Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — Shareholder Meeting (November 2020)
40 slides from Kelly Partners's shareholder meeting presentation, November 2020
Slide 1: FY20 Annual General Meeting
FY20 Annual General Meeting ASX: KPG PRESENTED BY Brett Kelly CEO and Executive Chairman Kenneth Ko Interim CFO November 2020 kellypartnersgroup.com.au
Slide 2: Section One: Summary
SECTION ONE: Summary <a A | aii = | : § ee : i‘
Slide 3: Company Overview
COMPANY OVERVIEW KELLY+PARTNERS WHO WE ARE FY20 Annuity and Transactional Revenue Kelly Partners Group Holdings ~99% ~1% • Limited (KPG.ASX) has a ~51% Annuity Revenue* Transactional Revenue interest in 21 operating businesses operating from 15 locations in Accounting Wealth Finance Investment Offic
Slide 4: Resilient K+P Business Model Delivering Solid Fundamentals
RESILIENT K+P BUSINESS MODEL DELIVERING SOLID FUNDAMENTALS PROFIT & LOSS BALANCE SHEET CASHFLOW 16% 30% 25% 49% 1.1X 27% 98% REVENUE EBITDA UNDERLYING RETURN ON NET DEBT TO INCREASE IN CASH GROWTH MARGIN NPATA EQUITY UNDERLYING OPERATING CONVERSION GROWTH EBITDA CASHFLOW REVENUE MARGIN PROFIT RETURN
Slide 5: K+P COVID-19 Response
K+P COVID-19 RESPONSE The Group was in a strong position pre COVID, and existing infrastructure enabled a smooth transition with minimal business impact across the second half. From March, to further strengthen the Group’s position in light of COVID we took the following proactive measures: TEAM COS
Slide 6: KPG Strategy
KPG STRATEGY To build intrinsic value Kelly Partners Group Holdings Limited aims Dashboard to build per-share intrinsic value by: FY19 FY20 27.7% 32.5% 1 Improving the earning power of our many operating businesses P (EBITDA margin) (EBITDA margin) 6.4% 6.6% 2 Further increasing their earnings throu
Slide 7: Build, Accelerate and Lead
BUILD, ACCELERATE AND LEAD Five Year Plan on track to double revenue to $80m+ by FY24 1. Build 2. Accelerate 3. Lead $90.0m • 54% Total Revenue Growth • Double Revenue to $80m Revenue • 15.4% YOY Revenue Growth Grow NPATA $80.0m • Double NPATA to $8m • Invest in Corporate Team to scale ~$80.0m 15% C
Slide 8: Section Two: Financials
ial Mar} @ The Heart of Australia's Financ ty a O c © = re SECTION TWO:
Slide 9: FY20 Financial Highlights
FY20 Financial Highlights Underlying Shareholder NPATA up 25.3% to $4.0m FY20 Financial Highlights (m) KPGHL & Controlled Entities KPGHL Attributed (parent only) P&L and Cashflow FY19 FY20 % Change FY19 FY20 % Change Revenue $40.0 $46.4 16.0% – – – Underlying EBITDA (pre AASB 16) $10.9 $13.7 26.1% –
Slide 10: FY20 Income Statement
FY20 Income Statement Strong revenue & earnings growth driven by acquisitions and existing businesses Income Statement Summary ($m)* FY19 FY20 Change % • Revenue of $46.4m (+$6.4m, up 16.0%), driven by in year Professional Services Revenue $40.0 $46.4 16.0% acquisition revenue of +$2.3m (Melbourne a
Slide 11: Attributable NPAT to Underlying NPATA Reconciliation
Attributable NPAT to Underlying NPATA Reconciliation Reconciliation of attributed NPAT/NPATA ($m) FY19 FY20 Statutory NPAT attributable owners of Kelly Partners Group Holdings Limited 2.4 4.0 Amortisation of customer relationship intangibles 0.4 0.5 NPATA attributable to owners of Kelly Partners Gro
Slide 12: FY20 Margins
FY20 Margins Targeting EBITDA margins of 32.5% across the Group Margins by Cohort Operating Other Businesses Established Growth Start-ups Services Total Revenue $34.5 $8.6 $0.4 $3.0 $46.4 68% EBITDA^ $11.6 $2.1 $0.0 $1.3 $15.1 81% EBITDA Margin % 33.5% 24.7% 12.3% 45.4% 32.5% ^EBITDA before head off
Slide 13: Balance Sheet as at 30 June 2020
Balance Sheet as at 30 June 2020 Conservative balance sheet with gearing reducing 18% to 1.1x $0.7m Consistently reducing lock up • Conservative capital structure with 39.7% Equity / cash and increasing efficiency Total Assets ratio, and Net Debt / Underlying EBITDA $7.6m unlocked LOCKUP DAYS (pre A
Slide 14: FY20 Cashflow
FY20 Cashflow Operating Cashflow up 27.0% and cash conversion at 98% reflects high quality earnings CASHFLOW COMPARATIVES • Cash from Operations $12.7 (+27%) $14.0m $12.7m driven by billings growth and reduction in lock up $12.0m $10.0m +27% $10.0m • Strong cashflow supports dividend. $8.0m $6.6m $6
Slide 15: Debt and liquidity
Debt and liquidity $12.5m in liquidity for COVID cushioning and $31m in acquisition capability DEBT AND CASH • Up to $12.5m equates to ~$31m in acquisition $5.0 capability, i.e. accretive Revenue of ~$31m and accretive EBITDA of $10m1. $0.0 $12.5m $3.8mCash • Liquidity COVID cushion - Lock-up days c
Slide 16: Section Three: Outlook
SECTION THREE: Outlook 16
Slide 17: Outlook
Outlook Strong outlook underpinned by annuity income and industry leading margins The Company will maintain its focus on organic growth, network expansion and offering new services. During FY21 the Company aims to: • Grow EBITDA margins (pre-AASB 16) to 32.5% in each individual accounting practice;
Slide 18: Build, accelerate and lead
Build, accelerate and lead Double revenue to $80m+ by FY24 1. Build 2. Accelerate 3. Lead $90.0m • 54% Total Revenue Growth • Double Revenue to $80m Revenue • 15.4% YOY Revenue Growth Grow NPATA $80.0m • Double NPATA to $8m ~$80.0m • Invest in Corporate Team to scale 15% CAGR $70.0m $60.0m Revenue $
Slide 19: 5 Year Revenue Growth Plan to FY24
5 Year Revenue Growth Plan to FY24 Double revenue to $80m+ by FY24 Build Accelerate Lead Actual CAGR Target CAGR 15.4% 15.1% m $81.3m Total Growth Total Growth $80 53.5% 2X from FY19 $5.8m $3.5m $70 $5.1m $3.1m $60 $4.4m $2.7m $50 $3.8m* $46.4m $2.3m* $2.6m $40 $2.5m $2.7m $5.2m $70.5m $30.2m $3.2m
Slide 20: Appendix
Appendix 20
Slide 21: 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 Accounting Services Market Insurance Brokers Market $20.4b Annual Revenue* $13.2b Annual Revenue Typical Clie
Slide 22: 24th Largest Accounting Firm in Australia, Opportunity Remains Enormous
WE ARE THE 24TH LARGEST ACCOUNTING FIRM IN AUSTRALIA AND THE OPPORTUNITY REMAINS ENORMOUS BUILDING A PLATFORM BUSINESS FOR PROFESSIONAL SERVICES FIRMS Financial Review Top 100 Accounting Firms Firm Revenue Revenue Total FY19 Change Total New ($m) (% YOY) Partners Partners 1 PWC 2600.00 10.6% 734 41
Slide 23: Existing Kelly+Partners Office Locations
Existing Kelly+Partners Office Locations NSW and VICTORIA NSW VICTORIA 23
Slide 24: Mission and Momentum
“ TO BE SYDNEY AND MELBOURNE’S FIRST CHOICE ACOUNTANTS AND ADVISORS FOR “ PRIVATE BUSINESS OWNERS. 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 a
Slide 25: Strategic Pillars
STRATEGIC PILLARS FOCUS & CHALLENGE GROWTH PERFORMANCE STRUCTURE Continue to challenge the Focus on deep expertise and Scale our network of offices as Delivering strong value status quo by delivering to market penetration making we continue to drive our to our clients, people, our professionals in o
Slide 26: Different on Purpose
DIFFERENT ON PURPOSE … TO TRADITIONAL ACCOUNTING FIRMS 26
Slide 27: FY20 Growth and Performance Continues
FY20 Growth and Performance Continues 14 years of continual growth. The business has doubled on average every 3 years, 4 times in a row. Double Double Double Double Revenue 2007 2008 2009 2013 $50.0 2 Years 1 Year 4 Years 4 Years 54% in 3 Years 1 2 3 4 $46.4m FY Revenue $45.0 $22.0m 2H Revenue $39.5
Slide 28: Revenue Growth since IPO
Revenue Growth since IPO 54% revenue growth since IPO in 2017 • Total Revenue has increased 54% since the 2017 IPO, representing a year on year revenue growth of 15.4%. 54% $46.3m • Annuity revenue comprise ~95% of total group revenue, demonstrating defensive and recurring nature of K+P. $39.5m $40.
Slide 29: Network Expansion Update
Network Expansion Update Melbourne Blue Mountains Marquee Tuck-in Revenue: $2.0-$2.5m Revenue: $1.2 - $1.4m EBITDA contribution*: ~ $500k EBITDA contribution*: ~ $300k Completion Date: 1 November 2019 Completion Date: 1 November 2019 • Existing K+P partner of 5 years is now running the office. • Exi
Slide 30: Complementary Business Progress
Complementary Business* Progress Positive momentum in complimentary businesses with significant runway ahead CORPORATE INVESTMENT WEALTH FINANCE TOTAL ADVISORY** OFFICE*** Establishment date Dec-16 Sep-17 Sep-17 Jun-18 Investment < $5k $34k $90K $110k < $250k KPG share of profit 51.00% 51.00% 51.00%
Slide 31: Launch of Special Opportunities Fund #2
Launch of Special Opportunities Fund #2 On the back of a successful Fund #1, Fund #2 looks to raise $5-$50m in FY21 Fund Name Kelly+Partners Investment Office Special Opportunities Fund #2 Investment Manager Kelly Partners (Investment Office) Pty Ltd Trustee Columbus Investment Services Ltd (One Inv
Slide 32: FY20 Dividends
FY20 Dividends Dividend growth of 10%+ per annum Total fully franked Amount per Fully Franked amount Payment date dividends paid security Cents per security Cents For the year ended 30 June 2020 Special dividend 18 September 2019 $249,881 0.55 0.55 First interim dividend 30 September 2019 $549,737 1
Slide 33: Return to shareholders since IPO
Return to shareholders since IPO Consistent and regular returns to shareholders via quarterly dividends • The Company since IPO, has consistently paid Dividends Declared and Paid out quarterly dividends growing at 10% per annum from a base of 1.00 cent per share per 6.00cps 5.39cps quarter in FY20 t
Slide 34: NPAT to Operating Cashflow Reconciliation
NPAT to Operating Cashflow Reconciliation Reconciliation of NPAT to Operating Cashflow ($m) FY19 FY20 Reported NPAT 7.1 10.4 Adjustments for: Depreciation and amortisation 1.2 3.7 Change in fair value of contingent consideration -0.2 - Repayments of lease liabilities - -2.0 Net fair value (gain ) /l
Slide 35: Case Study: Business Transformation
Case Study: Business Transformation Kelly+Partners has a proven track record of delivering transformational outcomes for smaller firms • Significant improvement in margins Pre-acquisition Post-acquisition and revenue in the first 5 years after 40.0% joining the network. • Following an acquisition, 3
Slide 36: Case Study: Greenfield Expansion
Case Study: Greenfield Expansion Kelly+Partners has successfully launched 7 greenfield operating businesses since its inception • The Kelly Partners Norwest business has exhibited very strong growth in $1,800,000 50.0% revenue and earnings, with a significant increase in margins. This $1,600,000 has
Slide 37: Top Shareholders at June 2020
Top 50 Shareholders at 30 June 2020 Strong alignment of employee, partners and owners, holding 59.8% Holder Type No of shares % Founder and CEO 23,400,000 51.5% Shareholder Composition Partners 3,178,251 7.0% Management & Team 593,550 1.3% 11% Top 50 - Internal 27,171,801 59.8% Institutional 7,314,7
Slide 38: 5 Year Growth Plan
5 Year Growth Plan Three pronged growth plan ORGANIC NETWORK EXPANSION EXISTING NEW SERVICES TARGET GROUP GROUP ORGANIC ACQUISITION – ACQUISITION – OR GREENFIELD GROWTH TUCK-IN MARQUEE • 2+ tuck-ins per year • 5 new sites • 5 new sites • Wealth • 8 existing sites • $2.0m+ revenue each • $2.0m revenu
Slide 39: Disclaimer
Disclaimer SUMMARY INFORMATION are generally identifiable by the words “anticipate”, “believe”, “expect”, “projections” This document has been prepared by Kelly Partners Group Holdings Limited “guidance”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “will”, “target”, ACN 124
Slide 40: Thank you
Thank you kellypartnersgroup.com.au 40
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