Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — Shareholder Meeting (November 2019)
33 slides from Kelly Partners's shareholder meeting presentation, November 2019
Slide 1: FY19 Annual General Meeting
KP+GH FY19 Annual General Meeting ASX: KPG PRESENTED BY Brett Kelly CEO and Executive Chairman Justin Sweeting Deputy CFO Kenneth Ko Group Finance Manager November 2019 kellypartnersgroup.com.au
Slide 2: KPG in 10 Seconds
KPG IN 10 SECONDS 0.6% 32% 27.2% 117% MARKET PENETRATION RETURN ON EQUITY EBITDA CASH MARGIN CONVERSION OPPORTUNITY GROWTH RETURN MARGIN EFFICIENCY Market 13 year CAGR since FY19 Group NPATA FY19 Underlying FY19 Operating penetration inception 2006. $7.9m on Group EBITDA $10.9m to Cashflow $11.9m ba
Slide 3: Agenda
AGENDA T SECTION ONE MISSION AND MOMENTUM SECTION TWO INVESTMENT CASE AND STRATEGY SECTION FOUR SECTION THREE 3 5 YEAR GROWTH STRATEGY 4 OUTLOOK APPENDIX KP+GH
Slide 4: Section One: Mission and Momentum
SECTION ONE MISSION AND MOMENTUM KPG continues to focus on building out a scalable and difficult to replicate model. We have proven the model in Sydney and have commenced expansion geographically, with Melbourne as the first new target. It is estimated that the addressable market in Sydney and Melbo
Slide 5: Strategic Pillars
STRATEGIC PILLARS CHALLENGE Continue to challenge the status quo by delivering to our professionals in our team and clients of our industry our core values and unique systematic approach embodied in our Kelly+Partners Purple File Program(‘PFP’) and Kelly+Partners Financial Advice System (‘KPFAS). FO
Slide 6: Industry Size and Structure Provides a Significant Growth Opportunity
INDUSTRY SIZE AND STRUCTURE PROVIDES A SIGNIFICANT GROWTH OPPORTUNITY Similar to the insurance-broking industry, there is significant opportunity to grow under the Partner-Owner-Driver model Insurance Brokers Market $13.2b Annual Revenue Accounting Services Market $20.0b Annual Revenue Typical Clien
Slide 7: We Are the 24th Largest Accounting Firm in Australia
WE ARE THE 24TH LARGEST ACCOUNTING FIRM IN AUSTRALIA AND THE OPPORTUNITY REMAINS ENORMOUS BUILDING A PLATFORM BUSINESS FOR PROFESSIONAL SERVICES FIRMS unting Firms 2600.00 ‘2300.00 | p83 67 H 2 ' 8964 | 1887.00 | 57% | 569 | 54 i 7 (588 | 178000 | 85% | 582 | 104 | 4 | 7800: | 36759 | «10% =| «300:
Slide 8: Different on Purpose
DIFFERENT ON PURPOSE «. TO TRADITIONAL ACCOUNTING FIRMS DIFFERENT ON PURPOSE FOR PROFESSIONALS MISSION AND VALUES CLEARLY DEFINED MISSION AND VALUES STRATEGY AND MARKET SME FOCUS IN GREATER SYDNEY AND MELBOURNE AREA STRUCTURE 51/49 OWNER-DRIVER PARTNERSHIP MODEL MANAGEMENT CENTRALISED BACK OFFICE BR
Slide 9: Executing Our 5 Year Plan
EXECUTING OUR 5 YEAR PLAN OUR ADDRESSABLE MARKET IS VERY LARGE We must expand in our target markets and dominate the market for Private Business Owners accounting and advice services within 5 years. 8 ‘nfl Improve EBITDA Lower operating cost margin in underlying base of Central businesses Management
Slide 10: Section Two: Investment Case and Strategy
SECTION TWO: Investment Case and Strategy
Slide 11: KPG Strategy
KPG Strategy To build per-share intrinsic value Kelly Partners Group Holdings Limited aims to build per-share intrinsic value by: 1 Improving the earning power of our many operating businesses 2 Further increasing their earnings through tuck-in acquisitions 3 Participating in the growth of our busin
Slide 12: KPG Business Model
KPG — Business Model 1 Recurring, defensive, diversified (geographic, business and client) revenue streams 2 Proven ‘Partner-Owner-Driver' (“POD”) operating model which creates alignment of interests 3 Longstanding client relationships across a diverse SME focussed client base 4 Single brand with a
Slide 13: FY19 Growth and Performance Continues
FY19 Growth and Performance Continues 13 years of continual growth. Doubling on average every ~3 years Revenue Double Double Double Double 2007 2008 2009 2013 $4 2 Years ! iYears_ | 4 Years | 4 Years 32% in 2 Years t t t ! | $40.0 $40 | | $39.5 I I a I I $35 | | I I I I $30 I I 34 I I os | Revenue !
Slide 14: Business Milestones and Office Expansion
Listed KPG on K+P ASX K+P Corporate Investment K+P Melbourne K+P Finance Advisory Office Government 200 Team CBD Office Inner West North Sydney Launched Launched Launched Launched Members Established Marquee Tuck-In FY17 FY18 FY18 FY18 FY18 FY18 FY19 FY19 FY19 Northern Blue Mountains Melbourne CBD O
Slide 15: Capital Allocation: Share Buyback and Special Dividend
Capital Allocation: Share Buyback and Special Dividend Benefitting shareholders and improving returns on equity 45,497,181 45,400,000 97,181 The group seeks to maximise its return on capital. Where the group believes its shares are trading at a significant discount to intrinsic value, it may use fre
Slide 16: New Business Progress
New Business Progress The new businesses established are seeds of future growth WEALTH FINANCE CORPORATE ADV ence ESTABLISHMENT DATE Dec-16 Sep-17 Sep-17 Jun-18 INVESTMENT < $5k $34k $90K $nl0k < $250k KPG share of profit 51.0% 51.0% 51.0% 75.5% FYI9 REVENUE $779k $514k $313K $l4k $1,720k Annual Gro
Slide 17: Special Opportunities Fund #1 - Performance since inception
Special Opportunities Fund #1 - Performance NAV since inception1 $1.50 • $1.40 • $1.30 $1.20 • $1.10 $1.00 • $0.90 30/06/18 30/09/18 31/12/18 31/03/19 30/06/19 30/09/19 1 inclusive of distributions
Slide 18: Organic Growth Driven by Focussed Differentiated Offer
Organic Growth Driven by Focussed Differentiated Offer Only firm focussed exclusively on Private Business Owner clients, at scale, with a unique offer PRIVATE BUSINESS OWNERS ARE THE FASTEST GROWING GROUP IN THE ECONOMY KEEP THEIR ACCOUNTANTS THE LONGEST GENERATORS OF NEW AND EXTRA WEALTH LARGE USER
Slide 19: Bright & Duggan Case Study
Bright & Duggan. Case Study Solving Succession in a founder-led private business KELLY-PARTNERS CHARTERED ACCOUNTANTS Watch the video here: https://www.youtube.com/watch?v=OHQG8F6sPic KP+GH
Slide 20: Section Three: Five Year Growth Strategy
Slide 21: FY19 Revenue and FY2020 Progress
• • • • • • • • • • • • • • • • • • • • • • • FY19 ~$40.0m Revenue FY2020 PROGRESS EBITDA
Slide 22: Expected EBITDA Contribution
• • • • • • *Expected EBITDA contribution is post transaction improvement
Slide 23: CentralCo
CentralCo + CentralTablelands @ @ Western Sydney Norwest @ @ Blue Mountainst + | @inner west ob © Oran Park*+ @ Southern Highlands+ +Melbourne CBD @
Slide 24: Newcastle
Newcastle + WesternSydney Norwest : + 4 existing sites ‘ 4.new sites
Slide 25: Melbourne CBD
+ Melbourne CBD + Essendon Monee Ponds+ + Brunswick + Cranbourne 5 new sites a
Slide 26: Section Four: Outlook
Slide 27: FY20 Outlook
FY20 Outlook During FY20, the Group aims to 1 Continue targeting EBITDA margins of at least 32.5% (after partner base distributions) in each individual partnership 2 Continue driving market share gains, underpinned by strong brand presence and growing market penetration 3 Continually review acquisit
Slide 28: Appendix
Appendix
Slide 29: Challenges Facing Smaller Accounting Practices
Challenges facing smaller accounting practices Pressure points for smaller accounting practices X succession planning, staff attraction and retention xX Management of sub-scale back office functions X undifferentiated service offering xX Technological change { xX Increasing regulatory and compliance
Slide 30: Case Study: Business Transformation
Case Study: Business Transformation Kelly+Partners has a proven track record of delivering transformational outcomes for smaller firms Post-acquisition * Significant improvement in margins Pre-acquisition and revenue in the first 5 years after 50M 40.0% joining the network. + Following an acquisitio
Slide 31: Case Study: Greenfield Expansion
Case Study: Greenfield Expansion Kelly+Partners has successfully launched 7 greenfield operating businesses since its inception . $1,600,000 50.0% + The Kelly Partners Norwest business has exhibited very strong growth in revenue and earnings, with a $1,400,000 significant increase in margins. This 4
Slide 32: Disclaimer
Disclaimer SUMMARY INFORMATION This document has been prepared by Kelly Partners Group Holdings Limited ACN 124 908 363 (Company). This document contains information in a summary form and general background information about the Company's activities current as at the date of the document. It is to b
Slide 33: Thank you
KP+GH KELLY PARTNERS GROUP HOLDINGS LIMITED Thank you kellypartnersgroup.com.au
Kelly Partners Group Holdings — Shareholder Meeting (November 2019) on 6ix