Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — FY2022 Earnings Presentation
51 slides from Kelly Partners's earnings presentation, August 2022
Slide 1: FY22 Results Presentation: 5 Year Report Since IPO
KELLY PARTNERS GROUP HOLDINGS LIMITED KELLY PARTNERS GROUP HOLDINGS (ASX: KPG) FY22 RESULTS PRESENTATION 5 YEAR REPORT SINCE IPO PRESENTED BY Brett Kelly Founder and CEO Kenneth Ko CFO August 2022 KP+GH 1
Slide 2: KPG in 10 Seconds
KPG IN 10 SECONDS PROFIT & LOSS 132.6% REVENUE GROWTH 42.3% EBITDA MARGIN REVENUE MARGIN Fy22 $64.9m 30.8% Fy21 $48.9m 32.6% Revenue from Underlying ordinary EBITDA pre activities AASB 16 to Revenue $240K / FTE 30.9% FY21 $249K / FTE 33.4% t 23.1% UNDERLYING NPATA GROWTH PARENT NPATA $6.3m $5.1m Und
Slide 3: Contents
CONTENTS 1 ABOUT KPG 2 FINANCIALS 3 OUTLOOK 4 QUALITY SHAREHOLDERS are impacted by roundin: Note all totals and other calculations presented in the financial statements 9
Slide 4: Track Record: Double 5x
TRACK RECORD: DOUBLE 5X Revenue $70.0 $64.9m ~ 1 2 5 $48.9m $50.0 . $45.5m 433.9m 40.0 {o) $39.5m $40.0m me 30 % $241 alan & Revenue $22.0m _ $30.0 ' CAGR* $20.2m 48.4% 49.3% $20.0 50.7% $30.9m $235m $24.8m $19.3m — $19.7m pai mm os 1.2m, $63m || na 45.6% 48.9% 49.3% ‘51.6% 50.7% 476% $0.0 Vo we 2S
Slide 5: Per Share Growth
PER SHARE GROWTH $1.60 $0.16 $140 $014 +16 ts hy e $1.20 $0.12 P.a. Recurring $1.00 rs $0.10 Revenue per share $0.80 oe $0.08 since IPO $0.60 $0.06 $0.40 $0.04 $0.20 $0.02 Earnings $0.00 $0.00 (Parent) per 1 y- vy yoo FY FYI8. FY19 FY20 FY2 FY22 share & EPS M@il— Revenue per Share Dwners earnings pe
Slide 6: ROIC
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 shareholder
Slide 7: Owner Earnings - Parent
OWNER EARNINGS - PARENT CAGR since IPO Owner earnings $3,128,904 $3,885,041 $5,014,894 $6,312,568 Owner earnings per share (cents) 688 8.55 1.1 14.03 % Growth 24.2% 29.1% 25.9% 13.1% Underlying NPATA $3,193,208 $3,937,677 $5,114,832 $6,296,954 Cashflow Conversion - Parent 98% 99% 98% 100% + Owner ea
Slide 8: Capital Allocation
CAPITAL ALLOCATION KPG aims to build per-share intrinsic value by: 1 Improving the earning power of our operating businesses 2 Further increasing their earnings through acquisitions 3a Growing our existing accounting subsidiaries 3b Growing our existing complementary businesses 4a Making programmati
Slide 9: Timeline 2006-2022
8 7 4 3 3 3 2 2 1 1 1 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 10: Warren Buffett's Ground Rules by Jeremy Miller
Warren Buffett’s Ground Rules by Jeremy Miller, page xii
Slide 11: Years Since IPO
5 YEARS SINCE IPO At IPO FY22 tal +/- x CAGR (Operating businesses 16 31 15 1.9x 14.1% (Office Locations 13 20 7 1.5x, 9.0% Partners 38 66 28 1.7x 11.7% |Team Members 192 370 178 1.9x 14.0% Client Groups 5,300 13,500 8,200 2.5x 20.6% Revenue ($m) $30.2 $64.9 $34.7 21K 16.5% EBITDA ($m) $8.7 $20.0 $n
Slide 12: About KPG
1 ABOUT KPG KP+GH
Slide 13: About
ABOUT 370 Team 66 Partners 436 Total Team 20 Offices 31 Operating Businesses KP+GH
Slide 14: Our People as Owners and Team Member Satisfaction
| awards | Our People as Owners Team Member Satisfaction Group No.ofshares %held| Our eNPS score: 4.23/5 Board 23,520,434 52.27% Partner 2,381,000 5,29 Our eNPS Score Management 933,760 2.08% 4.23 Great Certified Place [eam Members (ESS) 2562 0.57 236 Team Member Responses (85%) To Work. |Team Membe
Slide 15: Services
SERVICES + Business Audit 91 1% + Business, Personal Structures . Corporate Services Accounting, Tax & Audit + Full-service Accounting Business Advison + Outsourced CFO Services . 0, y Tax Audits Accounting, 91.1% * Taxation Advice and Compliance 2.0% Finance FY22 Revenue te) 0.0% $64.9m Insurance 6
Slide 16: Clients
CLIENTS 13,500+ . Client Groups +68 4O0%+ 707 Client Responses Growth NPS Composition o od | 7o% * Industry average: The Evolved Group Australian B2B NPS® Industry Benchmarks KP+GH
Slide 17: Revenue Growth
REVENUE GROWTH Compounded annual growth rate since 2006 FY22 INTERNAL 0 6 Complementary +32.6% BLY EXTERNAL Acquired Earnings per share annual growth rate since IPO 13.1% KP+GH
Slide 18: Branded
BRANDED Updated external signages across Fitting out 10 offices to create Developing KP App, tech stack offices world class spaces for team and and digital IP to build clients competitive advantage
Slide 19: Financials
2 FINANCIALS KP+GH
Slide 20: Highlights
HIGHLIGHTS KPGHL Attributed (parent only) 5 Revenue $48.9 $64.9 32.6% - - - Underlying EBITDA (pre AASB 16) $16.0 $20.0 25.3% - - - Margin % 32.6% 30.8% 5.5% - - - EBITDA (pre AASB 16) $162 $21.7 33.8% - - - Underlying NPATA $1.6 $14.2 22.5% $5.1 $6.3 23.1% Margin 23.7% 218% 7.6% - - - NPATA ge $155
Slide 21: 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 -$9.9 Cash From Operations (Cf
Slide 22: Income Statement
INCOME STATEMENT Income Statement Summary ($m) + Revenue of $64.9m (+$16.0m, up 32.6%), driven both by organic Professional services revenue $48.9 $64.9 32.6% revenue growth (6.2%) and by contributions from acquisitions Other income exc Non Recurring Income $0.2 $0.1 611% completed in FY22 (26.5%).
Slide 23: Revenue Growth
REVENUE GROWTH Revenue growth contributions by year vig vig FV20 Fv2i Fv22 Organic - Accounting 10.3% -6.4% 6.6% 1.5% 4.7% 3.3% Organic-Complementary 2.7% 1.8% 1.4% 1.2% 1.5% 1.7% Organic - Total 13.0% -4.6% 8.0% 2.7% 6.2% 5.1% Acquired 17.2% 6.4% 6.6% 48% 265% 123% Total 30.2% 1.8% 14.6% 7.5% 32.6%
Slide 24: NPATA Reconciliation
NPATA RECONCILIATION Reconci uted NPAT/NPATA ($m) FY21 FY22 Statutory NPAT attributable owners of Kelly Partners Group Holdings Limited 46 5.6 Amortisation of customer relationship intangibles 0.6 12 NPATA attributable to owners of Kelly Partners Group Holdings Limited 5.2 6.7 Add: non-recurring exp
Slide 25: Trinity
TRINITY CASH CONVERSION ON EBITDA 3. Revenue 52) Growth 2. Debtors 47.6 days* EBITDA O Margins
Slide 26: Balance Sheet
BALANCE SHEET LOCKUP DAYS WIP Days + Conservative capital structure with 31.8% 70.0 Debtor Days Equity / Total Assets ratio, and Net Debt / 600 574 558 Underlying EBITDA of 1.36x (FY21: 0.84x) S11 : 50.0 * Group ROE of 41.7% (Group Underlying 400 NPATA $14.2m / Group Equity of $34.0m) & (FY21: 46.0%
Slide 27: Profitability
PROFITABILITY Established Subscale perating Businesses <$1m) Total exc. Acquired Acquired Total inc. Acquired] Revenue EBITDAA $145 $0.6 $17 EBITDA Margin % 34.2% 13.0% 31.6% KELLY+PARTNERS UNTING INDUSTRY 19% 81% EBITDA mCosts Source: IBIS World Accounting Services in Australia Industry Report (Apr
Slide 28: 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% 59.5% 60.00% 58.8% 50.00% 44% 425% AlI% 42.2%
Slide 29: Cashflow
CASHFLOW + Cash from Operations pre AASB 16 of $14.3m increased CASH FROM OPERATIONS (CFO) FREE CASHFLOW TO FIRM (FCFF) 10.0% (FY21: $13.0m). Normalising for the first year of 02m lockup accumulated from in year acquisitions, Cash $143m $8.7m from Operations pre AASB 16 is $17.9m and is a 38.1% $130
Slide 30: Acquisition Impact on Cash Conversion
ACQ IMPACT ON CASH CONV. Example * Business with $1.2m annual recurring revenue, commences in the Group 2 months prior to end of Year 1. * KPG does not buy WIP & Debtors. WIP & Debtors start accumulating from Day 1. + In below example, $200K billed in Year 1 but only $19K is collected in cash ($200K
Slide 31: Acquisition Impact on Cash Conversion
ACQ IMPACT ON CASH CONV. Statutory EBITDA $24,789,615 Cash from Operating Activities before Interest and Tax $20,640,628 Cash Conversion - Actual 83.3% days Debtors from in year acquisitions $2,764,726 55.3 WIP from in year acquisitions $876,549 17.5 Lockup from in year acquisitions $3,641,275 728 C
Slide 32: Debt & Liquidity
DEBT & LIQUIDITY $50.0m ery Working Capital Debt s450m $12.8m ces Som Property Debt gsoom Cash & ‘available Headroom Acquisition & other term debt Headroom gam $35.0m $30.0m * FY21 25.0) ™ Gross Debt - FY21 $13. $18.4 $19.8 $20.0m $34.3m Cash - FY21 -$0.2 $3.8 $4.0 Brerem Net Debt - FY21 $11 $14.6 $
Slide 33: Net Debt per Partner
NET DEBT PER PARTNER . . Net Debt per Partner Total number of equity partners increased to 62: $600,000 70 + 2new partners promoted internally 60 $500,000 * 8new partners from completed acquisitions 50 Pot $400,000 On 1July 2022, four new partners joined the group from completed acquisitions, 40 bri
Slide 34: Parent & NCI
PARENT & NCI P Profit after income tax expense for the year was $13.0m, ml NCI Parent Total . Group NPAT - Statutory $7.8 $5.6 $13.0 + Profit attributable to shareholders of Kelly Partners 58% 42% Group Holdings Limited of $5.6m ° . UL BeRae Nes to non controlling interests (NCI) of Add Back: Income
Slide 35: Dividends
DIVIDENDS + Since IPO in June 2017, the Company has consistently paid out dividends growing at >10% per annum 9.00cps 8.00cps . -_ 7.00cps * The Company has paid out monthly dividends from Jan-21, reflecting the resilience and strength of its 6.00cps earnings and cashflow 5.00cps + The Group intends
Slide 36: Cash Reconciliation
CASH RECONCILIATION of NP. Reconci to Operating Cashflow ($m) FY21 FY22 Reported NPAT 10.9 13.3 Adjustments for: Depreciation and amortisation 44 63 Unwinding of interest on contingent consideration 0.2 03 Other non-cash movements (1.4) (3.1)* Change in operating assets and liabilities: Decrease / (
Slide 37: Cashflow Since IPO
CASHFLOW SINCE IPO Cash From Operations (CfO) $6.9 Owners' Earnings (CfO - Maint. Capex) $6.6 Cash Conversion (Operating Cash Flow / Reported EBITDA) 269.6% Days Lockup* 94.2 $12.8 $14.0 16.1% 93.5% 83.3% 51.1 55.8 $20.0 $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 FVIT FYB FYI FY20 FY21 F
Slide 38: 1H/2H Skews
1H/2H SKEWS Revenue seasonality in accounting business + Revenue seasonality in the (excludes acquisitions) accounting businesses is 750% approximately 1H: 53% / 2H: 47%, equating to a 5% (or c. $2.4m swing) down swing in 2H22. 65.0% + Seasonality is predominantly due to timing of tax work related t
Slide 39: Issued Shares
ISSUED SHARES Number of shares on issue since IPO 48,000,000 46,000,000 44,000,000 42,000,000 40,000,000 38,000,000 36,000,000 34,000,000 32,000,000 30,000,000 IPO 30/06/2018 30/06/2019 30/06/2020 30/06/2021 30/06/2022
Slide 40: Outlook
3 OUTLOOK KP+GH
Slide 41: Programmatic Flywheel
PROGRAMMATIC FLYWHEEL Keep making many small deals! Keep turning Win in Australia your flywheel! and look globally!
Slide 42: 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 43: Management Bench
MANAGEMENT BENCH 1. COMPLETED BUILD OUT OF SENIOR EXECUTIVE TEAM |. PEOPLE Il. OPERATIONS Il. CLIENT EXPERIENCE IV. FINANCE V. IT & DIGITAL 2. SENIOR EXECUTIVE TEAM IN PLACE TO DELIVER 299 5 YEAR GROWTH PLAN (FY25-FY29) KP+GH
Slide 44: Management LTI
MANAGEMENT LTI ve DOUBLE BUSINESS BY FY24 PER 1§' 5 YEAR PLAN CASH BASED PERFORMANCE ar NO EXECUTIVE OPTIONS SHARE COUNT: 45M, NO SHARE ISSUANCE KP+GH
Slide 45: Next Years (FY25-FY29)
NEXT 5 YEARS (FY25-FY29) Growing Kelly+Partners System, Build vs. Buy vs. Partner Business Model and Partner Owner Driver™ model in markets globally Grow to become a top 10 accounting firm in Australia SCOPE : > Accounting, Tax & Audit Finance r, Insurance sb Finance, Insurance & Wealth Wealth ? e T
Slide 46: Advantage
ADVANTAGE (e na, PROGRESS)
Slide 47: Quality Shareholders
4 QUALITY SHAREHOLDERS KP+GH
Slide 48: Updated Owners' Manual
UPDATED OWNERS’ MANUAL ... We recommend shareholders to read these results together with the Owner’s Manual for a full comprehension of the business KP+GH KELLY PARTNERS GROUP HOLDINGS LIMITED. OWNERS’ MANUAL v2.0 PUBLISHED: 30 JUNE 2022 KP+GH 1 https://kellypartnersgroup.com.au/investor-centre/kpg-
Slide 49: Shareholder Geographic Distribution
Netherlands United Kingdom 129.84K | 0.3% ISC 103.36K | 0.2% ISC 2 Holders 3 Holders Luxembourg Germany 3.50M | 7.8% ISC 785.67K | 1.7% ISC 3 Holders 7 Holders United States 1.92M | 4.3% ISC Switzerland 9 Holders 405.64K | 0.9% ISC 5 Holders Hong Kong 393.50K | 0.9% ISC 1 Holder Singapore 117.47K |
Slide 50: Expanded Board
EXPANDED BOARD 2 2 Brett Stephen Ryan Paul Lawrence Kelly Rouvray Macnamee Kuchta boon Cunningham Founder, Executive Deputy Chairman, Non Executive Executive Director Executive Director Non Executive Chair, Non Executive Director Director CEO Director appointed 1 July 2022
Slide 51: Thank you
Thank you KP+GH
Kelly Partners Group Holdings — FY2022 Earnings Presentation on 6ix