Kelly Partners Group Holdings Ltd. · ASX:KPG
Kelly Partners — Morgans' Morning Meeting (April 2021)
21 slides from Kelly Partners's conference presentation, Apr 30, 2021
Slide 1: Morgans' Morning Meeting
For personal use only Morgans’ Morning Meeting ASX: KPG PRESENTED BY Brett Kelly CEO and Executive Chairman 30 April 2021 CEO and Executive Chairman, Brett Kelly, has approved the release of this document to the market Kelly Partners Group Holdings Limited kellypartnersgroup.com.au Level 8, 32 Walke
Slide 2: KPG Since IPO
KPG SINCE IPO PROFIT & LOSS BALANCE SHEET CASHFLOW TSR For personal use only 16% 31% 21% 43% 1.0X 28% 31% REVENUE EBITDA UNDERLYING RETURN ON NET DEBT TO OPERATING TOTAL CAGR MARGIN NPATA EQUITY UNDERLYING CASHFLOW SHAREHOLDER CAGR EBITDA CAGR RETURN REVENUE MARGIN PARENT RETURN GEARING CASHFLOW RET
Slide 3: Market opportunity
Market opportunity For personal use only Similar to the insurance-broking industry, there is significant opportunity to grow under the Partner Owner DriverTM (“POD”) model Accounting Services Market $20.4b Annual Revenue* Typical Client Base Typical Accounting Provider $4.5 ASX listed and multi- bil
Slide 4: Why K+P is different – Progress Pyramid
For personal use only Why K+P is different – Progress PyramidTM Rollup K+P Haphazard approach Documented and systemised succession system Every person for themselves, no investment 9% reinvested annually to strengthen and no system competitive advantage; acquisition system Numerous confused brands O
Slide 5: K+P Partner Owner Driver model vs a Typical Rollup model
K+P Partner Owner Driver model (“POD”) vs a Typical Rollup model For personal use only POD aligns the risk and reward incentives to protect shareholder capital and drive return Rollup KPG: Partner Owner Driver Other 1. CEO given equity from Other 1. Founder CEO grows equity from CEO shareholders Sha
Slide 6: Year Progress Plan: Build, Accelerate and Lead
5 Year Progress Plan For personal use only Build, Accelerate and Lead 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% CAGR $70.0m $60.0
Slide 7: Year Revenue Growth Plan to FY24
5 Year Revenue Growth Plan to FY24 For personal use only 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 $7.2m $5.8m acquisitions $3.5m $70 completed in FY21 $5.1m $3.1m $60 $4.4m $2.7m P $50 $46.4m $
Slide 8: Free Options on Growth
Free Options on Growth For personal use only Long term growth businesses not priced into current share price Business Kelly Partners General Insurance Kelly Partners Private Wealth Kelly Partners Investment Office Logo Commenced December 2020 August 2016 July 2020 Description Partnership with Austbr
Slide 9: Flywheel
Flywheel For personal use only Source: Good to Great by Jim Collins 9
Slide 10: Growing investor interest
Growing investor interest For personal use only Great Quality Shareholder feedback 10
Slide 11: The Outsiders Approach to Capital Allocation
The Outsiders Approach to Capital Allocation For personal use only To maximise average annual rate of gain in intrinsic value on a per- share basis Kelly Partners Group Holdings Limited aims Dashboard to build per-share intrinsic value by: FY20 1H20 1H21 1 Improving the earning power of our many ope
Slide 12: Appendix
For personal use only Appendix 12
Slide 13: Company Overview
Company Overview For personal use only WHO WE ARE FY20 Annuity and Transactional Revenue • Kelly Partners Group Holdings Limited (KPG.ASX) has a ~51% interest in 22 operating businesses Annuity Revenue* ~99% Transactional Revenue ~1% operating from 16 locations in NSW and VIC Accounting Wealth Finan
Slide 14: K+P – Tenets of the Warren Buffett Way
K+P – Tenets of the Warren Buffett Way For personal use only Source: The Warren Buffett Way by Robert Hagstrom Business Tenets K+P 1. Is the business simple and understandable? P Accounting and tax services to private client businesses and their owners 2. Does the business have a consistent operatin
Slide 15: K+P – Tenets of the Warren Buffett Way
K+P – Tenets of the Warren Buffett Way For personal use only Source: The Warren Buffett Way by Robert Hagstrom Financial Tenets K+P 7. Focus on return on equity, not earnings per share P Return on equity = 44.5% Return on invested capital = 28.1% 8. Calculate “owner earnings” P K+P publishes its own
Slide 16: Reading List to Better Understand KPG
Reading List to Better Understand KPG For personal use only “The man who does not read good books has no advantage over the man who can't read them.” —Mark Twain KPG Operating Business Snowball: Warren Buffett and the Business of Life by Alice Good to Great by Jim Collins Schroeder The Warren Buffet
Slide 17: Key KPG Ideas
Key KPG Ideas For personal use only Our KPG Ideas revolve around long term value building for our shareholders Key Idea / Concept KPG Application Mr Market We know that the market is a manic depressive moving from excitement to despair in rapid and seemingly mad mood swings. We believe that “the mar
Slide 18: Valuing KPG
Valuing KPG For personal use only Two stage dividend discount model - Example Kelly Partners Group Holdings Two Stage Discount Model Assumptions Stage 1 Growth Rate (Years 1 - 10) Stage 2 Growth Rate (Terminal Value) Required annual return (based on ASX) Base Year Earnings Stage 1 Stage 2 - Term Val
Slide 19: Owners Earnings since IPO
Owners Earnings since IPO For personal use only FY17 (IPO) FY18 FY19 FY20 1H21 Net cash from operating activities $6,919,077 $6,604,912 $9,973,451 $14,644,223 $8,970,542 Less: Repayment of lease liabilities (AASB 16) $0 $0 $0 -$1,978,034 -$842,674 Less: Maintenance capex -$150,000 -$150,000 -$150,00
Slide 20: Disclaimer
Disclaimer For personal use only 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”, “wi
Slide 21: Thank you
For personal use only Thank you kellypartnersgroup.com.au 21
Kelly Partners Group Holdings — Morgans' Morning Meeting (April 2021) on 6ix