as accountants in Australia, and this is a trend that's reflected globally.
We think that that will mean that margins will be stronger over time because it will be harder to find. There'll be more demand as there's more compliance. I think you should have learned through the pandemic that governments love compliance. They love to tell you, "Stand up, sit down, put your mask on, take your mask off." As there's more compliance, you'll need more lawyers, accountants, and soldiers. Good news is we're accountants, and so there should be huge demand for our services. There'll be less accountants. Prices will go up. You are seeing that strongly in the market at the moment. We think revenue can grow, that we have a very unique ability to acquire and integrate firms. We're not sure that there is anyone else in the market that has a proven track record with that sort of muscle as well developed as we have.
The margin of the business is still very strong. As we grow faster, you'll see top-line imaginary margin compression. That'll mean that there is cost to integrate firms, and so the headline number will vary between 35, 29, 28. If you look over the last five years, there's a very strong and consistent margin there. That is because we are not an organisation that wants to grow for its own sake. If we can't do something that's profitable, we won't do it. We never have done it. That comes from founding a business where we had an empty bank account, so we knew that if it wasn't profitable, there's no point doing it. We do believe our industry is obsessed by size. They think being bigger is better. We think being excellent is better.
Wherever we can be excellent and make our margin, then we'll focus there. In terms of parent NPATA, parent NPATA continues to grow strongly. It's been a focus of ours, a very clear number that people can understand easily. NPATA is a number that we think people can understand easily. If you look at the growth in EBITDA over time and take it on a 100% basis, this is a much larger business than people realize. That's a worthwhile exercise for the accountants amongst you. In terms of return on invested capital, I started this business by borrowing $160,000 and putting my own fee base of $200,000 in fees into the business. That means we've compounded the capital that the business was started at. It's something like 60% a year for 16 years in a row. By mindset, I'm an investor. I don't like to lose money.
I don't like to waste money. We will invest money. In the short term, you might not be able to understand where we'll get a return. Do not worry, in the medium and long term, that'll become very obvious as it has over time. These levels of return we think are exceptionally high. We've got really strong interest from global investors because they can look up their Bloomberg screen and see those returns, and they make inquiry with us. That is why we've got a very interesting share register. In terms of gearing, the business remains very under-geared. I've just been in the U.S. where these types of businesses are geared at three and a half to four and a half times EBITDA. We are on a global basis. We're carrying almost no debt on a global basis, which is really interesting.
There are listed companies that are geared at that level. We do not think that we need to do that, but it does give you a sense of how big the opportunity is to grow the business if we were a little more aggressive in that space, not that we are intending to be at this point. Cashflow continues to grow very strongly. We are a cash-on-cash business. We do not work for hopes, dreams, and aspirations. We want to see an actual financial return from the business that we are operating with you as partners and shareholders. The cash conversion of the business remains very strong. You will see the cash conversion go from 83%- 100%. If we have done a lot of acquisitions and there is a lot of growth, then it will take us time to get back to closer to 100% cash conversion.
It will depend at what time the books are ruled off. That is Kelly Partners in 10 seconds. A little more than 10 seconds there. We have tried to prepare this scoreboard, if you like, in a consistent way over time so that any investor that is genuinely interested in the business can go back every six months for X number of years, pull these one-pagers, and understand the group. We do not think the business is particularly complex. What have you got next, Joyce? Beautiful. I will go very quickly through these and largely take them as read. The business has grown. The point of this slide is to say that there are very few businesses that you can invest in that are listed that have doubled five times in a row. The point of that is that the business is a business system that knows how to double.
We are trying to, in this slide, say, "Look, we have a system that if we continue to just execute in the way that we always have, we expect the business will consistently double." Now, I've had a few people over time tell me that that won't happen. We sort of laugh in the face of that type of rubbish because the fact is that those are the same people that want to read Kelly Partners in 10 seconds. If you spend more than 10 seconds on the business, you'll probably conclude that these are accounting firms and we know how to double them over time gently.
We have done it a lot, and we expect that the opportunity is actually much larger now than it was when we started because we have more credibility, we have more skill, and we have more capital, and we have a lot more people coming to us. It is getting easier and easier to actually grow the business. We were at AUD 64.9 million last year. We expect this year that our revenues will be, over the five-year plan, AUD 80 million, and our run rate is well over AUD 90 million. The business is becoming a significant enterprise with a focus on private business owners. I am really pleased to see how well that is progressing, which is great. It is a good top-line thing to have a look at. The other thing I would like to point out here is we have not done this quickly. This is not like a private equity slap-up.
This is not some sort of quick sort of throw it together and hope for the best. The business has been built systematically with a consistent methodology over what now is a considerable period of time. We do think the best days are in front of us, however. Per-share growth, we think it's important. I'm often asked, "Hey, what do you think's the most important thing for an investor to know?" I always laugh at investors and say, "That stock you tell me is really great. How many shares does it have on issue?" You don't know. Neither do the people running it. Ask that to the next CEO you meet. If there's not a focus on return per share, then as an investor, you're not going to do well over time.
We like to publish per-share this, per-share that, and emphasize that we've got 45 million shares on issue, a nice even number. We don't give them away to people for being kind to us or for doing things. Everyone in our group has the opportunity to buy our shares on market on the same basis as anyone else. They always have had that, which is great. Recurring revenue is growing very strongly, 16.8% compound since IPO. Owner earnings are growing at 13% per annum since IPO. While these are not sort of rocket ship numbers, we think that if we can compound at those rates for a long, long period of time, then the business becomes quite interesting. Return on invested capital remains strong. We took this from the Constellation Software data.
Personally, we think the numbers speak for themselves, and the focus tells you something. Owner earnings to the parent continue to grow. Since the day I started the business, I'd read Hagstrom's book, Warren Buffett Way. I'd always looked at how you calculate owner earnings in these businesses, and it remains a focus of the group. Capital allocation's important. We've prepared this scoreboard again. It's a nice one-pager. It gives you a sense of sort of what we're on about. The underlying businesses at number one have got very strong earning power. We're continually increasing the earning power of those underlying businesses through acquisitions, mainly real tuck-ins. We'll start one-off marquee sites wherever the opportunity presents itself on the right basis. We'll keep growing these existing subsidiaries, grow our existing complementary businesses.
I'd like to call out that we've appointed Matt Fogarty, who's the head of private wealth at Fitzpatricks, to come over and run our wealth business. We've now got over AUD 7 million of revenues in these complementary businesses. We've never really called out the potential of those businesses. We think that we can discover a natural level for those businesses over the next five years, and we expect that that'll be a very substantial business. Today, when people look at the business and see an AUD 80 million business, I see a business that's going to continue to grow. Soon enough, it'll be AUD 100 million. There's embedded 50% conversion, 10% to finance, 10% to insurance, and 30% to wealth over time. That means for every dollar of accounting revenue we own, we own another 50 cents of revenue. We're not impatient about when that turns up.
We're only going to grow those businesses to the degree that it actually serves the customer, the actual client. It's not the focus of the group to make more revenue on a per-client basis. It's to add more value on a per-client basis. We're also building a strong digital business, which you'll hear more about over the next 12 months. We've been quietly building software that we think has got real potential to add to the business itself and add to the ease of which we can serve a client. Making programmatic acquisitions for a—that's our core business. We don't know anyone else in the business globally at the size that we operate, doing the types of deals we do in the way that we do them. We think we've got a very unique muscle in that area. Making an occasional large acquisition.
It's just not our focus to go and do big, exciting things. Our focus is to do things really well and to become exciting over time. Number five, repurchase shares. We'll do that. I often get asked, "Do you think the share price isn't at a level that you should repurchase?" We believe the share price continues to trade at a deep discount to intrinsic value. However, we'll keep deploying the cash to grow the business. We think the best return for all shareholders is buying as many accounting firms that meet our criteria as we can go along. If the opportunity presents and we're not in a blackout period and we've got the cash, we'll buy some stock. Most often, when we've wanted to buy more of our stock back, we've been in a blackout period.
We're almost continually in a blackout because of the activity that we've undertaken in the market. Number of shares on issue is 45 million. It's a nice round number. Very proud of that number. We'll keep that number nice and round for as long as possible or continue to shrink it. Probably the most annoying question I get asked by investors over the last five years is, "Hey, what about liquidity?" I keep saying to them that I think there's only 36 Rembrandts in the world. If you own one, it's not a good thing if they bring him back from the dead and get him to paint another 36. We're not looking to make more shares just for the sake of it. We're not looking to solve the imaginary liquidity issue.
We think every share in this business is worth owning and that those people that own it are in a really privileged position. They're no different to the equity partners in our firms. It should be very difficult to become an equity partner in a firm such as ours. That should be reserved for very high-quality people with excellent values and a consistent track record of high performance. I'd like to essentially hold the same standard around our shareholders. I don't want to have a shareholder that I wouldn't have as a partner in our business. In our business, it's easy to say and do that because we run a business of partnerships. We have a criteria to admit an equity partner. We should have no lower standards when it comes to the people that we allow to own the shares in the public company.
They can go and buy them and sell them and do whatever they like. Over time, we've found really good people that want to partner with us, and that's working really well. In the absence of finding those people, we'll buy the shares ourselves. It's a pretty good business. What have you got next, Joyce? Now, I'm conscious of time. Programmatic acquisitions. I'll just stick to the highlights and hope that everything else is read. This is really saying that we think we can do more acquisitions over time, that we can do those in a controlled way, that we can fully integrate them and build amazing businesses that last for 100 years. We're trying to build the muscle to do more of that.
We're trying to empower more of our people and bring them up into positions where they can initiate and assist us to do more of that activity. That's working very well. We sort of say that we go fast by going slow. By doing things well, it tends to move the flywheel pretty substantially over time. It's imperceptible, the movement, but it's not just a sheer number. Some of those are bigger than others. Some of those are better than others. We'll focus on quality, and we'll continue to try and be able to have the capacity to do more. That's probably it, Joyce. We'll just slide through a couple. Just on this slide, I've put in here a lot of people know that I've got some heroes in the world. One of them talks about five-year periods as being good periods of measure.
For us, it was get listed and perform well for five years as a public company. We're now working on the next five-year plan. We're excited about the opportunities that we see. We see that we have a business model that is transportable, urged by our shareholders into the U.K. and into the U.S. We think that those markets, frankly, California and London, are places that we could apply our model. We're just investigating how we would do that. We think that there's an opportunity for Australian clients to be serviced in those places and that there's no Australian accounting firm in those markets that's identifiably Australian that has the right ownership structure to be able to seamlessly service those clients over time.
The future for Australian private businesses is to grow through exporting, to have that capability that's not just some sort of association where somebody slaps their brand on the front door and pretends that they're friends and, frankly, doesn't serve their clients well. We think that there's an opportunity. We're just making preliminary investigations and starting to sort of first bullets and then cannonballs just to look at what the opportunity is. Why do we think that? We think we'll be a top 10 firm in Australia within three years if you take the sort of compounding rates of the business. Those firms already that we are comparably sized, we are 5% or less of our revenue is audit, whereas a comparably sized second-tier firm is 20%-45% audit revenue. We don't have any aspiration to be 20%-45% audit.
At a point, we'll continue to grow in Australia, but we also want to be the type of organisation that can help our best clients grow in the way that they want to grow. Rest assured, we'll do that. We'll fund those bullets through our cash flow. We'll do exactly there what we've done here, which is just quietly and determinedly sort of find where our niche is and where there's a return, which is quite interesting. We've got some amazing people helping us look at those things, which is really great. Other than that, that's basically the overview for the year. I couldn't be more proud of our team. Our teams are incredible from the most junior person through to the most senior people. Everything we do is about getting the best people into our business.
For me, it's about how do we create an environment to attract the best people in the industry so that they can do the best work. If we continue to think about our business as a business that really is in the business of finding amazing people and giving them the opportunities to be the best that they can, then that's been the basis upon which the business has been built, and it will continue to ensure the long-term success of the business. During the pandemic and the stop-starts and interruptions and whatnot that we've experienced over the last two and a half years, what we've seen is our people are very committed to the organisation, are very committed to their clients, have been very well trained.
We have great systems and processes to service the clients anywhere that the clients are or that our teams are required to work from. We have been able to seamlessly execute numerous transactions, frankly, on a completely remote basis. We think that when I listed, I said to—and when we were doing the original conversations with investors—I said to people, "Look, I think our business is recession-proof. I think the last two and a half years proves that the business is certainly pandemic-proof." If anyone has observed anything over the last two years, they should have observed that while the governments may do many things, they will not take a break from collecting people's taxes. We see our business as very strongly positioned for an uncertain world.
Frankly, if things get difficult, what we've done in the past during GFCs and more difficult economic times is grow even stronger because when things get difficult, businesses that are less well-positioned struggle. Frankly, things have been pre-pandemic quite easy for many businesses in our industry. We sort of look forward to the next five years and the opportunity that that presents. For people that invested at IPO, they've had a good return, which is great and very satisfying. I and our team are trying to lead the business in a way that's respectful of our people and of our partners, that serves our clients. It makes a great positive impact in the community. Ultimately, if we do that, we know shareholders will be extremely well-rewarded over time. We are more confident of that than we ever have been.
We think we've got a track record that speaks to that. Other than that, we'll go back to this great list of things that we have to address. Past shareholders' minutes. Number three, the minutes of the previous annual general meeting of members of the company, which was the annual general meeting held on the 8th of October, 2021, available for inspection by contacting the Company Secretary. Now, moving to the notice of annual general meeting and proxies. We now move to the formal business as set out in the notice of meeting. The notice of annual general meeting was mailed to all registered members on or about 14th of October, 2022, and is to be taken as read. Each shareholder or proxy holder who registered today in his eligible vote will have received a blue voting card.
Another shareholder and other shareholders will have received a yellow voting card. Each visitor will have received a white card. Proxies have been inspected, and all those validly lodged have been accepted. Undirected proxies are open votes that have nominated the Chairman as their proxy will be cast in favor of each resolution in the notice of annual general meeting. Voting on all four resolutions today will be conducted by poll. For the purposes of the poll, I appoint Chris Dostoevsky of Computers hare Investor Services, the company's share registry, who have examined and prepared summaries of the proxy forms received to act as a returning officer and to conduct a poll. Number five, financial statements and reports. The first item of business is to receive the company's annual financial report for the year ended 30th of June, 2022.
The financial report and the reports of the directors and the auditors are now made available before the meeting. There'll be no vote on this item, and it is a discussion item only. Company's auditor for the 2022 financial year, Leo Tutt and Lloyd Crawford of William Buck are present to take any questions relevant to the conduct of the audit in preparation of content of the independent auditor report. Are there any questions or comments on the financial report or the reports of the directors and auditors? If you wish to ask a question, please post your questions in the Q&A section. For anyone in the room, just put your hand up. Questions? No questions? Have to allow time. Are there any questions or comments on the management of the company? No questions. No questions.
Are there any questions relevant to the conduct of the audit and the preparation and content of the auditor's report to be put to the auditor? We will now proceed to the resolution set out in the notice of annual general meeting. Resolution one, adoption of remuneration report to consider any thought fit, pass with or without amendment, adoption of remuneration report as an ordinary resolution. If you wish to discuss this resolution, please post your question in the Q&A. The proxies received in relation to this resolution are presented on the screen. I now put the motion. Great. Any comments on that, Joyce? You got votes for, votes against. Track down those votes against. Great. I think we can carry that motion. Is that right? Terrific. Resolution two, re-election of director Mr. Lawrence Cunningham.
To consider and if thought fit to pass with or without amendment, resolution two, re-election of director Lawrence Cunningham as an ordinary resolution. If you wish to discuss, please post your question in the Q&A. The proxies received in relation to this resolution are presented on the screen. I now put the motion. We've got to find those 2,000 votes. Track them down, Computers hare. Resolution three, approval of the employee incentive scheme. To consider and if thought fit to pass with or without amendment, resolution three, approval of the employee incentive scheme. If you wish to discuss this resolution, please post your question in the Q&A. The proxies received in relation to this resolution are presented on the screen. I now put the motion. You know about that saying going through the motions. Resolution four, approval for provision of financial assistance to the KPGH subsidiary.
To consider and if thought fit to pass with or without amendment, resolution four, approval for provision of financial assistance to the KPGH subsidiary as a special resolution. If you wish to discuss this resolution, please post your question in the Q&A. The proxies received in relation to this resolution are presented on the screen. Is there any questions there, Joyce? I now put this motion. This concludes the resolutions to be voted on today. In a couple of minutes, I will close the polls. Please ensure that you have cast your vote. Please ensure that you've cast your vote on all resolutions and that you hand your blue voting cards to the Computers hare registry personnel now coming around to collect them. Thank you, sir. Am I allowed to? Not really. It's my donkey vote. I don't think I can vote on that one, but is that okay? Great.
That looks quite electronic. Great. Following confirmation by Computer Share, the final results will be announced to the ASX later today. Other business, is there any other business that can be lawfully brought forward? If any shareholders wish to bring forward any matters, please post your question to the Q&A or put up your hand. Questions? As that concludes the business of the meeting, I declare the meeting closed. I thank all members for their attendance. For those who watched the meeting, we would have loved to have had you here today. Beautiful day in Sydney. Thank you for your continued support of the company. We'll look forward to catching up again in the near future. Thank you.