Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — H1 2023 Earnings Presentation
42 slides from Kelly Partners's earnings presentation, Feb 1, 2023
Slide 1: Kelly Partners Group Holdings 1H23 Results Presentation
KELLY PARTNERS GROUP HOLDINGS LIMITED KELLY PARTNERS GROUP HOLDINGS (ASX: KPG) 1TH23 RESULTS PRESENTATION PRESENTED BY Brett Kelly Founder and CEO Kenneth Ko CFO February 2023 KP+GH 1
Slide 2: KPG in 10 Seconds
KPG IN 10 SECONDS PROFIT & LOSS BALANCE SHEET +0.61x NET DEBT TO UNDERLYING EBITDA 11.2% RETURN ON EQUITY t 7.5% UNDERLYING NPATA GROWTH 142.2% REVENUE GROWTH 16.5% EBITDA MARGIN REVENUE MARGIN PARENT RETURN GEARING NPATA 1H23 $44.0m 26.7% $3.6m 43.4% 1.93x* 1H22 $30.9m 33.2% $3.3m 42.2% 1.32x Reven
Slide 3: Capital Allocation
CAPITAL ALLOCATION KPG aims to build per-share intrinsic value b’ 1 Improving the earning power of our operating businesses 2 Further increasing their earnings through acquisitions 3a Growing our existing accounting subsidiaries 3b — Growing our existing complementary businesses 4a Making programmat
Slide 4: Contents
CONTENTS 1 GROWTH 2 FINANCIALS 3 AGLOBAL OUTLOOK ulations presented in this presentation may be impacted by rounding Note all totals and other calct
Slide 5: Growth
1 GROWTH KP+GH
Slide 6: Offices
OFFICES 28 19 NSW @ central Jablelands + Western Sydney, © Blue Mountains + Norwest Dungog © + Singleton#f.)+ Maitland y)+ {f)Clouster 4 07, Taylors Beach + QNewcastle Central Coast @ Pittwater + ,*Northern Beaches Inner West a @) Leeton + Ooranparkt, 4 @ North sydney Q south west sydney @ Sydney ca
Slide 7: Growth: Global
GROWTH: GLOBAL
Slide 8: Timeline 2006 to 1H23
8 7 5 4 3 3 3 2 2 1 1 1 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1H23
Slide 9: Growth: Revenue & EBITDA
GROWTH: REVENUE & EBITDA Double Double Double Double Double Revenue 2007 2008 2009 2013 2017 $100.0 1Year | 5 Years $90.4m $90.0 $80.0 $70.0 $60.0 3 re) % Revenue CAGR* & $500 $40.0 $30.0 $20.0 1 | $24 $24.8m] $6.3m . . $3.2m sisi o_o] 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 10: Growth: Revenue & EPS
GROWTH: REVENUE & EPS Compounded annual growth rate since 2006 1H23 INTERNAL 0 a) Complementary +42.2% BRR EXTERNAL Acquired Earnings per share annual growth rate since IPO (up to FY22) 13.1% KP+GH
Slide 11: Growth: Owner Earnings
GROWTH: OWNER EARNINGS Owner earnings $3,128,904 $3,885,041 $5,014,894 $6,312,568 $6,546,674 Owner earnings per share (cents) 688 8.55 1.1 14.03 14.37 % Growth 24.2% 29.1% 25.9% 3.7% 13.1% Underlying NPATA $3,193,208 $3,937,677 $5,114,832 $6,296,954 $6,546,674 Cashflow Conversion - Parent 98% 99% 98
Slide 12: Growth: Per Share
GROWTH: PER SHARE +16.8% p.a. Recurring Revenue per share to FY22 +13.1 p.a. Owner Earnings (Parent) per share & EPS to FY22
Slide 13: Growth: ROIC
GROWTH: ROIC “And when we think about Invested Capital, we think about the shareholder capital that has been invested in the businesses, plus any Adjusted Net Income less any distributions. Obviously, when you divide Adjusted Net Income by Invested Capital, you get a measure of the return on our sha
Slide 14: People, Services, Clients
PEOPLE SERVICES CLIENTS 45 ae — 90% Great Place to Work® Statement 456 Team Members Investment office, 0.5% Finance 2.0% Audit, Wealth, 5.8% \ | Gg 4.8% 1H23 Revenue $44m Accounting, 87.0% $44m Revenue (+42%) -100 Our Net 100 Promoter Score: +70 17,000+ Groups (+26%) 14
Slide 15: Financials
2 FINANCIALS KP+GH
Slide 16: Highlights
HIGHLIGHTS KPGHL & Controlled Ent uted (parent only) 1 Revenue $30.9 42.2% - - - Underlying EBITDA (pre AASB 16) $10.3 4.3% - - - Margin % 33.2% 19.6% - - - EBITDA (pre AASB 16) sis 21% - - - Underlying NPATA $75 18.2% $33 $3.6 15% Margin3 24.2% 16.9% - - - NPATA $89 58% $38 $33 14.9% Dividends & Di
Slide 17: Revenue Growth
REVENUE GROWTH Revenue growth contributions by year pe | rv | rv20 | ryan | ryan | ave | was Organic-Accounting 10.3% -6.4% 6.6% 1.5% 4.7% 3.3% 5.6% erganie” 2.7% 1.8% 1.4% 1.2% 1.5% 1.7% 2.1% Complementary Organic - Total 13.0% -46% 80% 27% 62% 51% 7.8% Acquired 17.2% ©4% 66% 48% 265% 12.3% 34.5% T
Slide 18: Income Statement
INCOME STATEMENT + Revenue of $44.0m (+$13.1m, up 42.2%), driven both by organic revenue growth (7.8%) and by contributions from acquisitions completed in FY22 (34.5%). Revenue increased organically by 8.0% compared to the prior period and has exceeded the Group's target annual organic growth of 5.0
Slide 19: Gross Margin
GROSS MARGIN “high gross margins are the most important single factor of long run performance. The resilience of gross margins pegs companies to a level of performance.” — Matthew Berry, “Mean Reversion in Corporate Returns”! 70.00% 618% 62.9% 619% 617% 60.00% 59.5% 58.8% $8.24% 50.00% 44.10% 41.10%
Slide 20: Profitability
PROFITABILITY Total inc. Businesses Growth Other Servi Subscale Subscale Revenue $33.1 $1.6 $3.6 $38.4 $13 $39.7 $43 $44.0 EBITDA $10.5 $0.3 $1.2 $12.0 $0.3 $12.3 $0.9 $13.2 EBITDA Margin % 31.7% 21.6% 32.2% 31.3% 22.3% 31.0% 20.9% 30.0% KELLY+PARTNERS COUNTING INDUSTRY EBITDA mCosts Source: IBIS Wo
Slide 21: NPATA Reconciliation
NPATA RECONCILIATION Reconciliation of attributed NPAT/NPATA ($m) 1H22 1H23] Statutory NPAT attributable owners of Kelly Partners Group Holdings Limited 34 2.3 Amortisation of customer relationship intangibles OS 10 NPATA attributable to owners of Kelly Partners Group Holdings Limited 3.8 3.3 Add: n
Slide 22: Trinity
TRINITY 2. Debtors 45.3 days* 1H22 1. WIP 12.1 days* CASH CONVERSION 88.99 3. Revenue 24.5% Growth EBITDA 33.5% Margins CASH CONVERSION ON EBITDA 10 3. Revenue ‘ h 2. Debtors 45.0 days* EBITDA * Calculated on estimated annualised run rate revenue
Slide 23: Balance Sheet
BALANCE SHEET LOCKUP DAYS WiP Days + Net Debt / Underlying EBITDA of 1.93x (FY22: 70.0 mDebtor Days 1.36x) as a result of increased term debt taken S74 558 564 out to fund acquisitions. Net Debt / £00 Underlying EBITDA of operating business (i.e. 50.0 721 14 excluding parent additional investment) w
Slide 24: Debt & Liquidity
DEBT & LIQUIDITY $60.0m $50.0m $40.0m $30.0m $20.0m $10.0m $0.0m + Working Capital debt of $8.1m is covered 1.7x by WIP and Debtors DEBT AND CASH Cash, $6.3m $43.2m Drawn $36.9m Net Available Headroom, $8.8m $52.0m Facility Limits + Acquisition & Term Debt of $31.7m is supported by annuity style cas
Slide 25: Net Debt per Partner
NET DEBT PER PARTNER Net Debt per Partner * Total number of equity partners increased $600,000 80 to 72: + 1new partner recruited externally 70 $500,000 * 12 new partners from completed acquisitions 60 * On1July 2022, 4 new partners were $400,000 promoted internally, bringing the total number of equ
Slide 26: Cashflow
CASHFLOW * Cash from Operations pre AASB 16 of $10.3m ‘CASH FROM OPERATIONS (CFO) FREE CASHFLOW TO FIRM (FCFF) increased 12.2% (1H23: $9.2m) $63m $6.4m $10.3m + Free Cashflow to Firm is in line with prior year as $9.2m all profits generated from acquisitions have been applied and repaid against acqu
Slide 27: Dividends
DIVIDENDS * Since IPO in June 2017, the Company has 8.00cps consistently paid out dividends growing at >10% 7.00cps per annum . a 6.00cps * The Company has paid out monthly dividends from Jan-21, reflecting the resilience and S.00cps ee eee strength of its earnings and cashflow 4.00cps * The Group i
Slide 28: Parent & NCI
PARENT & NCI Profit after income tax expense for the half year was $6.5m, with: + Profit attributable to shareholders of Kelly Partners Group Holdings Limited of $2.3m + Profit attributable to non controlling interests (NCI) of $4.2m The profit attributable to the parent vs. NCI represent a 35%/65%
Slide 29: Cashflow Since IPO
CASHFLOW SINCE IPO Group Cash From Operations (CfO) Group Owners' Earnings (CfO - Maint. Capex) Cash Conversion (Operating Cash Flow / EBITDA) Days Lockup $14.0 $125 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 1HI8 qHI9 1H20 1H21 1H22 1H23
Slide 30: Cash Reconciliation
CASH RECONCILIATION in of NPAT to Operating Cashflow ($m) 1H22 1H23 Reconcili Reported NPAT 8.0 65 Adjustments for: Depreciation and amortisation 28 45 Unwinding of interest on contingent consideration 01 03 Other non-cash movements* 13 -0.1 Change in operating assets and liabilities: Decrease / (in
Slide 31: 1H/2H Skews
1H/2H SKEWS Revenue seasonality in accounting business + Revenue seasonality in the accounting (excludes acquisitions) businesses is approximately 1H: 53% / 2H: 47%, equating to a 5% (orc. $2.4m swing) down swing in 2H22. 75.0% * Seasonality is predominantly due to 65.0% timing of tax work related t
Slide 32: Number of shares on issue since IPO
Number of shares on issue since IPO 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 IPO 30/06/2018 30/06/2019 30/06/2020 30/06/2021 30/06/2022 31/12/2022
Slide 33: A Global Outlook
3 A GLOBAL OUTLOOK KP+GH
Slide 34: We cannot continue to invest and deliver without growing globally
"We cannot continue to invest and deliver the world class people, client and community impact we are known for and justify the investment if we don’t grow globally. Our clients over the next 25 years are all going to have to earn a return on a global basis near and will need their accountants to THE
Slide 35: P P P
P P P P P P P P P P P P P P P P P P P P P P P P P
Slide 36: Australia's Global Firm
AUSTRALIA’S GLOBAL FIRM Country en Firm Na Found: Logo 1 United States 230 Lybrand, Ross Brothers ane Montgomery (now part of 1e98 Philadelphia, United pwe ck 2 China 18.0 ShineWing 1981 Beijing, China c ‘SW 3 Japan 49 Tohmatsu Aoki & Co (now part of Deloitte Touche Tohmatsu) 1968 Tokyo, Japan Deloi
Slide 37: Thank you
Thank you KP+GH
Slide 38: Appendix
APPENDIX KP+GH
Slide 39: Metrics Since IPO
METRICS SINCE IPO s ("Group") Revenue Underlying EBITDA (pre AASB 16) $10.9 $13.5 $16.0 $20.0 18.0% 27.2% 29.6% 32.6% 30.8% Underlying NPATA $8.8 $10.1 $1.6 $14.2 14.2% Margin% 22.1% 22.3% 237% 218% NPATA $79 $1.0 ge $155 Dividends & Distributions Pai -$6.7 -$105 -$8.4 -$9.9 Cash From Operations (Cf
Slide 40: Year Plan 1: FY19-FY24
5 YEAR PLAN 1: FY19-FY24 1. Build 2. Accelerate 3. Lead + 54% Total Revenue Growth $90.0m + 15.4% YOY Revenue Growth * Invest in Corporate Team to scale + Double Revenue to $80m Cauibitsar) + Double NPATA to $m $80.0m Revenue soem Revenue co” 9 $60.0m Revenue 17% CAGR $48.9m $50.0m Revenue 13% CAGR
Slide 41: Next Years (FY25-FY29)
NEXT 5 YEARS (FY25-FY29) . Growing Kelly+Partners System, Giese become 3 eID TO ereeourmaing Build vs. Buy vs. Partner Business Model and Partner-Owner- firm in Australia Driver® model in markets globally Financial 100 Accounting Firms {$m} Revenue 1 EERE Deloitte 4 oe ) 8 20260 Filmes S Sec 19.0 Fi
Slide 42: Advantage
ADVANTAGE (e na, PROGRESS)
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