Category: Articles

Project Archive

On www.phillipkingston.com.au there is now a photo and caption archive of many of the projects I’ve been involved in since 2007 around the world. These include businesses, events (including the famous Trimantium Study Tours and Henley Club events), non-governmental and inter-governmental projects.

It will be continuously updated over the coming months until I have at least some coverage of all of the major projects and events that I’ve organised, hosted or substantively participated in.

Visit the archive here.

Building my first skate park

As skate parks closed due to COVID-19 restrictions in Victoria, Australia, I ordered some skate ramps and pre-fabricated components online from Wizac Ramps (Queensland) and Ramp Champ (Western Australia) to de-risk myself and close friends from current and future lockdown laws.

The initial skate park kit includes:

  • 4ft X 6ft Mini Halfpipe
  • 2ft X 4ft Quarter Pipe
  • 4ft X 4ft Quarter Pipe
  • 6ft Low Grind Box
  • Fun-Box with Kicker Ramp + Grindbox + Wedge Ramp
  • 6ft Up Ledge Grind-Box

All coated in Feast Watson 10L Matt Look Decking Oil – Natural from Bunnings which makes everything look good.

I love my Feast Watson

Some construction photos:

The next phase of this project is to lay a suitable skate park floor, I’m currently thinking plywood on treated pine and targeting a skateable area of 10 metres x 5 metres (outside of the mini halfpipe which will continue to sit on the ground).

More to follow.

Reflections: Henley Club

In 2011, I was on a bus in Vietnam on an Intrepid tour with my friends from university and we were discussing the topic of reimagining the exclusive social club in a way that retains all of the good features that explain why they (as a concept and specific institutions) have survived for so many centuries, and addresses the bad features – the reasons that people don’t like them (the impartial reasons, not because they aren’t invited).

Henley Club, 8 Rankins Lane Melbourne

I refuse to join any club that would have me as a member.

Groucho Marx

Private clubs generally are considered to provide the following positive attributes in their most reducible form:

  • A deliberately-chosen membership group that meet some generally accepted criteria
  • A common set of behavioural values and an ethical code

They may also offer dedicated and quality infrastructure such as a club house, golf course, bar, restaurant, library, tennis court, etc. but these assets are not always essential to the value proposition. People do join some private social clubs just for access to the infrastructure, but I’m not going to spend much time on this here as the “club” aspect in these scenarios is more of a commercialisation model rather than the primary agenda.

The negative features of many of established private clubs we had been members of or had visited as guests, were considered at length at generally summarised in the following way:

  • Elitist on fading metrics and geographics
  • Clinging to privilege and patriarchy rather than individual and collective excellence and curiosity
  • Structurally racist and heteronormative, in addition to other biases

elite social clubs had members who were elite in terms that were quickly becoming obsolete

The primary feature which was objectively obvious and yet completely incongruous with established practice was the conclusion that elite social clubs had members who were elite in terms that were quickly becoming obsolete, and how the clubs themselves (as a result) were slipping into obsolescence. White men were no longer running the world’s most powerful companies, organisations and countries, so why fill your clubs with them? They should be included, but only in a measure that reflects their current contribution and future potential. Taking an unbiased, scientific and egalitarian approach to elitism would be critical. White men were declining in relevance and so would need to decline in their membership percentage.

Henley Community Manager, Leesa Charlotte (right) at Henley Club

The things that made you great and valuable as members in 1950 are not the same things that made you impressive today. For example, the technology pioneers & founders whose products have achieved full mainstream status and whose founders had normalised a level of wealth and power that was previously known only to robber barons, aristocrats, autocrats, royals, cronies and dynastic families, and yet their involvement in establishment clubs was almost non-existent. The writers, artists, journalists, performers and creatives who were challenging the general population as well as power with truth, perspective and imagination were ostracised from these clubs but for a few media owners.

Adam Bandt MP at Henley Club with Phillip Kingston in 2013

After a fairly rigorous period of contemplation, I settled on the entrance requirements for the Henley Club for the member candidate to be Interesting and Interested. This broadly boiled down to whether you could genuinely listen to other people and truly hear, as well as being passionate about something enough to enthral others in your passion, even if others were not interested in the particulars of your field. You had to approach the world with genuine curiosity and thirst, and be generally accepting of new ideas. Most importantly, you had to demonstrate that you didn’t just listen waiting for your turn to speak, but actively listened and participated in the contributions of others.

Phillip Kingston with US Embassador John Berry at the Henley Club
Phillip Kingston with Ambassador Berry at Henley Club in 2015

It turns out that an equally important component of membership criteria is the selection theatre and expectation setting process. How the founders, president and committee of the club set up and communicate the culture and expectations of the club have a significant bearing on the outward conduct of the prospective member. Even if the hierarchy-free, open sharing and listening culture wasn’t natural to everyone, the clarity of the expectation allowed the less-inclined to adopt a more open style to fit in and excel at the club.

Susan Pascoe AM at Henley Club

I wanted to ensure there was no pretence, so I made sure that we signalled the right way from the start:

  • Our clubhouse was tasteful but obviously inexpensive
  • All furniture was second-hand (also for environmental reasons)
  • There was no dress code
  • There was no restriction on phone or electronics use (outside of when someone was presenting)
  • There were no fancy alcohol brands
  • The cost of everything to members was as low as possible
  • The holding company of the enterprise was Old Kent Road Pty Ltd named after the cheapest property on the Monopoly board
Working Group Event at Henley Club in 2018

I brought in a few friends as seed investors including Edward Thomson, Matthew Donazzan, Finn Kelly and Sarah Riegelhuth. Then we brought in Lauren Broomhall and Leesa Charlotte as equity partners for their significant contribution. The strength of the community built at Henley Club was mostly due to the hard work and passion of Lauren Broomhall and Leesa Charlotte, and to the business support of Bonnie Tran. It was supported by a large team of volunteers who served on the Club’s committees and working groups.

Whilst we charged membership fees, and did raise some capital from the seed investors above, the club was only possible because of the support of Trimantium Capital who ultimately funded about 95% of its circa. $500,000 capital requirement over 6 years. I thank the Trimantium Capital shareholders for supporting this important social enterprise and building the Victorian entrepreneurial and creative ecosystem.

Darrell Wade and Phillip Kingston at Henley Club

We had significant membership from underrepresented groups and approximately even numbers of people who identified as male and female. We worked hard to be as reflective of the current and future population composition and identity as possible.

A summary of Henley Club ‘Conversations’ events:
All of these wonderful people volunteered their time to speak candidly about themselves and their values, careers, politics, families, projects and vision for Australia under the Chatham House rule. The Henley Conversations series was an informal Q&A for an hour with unprepared questions from the interviewer and the audience. We didn’t want our speakers to deliver anything prepared or scripted, but rather a very brief intro then straight into fruitful and challenging questions.

Many others spoke in addition to this list, but here is a snapshot of who donated their time to the club over the years:

  • Professor Peter Doherty – Nobel Laureate
  • Ambassador John Berry – U.S. Ambassador to Australia
  • The Hon. Justice John Middleton – Justice of the Federal Court of Australia
  • Naela Chohan – High Commissioner of Pakistan
  • Tim Costello – CEO of World Vision Australia
  • Carol Schwartz AM – Prominent Australian business leader – various directorship roles
  • Darrell Wade – CEO & Co-Founder of Intrepid Travel
  • Elana Rubin – Director at Mirvac and NAB Wealth, Former Chair at Australian Super
  • Adam Bandt MP – Federal Member for Melbourne
  • Susan Pascoe AM – Commissioner, Australian Charities and Not-for-profits Commission
  • Tony Reeves – CFO, Treasury Wine Estates
  • Michael Malouf – Former CEO, Carlton Football Club
  • Jan Owen AM – CEO, Foundation for Young Australians
  • Prof. Christine Kilpatrick – CEO of the Royal Children’s Hospital
  • The Hon. Dr Andrew Leigh MP – Shadow Assistant Treasurer, Member of the Australian Labour Party
Dr D’Souza with Elana Rubin at Henley Club
So after 6 great years, why did we shut it down?

Stay tuned for the next post which will cover why we decided to shut down Henley Club and the lessons learned which apply to business, community-driven organisations and alumni programmes.

I also want to collate and chronicle all of the great artists that exhibited at the club over the years in a future post.

My Ride

Current Skateboard Gear: (October 2020)

  • Deck: Girl – Mike Carroll (8 ¼ inch)
  • Trucks: Thunder Trucks 147 Mid Durrant V2
  • Wheels: Spitfire Formula Four Afterburner Wheels (55mm)
  • Bearings: Bones Super Reds
  • Hardware: Independent Bolts
Pimpin’ Ride

Clothing and Shoes:

  • Shoes: DC Shoes Lynx OG (US 11)
  • Pants: Dickies Carpenter Denim Jean – Relaxed Fit (Black)
  • Socks: Kathmandu NuYarn Ergonomic Hiking Socks

Spitfire Formula Four Afterburner Wheels (55mm)

GrowthOps – Valuation Considerations

I have received quite a few inbounds after my post of 6th October 2020 entitled GrowthOps – FY20 in Review asking for a more specific analysis of the Company’s cash position and different possible valuation outcomes. I’m going to spend a bit of time in this post on valuation considerations and come back to cash position in a week or so.

Disclaimer: I am the founder and a large shareholder of GrowthOps. Please read my disclaimer carefully here.

The following analysis is conducted in AUD (A$) with publicly available information obtained from the ASX, specifically:

  • Full Year Statutory Accounts from 28 August 2020
  • Appendix 4C – Quarterly from 31 July 2020

Key cash indicators:

Market Capitalisation: (at $0.06 per share)$8.96M
Cash and cash equivalents$6.11M
Net Assets$14.285M
Debt$12.718M
Enterprise Value^$15.568M
^ Enterprise Value = Market Capitalisation + Debt – Cash

If you purchased all of the stock in TGO today at its current price, you’d receive:

  • $14.285M of Net Assets (including $6.11M of cash) at last audited value
  • a business with $84+ million revenue with positive operating cash flow

for $8.96M.

Putting it another way, if you net-out the cash acquired from the purchase of GrowthOps with the cash used for the purchase, you can buy an $84+ million revenue stream and $8.175M of Net Assets for $2.85M.

$84.4 million of GrowthOps’ maintainable consulting revenue from tier one clients, applying a long-run (normalised) cost structure, would be expected to generate a sustainable EBITDA of 10% or more once GrowthOps completes its foundational integration years and comes out of COVID-19. This is supported by a large amount of historic GrowthOps component company data (disclosed in the Prospectus and summarised below) as well as publicly available data from many competitors / comparables on many stock exchanges including the ASX.

At a 10% EBITDA margin, $84.4 million of revenue generates $8.4 million of EBITDA p.a. In FY20, despite being nascent and COVID-19 impacts, GrowthOps delivered underlying EBITDA of circa $3.1 million.

From the GrowthOps Prospectus, EBITDA % margin for the combined businesses FY18F back to FY15 were:

Financial YearEBITDA % Margin
FY1515.9%
FY1618.2%
FY1722.8%
FY18F23.3%
Average20.0%

I expect that once GrowthOps completes its foundational integration phase and gets past COVID-19, it will be back to these EBITDA % margin levels.

Valuation Inputs:

Maintainable Revenue$84.4M
FY20 Underlying EBITDA$3.1M
Normalised EBITDA (Conservative)$8.4M
Indicative Valuation Methods

Valuation Methodologies

By any conventional valuation methodology used by corporate M&A teams at acquisitive advertising or consulting groups for an “at-scale” consulting company, TGO is meaningfully undervalued at its current share price. Acquirers would be expected to pay a minimum of 0.5x forward revenue for a business like GrowthOps, probably closer to 1.0x due to its unique attributes such as scale, service-mix, quality record, awards and regional footprint into Asian growth markets that are very hard to access authentically for large multinationals.

Comparable ASX Public Companies

Revenue
Multiple
EBITDA
Multiple
SLATER & GORDON LIMITED (ASX: SGH)0.84x5.32x
PS&C LIMITED (ASX: PSZ)0.41x8.64x
ENERO GROUP LIMITED (ASX: EGG)0.52x5.68x
TRIMANTIUM GROWTHOPS LIMITED (ASX: TGO)0.11x2.89x

If you value GrowthOps by these ASX comparable revenue multiples for consulting companies of comparable scale, here is how much money is left on the table at the current share price of TGO:

It is well known by the market that the TGO share price around $0.06 is a long way away from intrinsic value, but it is going to take some time for the mainstream fund manager community to support the stock because of a complex web of broker / investment bank self-interest and endemic distribution conflicts that plague the stock resulting from GrowthOps’ non-conventional IPO pathway. The US is much more alive to these systemic conflict issues which is why you are seeing a rise in direct listings (Asana, Palantir, Spotify, Slack, etc.) and Special Purpose Acquisition Companies (SPACs) which bypass them altogether. Australia will slowly follow suit, but for now, is a decade or so behind in shining the necessary light of transparency where it is not wanted.

Over time, institutions will look past their biases and buy into the stock which will correct the price and liquidity in line with ASX comparables and M&A prospectivity. Or they won’t.

Disclaimer: I am the founder and a large shareholder of GrowthOps. Please read my disclaimer carefully here.