Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — Shareholder Meeting (November 2023)
50 slides from Kelly Partners's shareholder meeting presentation, November 2023
Slide 1: Kelly Partners Group Holdings AGM 2023
KELLY PARTNERS GROUP HOLDINGS (ASX: KPG) AGM 2023 PRESENTED BY Brett Kelly Founder and CEO Kenneth Ko CFO November 2023 1
Slide 2: Valued Members, Winning Team, Inspiring Mission
Valued Members «Winning °Team : Inspiring ‘Mission
Slide 3: Partner-Owner-Driver
PARTNER-OWNER-DRIVER® EA 9% reinvested annually in business a ey 7) 0) L Z 7 FINANCIAL, e s PROCESS A PEOPLE Defined and agreed metrics Best interest of clients and advice Synergies and network effects Owners Partner-Owner-Driver™ (“POD”) STRUCTURE A STRATEGY Private Business Owners 1 Values led Fou
Slide 4: Double 5 Times in a Row
DOUBLE 5 TIMES IN A ROW Revenue Double Double Double Double 2007 2008 2009 2013 $120.0 1 Year 1 Year 4 Years 5 Years $100.0m 5 4 Years 12 3 4 to $110.0m $100.0 $86.5m $80.0 31% $64.9m $42.5m $m $60.0 Revenue CAGR* $48.9m $45.5m $33.9m $39.5m $40.0m $40.0 $24.1m $22.0m $30.2m $20.1m $20.2m $44.0m $16
Slide 5: Q1 Update
QI UPDATE ASX ANNOUNCEMENT - KPG Tuesday, 24” October 2023 KPG delivers 27.3% increase in QI Underlying’ Attributed NPATA. Q1-2024 Highlights + Group EBITDA of $8.2m (+$2.0m up 28.4% on pep) driven by organic and inorganic growth; + EBITDA margin of 29.4% of Revenue, reflecting a 1.7% increase on pe
Slide 6: Q1 Growth Over 5 Years
Q1 GROWTH OVER 5 YEARS Consistent Revenue Growth NPATA (parent) doubled since Q1-FY20 A$m A$m 21% 4YR CAGR 21% 4YR CAGR $27.7 $2.1 $22.2 $1.7 $1.6 $1.5 $15.4 $12.8 $13.6 $1.0 Q1-FY20 Q1-FY21 Q1-FY22 Q1-FY23 Q1-FY24 Q1-FY20 Q1-FY21 Q1-FY22 Q1-FY23 Q1-FY24 EBITDA doubled since Q1-FY20 EPS doubled sinc
Slide 7: Growth
1 GROWTH
Slide 8: Programmatic Partnerships
PROGRAMMATIC PARTNERSHIPS ~4x Pre-IPO Total Partnerships Contacts: 6 8 31 28,115 Leads: 138 Prospects we have met or plan to meet IPO with 9 8 7 Prospects 4 actively in 3 3 3 final stage 2 2 1 1 1 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Transactions 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 9: FY23 Partnerships
FY23 PARTNERSHIPS 1. Kelly Partners Hunter Region 2. Kelly Partners Leeton 3. Kelly Partners Maitland 4. Kelly Partners Melbourne (tuck-in) 5. Kelly Partners Palm Beach 6. Kelly Partners 7. Kelly Partners East Sydney 8. Kelly Partners Brisbane South West Brisbane 9
Slide 10: FY24 Partnerships
FY24 PARTNERSHIPS 1. Kelly Partners Griffith 2. Kelly Partners Bundall 3. Kelly Partners Los Angeles Jul-23 Aug-23 Dec-23 10
Slide 11: Griffith Office Launch
GRIFFITH OFFICE LAUNCH 11
Slide 12: Operational Updates
2 OPERATIONAL UPDATES KP+GH
Slide 13: US Update
US UPDATE 1. Kelly Partners Malibu 2. Kelly Partners Newport 3. Kelly Partners Los Angeles Dec-23 13
Slide 14: India Office
INDIA OFFICE 14
Slide 15: Focus on 9 Deals
FOCUS ON 9 DEALS ~4x Pre-IPO Total Partnerships Contacts: 6 8 31 28,115 Leads: 138 Prospects we have met or plan to meet IPO with 9 8 7 Prospects 4 actively in 3 3 3 final stage 2 2 1 1 1 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Transactions 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201
Slide 16: Digital Passport
DIGITAL PASSPORT KELLY:PARTNERS | Progress Portal ® Profile: John Citizen KELLY+ PARTNERS
Slide 17: Financials
3 FINANCIALS KP+GH
Slide 18: Capital Allocation
CAPITAL ALLOCATION KPG aims to build per-share intrinsic value by: FY18 FY19 FY20 FY21 FY22 FY23 1 Improving the earning power of our 34.0% 27.7% 32.5% 33.4% 30.9% 27.3%* operating businesses EBITDA margin of operating businesses 2 Further increasing their earnings through 17.2% 6.4% 6.6% 4.8% 26.5%
Slide 19: Profit Trajectory
PROFIT TRAJECTORY Revenue vs "Smoothness" in Earnings $120.0m $10.0m $9.0m 9.0% $9.0m $100.0m 3X IN 8 YEARS $100.0m $8.0m $6.3m $86.5m $7.0m $80.0m 9.7% $5.4m $6.0m $5.1m 6.2% 10.5% $4.3m $64.9m $60.0m $5.0m 11.0% $3.9m $3.4m 8.7% 11.4% $3.2m $4.0m $48.9m 8.0% $45.5m $40.0m $39.5m $40.0m $2.5m $3.0m
Slide 20: 5 Year Plan
5 YEAR PLAN $120.0m 1. Build 2. Accelerate 3. Lead • 54% Total Revenue Growth FY23 FY24 FY24 • 15.4% YOY Revenue Growth Grow NPATA Actual Run Rate 5 Year Goal • Invest in Corporate Team to scale Double Revenue to $80m $100.0m Revenue Double NPATA to $8m Revenue $100-$110m 20% CAGR Revenue $86.5m ~$8
Slide 21: Next 5 Years (FY25-FY29)
NEXT 5 YEARS (FY25-FY29) OBJECTIVE TOP 10 IN AUSTRALIA SCALE COMPLEMENTARY GO GLOBAL Growing Kelly+Partners System, Grow to become a top 10 accounting Build vs. Buy vs. Partner Business Model and Partner-Owner- firm in Australia Driver® model in markets globally Financial Review Top 100 Accounting F
Slide 22: Advantage
ADVANTAGE GROUP MODEL BUSINESS TEAM 22
Slide 23: Strategic Review
4 STRATEGIC REVIEW KP+GH
Slide 24: Strategic Review Update
KELLY PARTNERS GROUP HOLDINGS (ASX: KPG) STRATEGIC REVIEW UPDATE October 2023
Slide 25: Strategic Review Update
STRATEGIC REVIEW UPDATE ▪ As part of the Strategic Review announced on 11 August 2023, Kelly Partners Group Holdings Limited (“KPG”) continues to review its strategy, capital structure and governance in the context of its Australian and emerging US growth strategy ▪ As outlined in Section 1, The Str
Slide 26: General Observations from Strategic Review
GENERAL OBSERVATIONS FROM STRATEGIC REVIEW SECTION 1
Slide 27: Founder-Led Companies Outperform
1 FOUNDER-LED COMPANIES OUTPERFORM Research shows companies in which the founder is still deeply involved perform more than three times better than non-founder led companies. Relative TSR of Founder-led vs other companies The most sustainable profitable companies (Indexed Total Shareholder Return fo
Slide 28: Programmatic Acquirers Generate Superior Returns
2 PROGRAMMATIC ACQUIRERS GENERATE SUPERIOR RETURNS Programmatic growth strategies are the Programmatic M&A consistently outperforms Decades of research on M&A strategies and underlying capabilities point to three best performing of all M&A approaches(1) other approaches across sectors(1) critical ar
Slide 29: KPG Has Outperformed Select Sector Participants and Compounders
KPG HAS OUTPERFORMED SELECT SECTOR PARTICIPANTS 3 AND BEST-IN-CLASS COMPOUNDERS SINCE LISTING IN 2017 KPG TSR during the first six years of listing vs. select sector participants KPG TSR during the period it has been listed vs. select sector participants (Daily, rebased to 100) (1,2) (Jun-17 – Sep-2
Slide 30: KPG Generates One of the Strongest TSRs
KPG GENERATES ONE OF THE STRONGEST TSRs AMONG SELECT 3 SECTOR PARTICIPANTS AND BEST-IN-CLASS COMPOUNDERS KPG has generated average annual TSR of 32% which is among the strongest of select sector participants. Total Shareholder Return (TSR) over the last 15 years (rebased to 100)(1) Index / company T
Slide 31: KPG Compares Favourably With Best-in-Class Compounders
KPG OUTPERFORMS SELECT SECTOR PARTICIPANTS AND 3 COMPARES FAVOURABLY WITH BEST-IN-CLASS COMPOUNDERS US business US tax and ASX growth Kelly+Partners Group Select global Median estimates consulting services accounting services professional services Holdings Limited(1) best-in-class compounders Consti
Slide 32: Opportunity to Emerge as One of Australia's First Global Accounting Firms
THERE ARE MANY GLOBAL ACCOUNTING FIRMS, WITH AN 4 OPPORTUNITY FOR KPG TO EMERGE AS ONE OF AUSTRALIA’S FIRST KPGH’s differentiated model positions the company to continue growing to become one of Australia’s first global accounting firms. Example US-based global accounting firms (Example operators th
Slide 33: Value Creation from Ceasing Dividends
5 VALUE CREATION FROM CEASING DIVIDENDS Illustrative pro forma analysis demonstrates the incremental earnings potential from ceasing dividends and reinvesting capital. Commentary Illustrative pro forma historical Underlying NPATA assuming reinvestment of dividends (1) 20.1% CAGR • Illustrative analy
Slide 34: Observations on KPG's US Strategy
OBSERVATIONS ON KPG’S US STRATEGY SECTION 2
Slide 35: Observations on KPG's US Strategy
OBSERVATIONS ON KPG’S US STRATEGY ▪ KPG’s Strategic Review has confirmed the following with respect to its US growth strategy: 1. The US presents an opportunity for KPG expansion, with the accounting services industry over 10x the size of Australia 2. Many demand drivers in Australia are identical i
Slide 36: The US Market Presents an Opportunity for KPG Expansion
1 THE US MARKET PRESENTS AN OPPORTUNITY FOR KPG EXPANSION US GDP is ~15x the size of Australia’s and shares many of the characteristics that drove KPG’s growth over the past five years. US economy vs Australia US accounting services revenue by firm cohorts (2023) ($ USD) ($ USD) Rank Country GDP ($T
Slide 37: Many Demand Drivers in Australia Are Identical in the US
MANY DEMAND DRIVERS IN AUSTRALIA ARE IDENTICAL 2 IN THE US MARKET Strong tailwinds in the US market bodes well for KPG’s growth outlook as it looks to enter the US market. Paying taxes in the US is even more difficult than in Australia The US tax code is incredibly complex and growing each year Ease
Slide 38: California Is the Perfect Beachhead for US Expansion
CALIFORNIA IS THE PERFECT BEACHHEAD TO BEGIN 3 EXPANSION IN THE US MARKET California is a gateway to the APAC region and a logical beachhead for KPG’s expansion, as it’s the US’ most populous state and the world’s 5th largest economy despite a much smaller footprint than Australia. (1) Among the est
Slide 39: US Accounting Services Attract Private Equity Interest
US ACCOUNTING SERVICES HAVE ATTRACTED INTEREST FROM PRIVATE 4 EQUITY, DEMONSTRATING THE CONSOLIDATION OPPORTUNITY Target Minority Acquirer Date September 2021 June 2022 April 2022 August 2021 September 2021 Acq’n mult | EBITDA | EV Not disclosed Not disclosed 13.0x 12.0x | $100m | $1.2bn 15.5x | $12
Slide 40: Comparison of KPG Against Select US Operator
5 COMPARISON OF KPG AGAINST SELECT US OPERATOR A comparison to CBIZ demonstrates KPG’s relative performance and provides a reference point for valuation in the US listed market. Overview Top 20 and founder-led Australian tax and accounting services platform with market cap of ~A$200m Top 15 US provi
Slide 41: Key Takeaways
KEY TAKEAWAYS ▪ Through consultation with financial and legal advisors and exploration of alternatives with third parties, it has been determined to explore in further detail the US listing alternative, including the potential for a shareholding structure to attract and retain high- quality long-ter
Slide 42: Omaha May-24
5 OMAHA MAY-24
Slide 43: Omaha May-24
OMAHA MAY-24 43
Slide 44: Resolutions
RESOLUTIONS KP+GH
Slide 45: Resolution 1: Adoption of the Remuneration Report
Resolution 1 Adoption of the Remuneration Report To consider and, if thought fit, to pass, with or without amendment, the following Resolution as a Non-Binding Ordinary Resolution: “That for the purposes of Section 250R(2) of the Corporations Act 2001 and for all other purposes, approval is given to
Slide 46: Resolution 2: Re-election of Mr Stephen Rouvray
Resolution 2 Re-election of Directors – Mr Stephen Rouvray To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an Ordinary Resolution: “That for the purposes of clause 13.3 of the Constitution and for all other purposes, Mr Stephen Rouvray be re-elected a
Slide 47: Resolution 3: Re-election of Mr Paul Kuchta
Resolution 3 Re-election of Directors – Mr Paul Kuchta To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an Ordinary Resolution: “That for the purposes of clause 13.3 of the Constitution and for all other purposes, Mr Paul Kuchta be re-elected as a Dire
Slide 48: Resolution 4: Remuneration of Non-Executive Directors
Resolution 4 Remuneration of Non-Executive Directors To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an Ordinary Resolution: “That, for the purposes of clause 13.4 of the Constitution, ASX Listing Rule 10.17 and for all other purposes, the maximum agg
Slide 49: Disclaimer
DISCLAIMER SUMMARY INFORMATION This document has been prepared by Kelly Partners Group Holdings Limited ACN 124 908 363 (Company) of Level 8, 32 Walker Street, North Sydney NSW 2060. This document contains information in a summary form and general background information about the Company’s activitie
Slide 50: Thank you
Thank you KP+GH
Kelly Partners Group Holdings — Shareholder Meeting (November 2023) on 6ix