Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — Market Eye Conference 2020
37 slides from Kelly Partners's conference presentation, Jun 9, 2020
Slide 1: Market Eye Conference 2020
KP+GH MARKET EYE CONFERENCE 2020 ASX: KPG PRESENTED BY Brett Kelly CEO and Executive Chairman June 2020 kellypartnersgroup.com.au
Slide 2: K+P Response to COVID-19
K+P RESPONSE TO COVID-19 At Kelly+Partners, the safety and health of our team members are our top priority and careful considerations have been made in our response to COVID-19: 1. Remote working arrangements for all team members since mid-March 2. Return to work plans commencing this week, with var
Slide 3: Everything old is new again
CONSUMER 7 cone NS TO CHANGING UMER NEED EVERYTHING OLD IS NEW AGAIN KP+GH
Slide 4: For personal use only
For personal use only p25 p27 p28 * excluding finance costs and income taxes paid
Slide 5: 1H20 Growth and Performance Continues
1H20 Growth and Performance Continues 13 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 2018 2Years i; 1Year ; 4 Years . 4 Years $45.0 i t i 32% in2 : ' Years $40.0 T 4 : | $35.0 ‘ me — 34% $25.0 | |
Slide 6: FY2020 Revenue Progress
For personal use only • • • • • • • • • • • • • • • • • • • • • • • FY19 ~$40.0m Revenue FY2020 REVENUE PROGRESS EBITDA
Slide 7: Agenda
AGENDA T SECTION ONE MISSION AND MOMENTUM SECTION TWO INVESTMENT CASE AND STRATEGY SECTION FOUR SECTION THREE 3 RESULT HIGHLIGHTS 4 FINANCIALS KP+GH
Slide 8: 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 9: 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 10: 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 Typical Client Base ASX listed and multi-national Accounting Services Market $20.3b Annual Revenue* Typical A
Slide 11: We Are the 24th Largest Accounting Firm in Australia
WE ARE THE 24TH LARGEST ACCOUNTING FIRM IN AUSTRALIA AND THE OPPORTUNITY REMAINS ENORMOUS BUILDING A PLATFORM BUSINESS FOR PROFESSIONAL SERVICES FIRMS Financial Review Top 10 FY | ($m) | 6 YOY | | i 2600.00 H 10.6% H 734 H H | 230000 | 143% | 883 : . $8.6b~ iga700 5% 569 : : Big 4 L_|__ 1780.00 | 85
Slide 12: Different on Purpose
DIFFERENT ON PURPOSE «. TO TRADITIONAL ACCOUNTING FIRMS 1. Mission +Values Clearly defined mission and values ~ ea a. 6, Brand Z 4 = Single Brand and Marketing i i 4, Management Centralised Back Office Services
Slide 13: Executing Our 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 14: Section Two: Investment Case and Strategy
SECTION TWO: Investment Case and Strategy
Slide 15: 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 Y 2 Further increasing their earnings through tuck-in acquisitions v 3 Participating in the growth of our b
Slide 16: For personal use only
For personal use only P P P P P P P
Slide 17: For personal use only
For personal use only • • • • • • *Expected EBITDA contribution is post transaction improvement
Slide 18: Sydney and Melbourne office sites
CentralCo + CentralTablelands @ @ Western Sydney Norwest @ @ Blue Mountainst + | @inner west ob © Oran Park*+ @ Southern Highlands+ +Melbourne CBD @ B
Slide 19: Western Sydney Norwest sites
WesternSydney Norwest : + 4 existing sites target Newcastle + 4 new sites
Slide 20: Melbourne sites
+ Essendon Monee Ponds+ + Brunswick + Melbourne CBD + Cranbourne 5 new sites
Slide 21: 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 Accountant GROWING GROUP IN THE ECONOMY KEEP THEIR ACCOUNTANTS THE LONGEST GENERATORS OF NEW AND EXTRA WEALTH
Slide 22: Case Study: Business Transformation
For personal use onlv 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. + Follo
Slide 23: For personal use only
For personal use only • $1,800,000 50.0% $1,600,000 40.0% $1,400,000 $1,200,000 30.0% $1,000,000 $800,000 20.0% $600,000 10.0% $400,000 $200,000 0.0% $0 0 1 2 3 4 5 6 -$200,000 EBITDA Revenue EBITDA Margin -10.0%
Slide 24: Complementary Business' Progress
Complementary Business’ Progress The complementary established are now undergoing rapid and significant growth WEALTH FINANCE CORPORATE ADV VESTRY ESTABLISHMENT DATE Dec-16 Sep-17 Sep-17 Jun-18 INVESTMENT < $5k $34k $90K $nlok < $250k KPG share of profit 51.0% 51.0% 51.0% 75.5% 1H20 Revenue $493K $3
Slide 25: For personal use only
For personal use only
Slide 26: For personal use only
For personal use only • • • • • • • • • • • • • •
Slide 27: Section Four: Financials
cial Mar} @ The Heart of Australia's Finan cu a o c © = i SECTION FOUR:
Slide 28: 1H20 Financial Highlights
1H20 Financial Highlights Strong 1H20 performance significantly above prior corresponding pe 1H20 Financial Highlights ($m) KPGHL & Controlled Entities P&L and Ca: low 1H20, 1H19 Change Revenue $24.3 $19.7 23.4% $40.0 $6.1 $48 26.5% $8.4 Underlying EBITDA (pre AASB 16) $7.3 $4.7 55.6% $10.9 $3.2 $2.
Slide 29: 1H20 Income Statement
1H20 Income Statement Strong revenue & earnings growth driven by acquisitions and existing businesses + Revenue from ordinary activities grew to $24.3m (+$4.6m, up 23.4%), driven by $0.6m in current year acquisitions, $0.9m in acquisitions completed in the prior year and the remaining $3.1m resultin
Slide 30: EBITDA and Costs
For personal use only • • • • EBITDA Costs
Slide 31: Balance Sheet as at December 2019
Balance Sheet as at 31 December 2019 Conservatively geared balance sheet * Total Asset growth to $64.3m (+$14.8m) LOCKUP DAYS driven mainly by acquisitions, property 100.0 purchases and the recognition of right 79.9 of use assets as part of the leasing 80.0 62.8 69.6 23.8 standard WIP Days $ 60.0 ps
Slide 32: For personal use only
For personal use only • • • • • • •
Slide 33: Borrowings as at December 2019
Borrowings as at 31 December 2019 Borrowings increased to $21.1m as a result of acquisitions completed in the half year * Total Borrowings of $21.1m include nee $3.5m debt attributable to equity Revolver / insurance partners; $7.6m debt attributable to Overdraft__& fitout erty Amortiser | _ Total De
Slide 34: 1H20 Dividends
1H20 Dividends Dividend growth of 10%+ per annum Total fully franked Amount per Fully Franked amount dividends paid security Cents per security Cents Payment date For the year ended 30 June 2019 Final dividend 1 July 2019 $500,445 110 110 For the year ended 30 June 2020 Special dividend 18 September
Slide 35: Property Strategy
Property Strategy 1 14 1S sydney CBD North Sydney Northern Beaches Central Coast Inner West Norwest Western Sydney Central Tablelands - Bathurst Central Tablelands— Glenbrook Oran Park South West Sydney Southern Highlands Wollongong Melbourne Leased Leased Leased Owned x2 Owned x1 (settlement in Apr
Slide 36: 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 37: Thank you
KP+GH KELLY PARTNERS GROUP HOLDINGS LIMITED Thank you kellypartnersgroup.com.au 3 7
Kelly Partners Group Holdings — Market Eye Conference 2020 on 6ix