Annual Report
2017
Insight 1
It’s not the big
who beat the
small anymore,
but the fast who
beat the slow.
Insight 2
It’s not the amount
of marble in your
reception, but the
relevance of your
insight.
Insight 3
It’s not an accident
who succeeds today,
but the deliberate choice
of a capable team.
Private Businesses
Private Clients
Family Office
Private Businesses
Private Clients
Family Office
Private Businesses
Private Clients
Family Office
Insight 4
It’s not the latest
management fad,
but proven principles.
Insight 5
It’s not those
who talk about
business, but those
who, like you, are
doing the business.
Insight 6
Kelly+Partners Chartered
Accountants, we help
business owners who want
to go somewhere.
Private Businesses
Private Clients
Family Office
Private Businesses
Private Clients
Family Office
Private Businesses
Private Clients
Family Office
Values
Kelly+Partners is guided by a set of principles that define our character and culture, forming the core of our business
vision. These universal principles are the shared convictions that we bring to our professional and personal conduct and
are the fundamental strength of our business.
Our core values are outlined in below.
Kelly+Partners Values
Want the
best for
others
We are distinguished
by thinking and acting
in the interest of others,
taking the time to know
people and always seeking
to be helpful.
We do what
we say
We do what we say – our word is our bond and we
deliver what we promise.
Better off
We help Private Business Ow ners who want
to be ‘better off’ by delivering trusted and convenient
compliance and forward-looking advisory services.
Brightness
of future
Our team personally
demonstrate that they
contribute to making
Kelly+Partners a great
place to work.
Every client
a referrer
We like our clients and
we want them to be
happy. Each client is
important and if they’ve
got a problem that needs
solving, we’re there to help
fi x it.
One team,
one best way
We care for our colleagues,
treating each other like
family. We’ve got each
other’s backs and we work
with the Kelly+Partners
system in ‘One Best Way’.
Profi t leader
Profi t is essential to a
sustainable business.
We want to demonstrate
the quality of our advice
by earning it in our
business.
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KELLY+PARTNERS ANNUAL REPORT 2017 Values
Mission
To help private business
owners, private clients
and families maintain
control of their financial
universe and be better
off by delivering the
Kelly+Partners Financial
Advice System.
Vision
By making private business owners prosper, we envisage
a stronger world and clients who are ‘better off.'
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Contents
MESSAGE FROM THE CHAIRMAN AND CEO
STRATEGIC INTENT
PERFORMANCE HIGHLIGHTS
GLOBAL TAX MEGATRENDS
INDUSTRY OVERVIEW
BUSINESS OVERVIEW
KELLY+PARTNERS NETWORK
COMMUNITY SPIRIT
BOARD OF DIRECTORS
AND SENIOR MANAGEMENT
2017 FINANCIAL REPORT
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Message from
the Chairman
& CEO
During the financial year, Kelly Partners Group Holdings made significant progress. Our commitment to helping our
clients' accounting, tax, audit and advisory needs (principally SME and mid-market businesses) via our 13 office locations
delivered continued growth across all our business areas.
The 2017 financial year saw the Group deliver a Net Profit After Tax of $1.08 million after taking into account one off
costs largely associated with the IPO of the company (refer page 73 of Financial Report). Group Revenue was up by 43%
and underlying Group EBITDA (after adjusting for non–recurring items) grew by 67% to $8.7 million. Underlying EBITDA
attributable to shareholders grew by 60% to $4.3m (refer page 61 of Financial Report). The driver of this performance was
growth across all business areas, disciplined management of costs and focus on core business delivery.
Our Mission and Strategy - A key differentiator for the business is the clarity of understanding as to our mission and
strategy. We focus on helping clients realise a stronger financial future by delivering coordinated financial advice.
In executing our strategy, we concentrate on five key areas: maximise the partnership model; strengthen foundations
for growth; broaden service offering and maintain SME focus; drive operational excellence and fully deliver the
Kelly+Partners Financial Advice System.
Alignment - Our business model is entirely focused on alignment of interests of our partners, people, clients
and shareholders and this team based approach has, and we believe will continue, to drive superior opportunity
and performance in the businesses.
Outlook - We have a clear mission and strategy, focused on our continuing to deliver growth over time. We are excited
about the opportunities to bring additional talented people and services to our clients, and to build Kelly Partners
Group’s position in the industry. What is good for our partners and clients, will be great for our business and long-term
shareholder value.
I am extremely grateful to the Kelly Partners Group team and its partners, for their dedication and willingness to
embrace change as we continue to grow and evolve. We are committed to making Kelly Partners Group not just
a great company and a great place to work, but one that makes all of its people and clients better off.
Brett Kelly
Founder, Chairman and Chief Executive Officer
Kelly Partners Group Holdings Limited
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Strategic
Intent
Strategic Intent
Helping clients realise a stronger financial future
through coordinated financial advice.
1.
Maximising the
partnership model
5.
Fully deliver the
Kelly+Partners Advice System
4.
Drive operational
excellence
2.
Strengthen
foundations
for growth
3.
Broaden
service offering +
maintain focus
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Performance
Highlights
Performance Highlights
Full Year Financial Highlights
Strong growth in Underlying Pro forma FY17 P&L metrics
compared to prior year.
Underlying Pro forma FY17 P&L metrics all above
prospectus forecasts.
EBITDA margins above both prior year and prospectus.
Reported NPAT impacted by non-recurring items.
Strong Revenue Growth
$m
FY17
FY16
% Change
Underlying Pro forma
Consolidated Revenue*
Number of Offices
Number of Operating Business
Number of Operating Partners
Number of Total Team
$35.7m
$31.2m
13
16
38
192
11
12
32
124
14%
18%
33%
19%
55%
* Underlying Pro forma revenue includes Sydney CBD business for a full 12 months for FY17 and FY16.
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KELLY+PARTNERS ANNUAL REPORT 2017 Underlying
Pro forma
FY17 NPATA*
attributable to
Shareholders
Underlying
Pro forma
FY17 EBITDA*
attributable to
Shareholders
Underlying
Pro forma FY17
EPS* attributable
to Shareholders
Underlying
Consolidated
Pro forma FY17
Total Revenue
Underlying
Pro forma
EBITDA Margin
$3.4m
15%
on prior year
2%
on prospectus
$5.9m
23%
on prior year
7%
on prospectus
7.6cps
15%
on prior year
2%
on prospectus
$35.7m
14%
on prior year
3%
on prospectus
31.8%
29.6%
in prior year
31.1%
in prospectus
Reported FY17
NPAT attributable
to Shareholders
($2.8m)
impacted by
($4.7m)
in non-recurring items
* Underlying Reported P&L metrics have been derived from the audited financial statements and exclude amortisation of intangibles and
non-recurring items including: IPO costs, acquisition expenses, and convertible note exercise.
Proforma Adjustments include the pro forma contribution from Kelly Partners Sydney CBD as if the acquisition had occurred on 1 July 2015.
Plus other normalised items as outlined in the KPGH prospectus.
Underlying Pro forma results comprise Underlying Reported results, adjusted to include the pro forma contribution from Kelly Partners Sydney
CBD as if the acquisition had occurred on 1 July 2015. These metrics are used by management to assess the operational performance of the
business.
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Performance Highlights
BUSINESS
EXPANSION
Southern
Highlands
expansion
In the middle
of 2016, the
Mittagong office
merged with the
oldest & largest
firm in Bowral
to create the
leading firm in
the Southern
Highlands.
NETWORK
EXTENSION
Sydney CBD
Office joins
The CBD
business of BMF
Accounting
was a welcome
addition to the
Kelly+Partners
network on 1st
January 2017.
GREENFIELD
NEW SERVICES
Parramatta
Office launched
In April 2017,
Kelly+Partners
launched a
greenfield office
in Parramatta.
This was the 9th
greenfield office
during the 11
year history of
Kelly+Partners.
Wealth
Our Wealth
business was
launched in
September 2016
in our North
Sydney office
to assist our
existing SME
clients and their
families.
Finance
Since the
balance date,
Kelly+Partners
has added a
Finance
business to
provide
specialist
advice to our
SME clients.
Successful IPO
The parent company of the group, Kelly Partners Group Holdings Limited,
was successfully listed on ASX on 21 June 2017 at $1.00/share.
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KELLY+PARTNERS ANNUAL REPORT 2017
Services
Accounting, Taxation, Audit and Advisory
Hong Kong
Central Tablelands
Central Coast
Western Sydney
Norwest
Parramatta
North Sydney
Northern Beaches
Oran Park
Sydney CBD
South West Sydney
Southern Highlands
Wollongong
Specialist Services
T A X C O N S U L T I N G
W E A LT H M A N A G E M E N T
Specialist Tax Consulting
Wealth Solutions
Investment Solutions
SMSF Solutions
Business Finance
Personal Finance
Property Consulting
and Advice
C O R P O R A T E A D V I S O R Y
I N S U R A N C E
M&A
Capital Raisings
Corporate Restructuring
Strategic Reviews
Business Valuations
Life Insurance
General Insurance
Risk Assessment
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Global Tax
Megatrends
Global tax megatrends
Management believes there are a number of important issues facing the Western economies, which combine to drive
global demand for accounting and tax services.
These issues include:
+ Ongoing Government Budget Deficits
Governments in the developed world continue to run sizeable fiscal deficits against a background of slow global
growth. This is unsustainable in the long term without damaging consumer and investor confidence. Increasingly, this
problem is being solved via higher taxation of individuals rather than reduced government spending.
+ Shrinking Tax Base Demographics
An aging population in developed economies is steadily shrinking the personal income tax receipts for governments.
In order to provide certainty of revenue, this has resulted in a broadening of the tax base. In turn, this has led to higher
indirect taxation such as goods and services tax / value added tax, and the introduction of new taxes, such as those
targeting the digital economy.
+ Societal Pressure to Increase Personal Taxes
Demand continues for publically-funded healthcare, education, infrastructure, defence, law enforcement, and other
civil services. This is largely funded through higher taxation revenue over time. The political debate on inequality in
wealth and income is resulting in increased personal income tax on high-earners.
+ Competitive Pressure to Reduce Corporate Taxes
Corporate tax rates have been falling in many developed countries for over 10 years. This trend is driven by competition
for global investment dollars, and the need to stimulate economic growth following the global financial crisis.
+ Increasing Tax Complexity, Compliance and Collaboration
The volume of tax law is increasing, centred around annual government budget cycles. Further, an increased focus on
anti-avoidance and loopholes has led to increased government audits and the pursuit of new cross-border tax treaties
between countries.
+ Heightened Corporate Disclosure
The current global push towards Corporate Social Responsibility (CSR) is being directed by governments, regulators,
the media, and the general public. For companies, this has resulted in a reassessment of the way they account for
revenue and taxes in the jurisdictions in which they operate.
Global Tax Megatrends
Source: Management estimates.
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KELLY+PARTNERS ANNUAL REPORT 2017 Industry
Overview
The Australian accounting and tax market is large,
but highly fragmented.
The accounting and tax market in Australia is highly fragmented, both in terms of the number of providers and the
scope and quality of services offered. In total, accounting industry revenues were approximately A$20 billion in 20161.
Once all on-costs are included (other professional services fees and the cost of taxpayers own time),
the total dollar value of tax compliance in Australia is $40 billion per annum2.
The accounting market can be broken down into four broad segments as per below:
Size of Australian accounting industry
Typical Client Base
Typical Accounting Provider
Total Market $20 Billion Revenue
ASX-listed and
multi-national
Companies
Large and
national
companies
SMEs,
Private Business
Owners, SMSFs,
and Other
Personal /
Household
Source: Management estimates
$4.5
billion
23% of total
$0.9 billion
5% of total
$12.2 billion
60% of total
$2.4 billion
12% of total
Big 4 Firms
PWC
EY
DELOITTE
KPMG
National Mid-Tier Firms
BDO
CROWE HORWATH
PITCHER PARTNERS
GRANT THORNTON
Smaller Private Practices
National Franchises /Smaller
Private Practices
1 Management estimates.
2 Compliance costs include fees paid to all external independent professionals, as well as costs associated with tax payers complying with regulations.
Source; Australian Treasury, Stocktake of Regulation: Final Report, March 2015.
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KELLY+PARTNERS ANNUAL REPORT 2017 Business
Overview
Kelly+Partners is a single-brand owner-driver
network focused on providing accounting and
taxation services to private SMEs.
Overview
Introduction
Kelly+Partners is a single-brand, owner-driver network primarily focused on providing accounting and taxation services
to private SMEs. The network comprises of 16 majority-owned businesses across 13 locations, and includes specialist
businesses in tax consulting, wealth management and strategy consulting. Our offices are spread across Greater Sydney,
with a finance and bookkeeping function located in Hong Kong.
Typically, the accounting firms which service the domestic SME market are highly fragmented and spread across more
than 30,000 small private practices1, with varying degrees of expertise and service. With over 5,300 active SME client
groups today, Kelly+Partners is well positioned to further develop its position in this segment of the accounting market.
Kelly+Partners sees the fragmented market structure of the private SME segment as a significant opportunity to increase
market share going forward.
Our existing client base consists of stable, long-term relationships with SME owners who typically have a growing
demand for taxation and compliance services. The foundation of these relationships is Kelly+Partners’ commitment
to operational excellence and our investment in staff training and development, that delivers premium quality client
service.
Kelly+Partners Group Holdings Limited (the 'Company') provides three key services to the underlying majority-owned
and controlled Operating Businesses:
+ Intellectual Property – Proprietary systems and single-brand marketing to drive better revenue performance.
+ Centralised Services – Optimisation of back office functions to improve margins and cashflow within the underlying
accounting network.
+ Operating Business Model – Using an owner-driver model, the Company acquires a majority interest (>50%) in the
Operating Businesses to drive long-term strategic alignment, and help solve the succession dilemma.
Going forward, Kelly+Partners growth strategy includes a combination of organic growth in existing businesses, network
expansion through new Operating Businesses and establishment of greenfield sites, as well provision of new services
such as tax consulting and wealth management / SMSF.
Kelly+Partners Business Model
The Company's business model is to:
Provide
Intellectual Property
Provide Centralised
Management Services
Aquire a Majority
Equity Stake
in SME-focused accounting and taxation business with an owner-driver structure.
1 Management estimates.
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KELLY+PARTNERS ANNUAL REPORT 2017 History
Kelly+Partners was established in 2006 to provide a better service to private business owners, and in 2007 started
investing in private chartered accounting firms in the Greater Sydney area. The owner-driver Operating Business structure
was modeled on a >50% Company Subsidiary / <50% Operating Business Owner ownership split, to ensure long term
strategic alignment of both parties.
Growing from two initial start-up businesses in North Sydney and the Central Coast in 2006, Kelly+Partners now has 12
locations across Greater Sydney, and 1 office in Hong Kong. During this period, the Company has transformed 14 external
firms and built 9 greenfield businesses, to create the existing accounting network. This includes three specialist business
that have been launched in tax consulting, wealth management and strategy consulting. All Operating Businesses utilise
Kelly+Partners intellectual property, including branding and marketing, plus a centralised management and back office
function located in North Sydney and Hong Kong.
Kelly+Partners has experienced strong growth since its inception in 2006, as demonstrated in the chart below. In the
historical period from FY07 to FY16, the Company generated a consolidated revenue CAGR of 37%. Over the period from
FY16 to FY18, the Company is forecasting consolidated pro forma revenue CAGR of 8.5%.
Kelly+Partners Consolidated Revenue
$40m
$35m
$30m
$25m
$20m
$15m
$10m
$5m
$0m
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
*
2018
prospectus
forecast
* Underlying Pro forma revenue includes Sydney CBD business for a full 12 months. All data is on a financial year basis.
Current operations
Today, Kelly+Partners encompasses 38 Operating Business Owners and a total of 192 team members, spread across 16
individual Operating Businesses and 13 locations.
The business proposition is to provide:
+ Leadership & Management on a centralised basis to reduce costs, improve efficiency and enhance the competitive
position of the Operating Businesses.
+ Intellectual Property, including brand, marketing, systems and processes, which aims to address the Operating
Business' ability to attract, develop and retain team members and increase the breadth of service offering.
+ Structure & Investment to facilitate succession and long term growth of the Operating Businesses through a
controlling >50% interest via a Company Subsidiary.
The Company holds a majority and controlling interest in each operating business which varies from 50.05% to 100%,
with exception of Kelly Partners Oran Park (25.3%) which is held through a trust controlled by the Company.
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Kelly+Partners Operating Businesses
Kelly Partners Group Holdings Limited
58.5%
North Sydney
Launched FY06
50.1%
Central Coast
Launched FY06
51.0%
Western Sydney
Joined FY08
50.5%
South West Sydney
Joined FY12
51.0%
Norwest
Launched FY12
51.0%
Tax Consulting
Launched FY12
51.0%
Central Tablelands
Launched FY13
51.0%
Wollongong
Joined FY14
1
2
3
4
5
6
7
8
51.0%
Northern Beaches
Launched FY15
25.3%
Oran Park
Joined FY15
51.0%
Hong Kong
Launched FY16
51.0%
Southern
Highlands
Joined FY16
51.0%
Wealth
Management
Launched FY17
50.05%
Sydney CBD
Joined FY17
100%
Strategy
Consulting
Joined FY17
51.0%
Parramatta
Launched FY17
9
10
11
12
13
14
15
16
Indicates greenfield Operating Business.
Indicates specialist Operating Businesses within the network.
192
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Total
Team
Transactions
completed
since inception
Business Owners
38 Operating
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Average age of
Operating Business
Owners
Kelly+Partners key statistics
16
13
Operating
Businesses
Locations
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KELLY+PARTNERS ANNUAL REPORT 2017 Kelly+Partners Office Locations
Kelly+Partners’ Diversification
Location
12 office locations spread across Greater Sydney, and 1 office in Hong Kong
Operating Business Owners
38 Operating Business Owners spread across 16 individual Operating Businesses
with an average age of 41
Client Base
Over 36 separate industries represented in the client base and more than 5,300
client groups
Services
Expanding presence in tax consulting and wealth management
Transactions
completed
since inception
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Strategy
Kelly+Partners has seven strategic priorities:
+ Private SME business owners in Greater Sydney - Since inception, Kelly+Partners’ focus has been building
accounting teams that can materially improve the financial situation of private SMEs and their owners. These clients
are “sticky” given that they desire long term relationships with their accountants.
+ Recurring business lines - Kelly+Partners focuses on business lines that are predictable and recurring in nature
which include accounting and taxation. We regard audit as commoditised, and it represents less than 5% of our total
revenue. Approximately 85% of Kelly+Partners revenues are generated from accounting and taxation services.
+ Premium service and prices - The Operating Businesses deliver high-quality service levels with a strong focus on
clients. We maximise value for clients using our proprietary processes and systems. The network benefits from strong
client loyalty with an annual client churn of 2%.
+ Network expansion under a strong single-brand - Kelly+Partners has a long and successful track record of profitable
network expansion using an owner-driver model. Key synergies include a combination of higher cost efficiency,
active management of debtors and cashflow, and increased revenue opportunities. In addition, the adoption of a
strong single-brand provides proven benefits for future business development, overall staff culture, and in particular,
recruitment of talented team members.
+ Ongoing system growth - Accounting and taxation services are driven by increasing tax complexity and compliance
in Australia. The SME subset of the accounting market represents approximately 60% (or $12 billion pa)1 of total
industry revenues, and the role of intermediating the relationship between this client subset and the ATO will become
more important over time.
+ Marketing and Advertising - The Company invests significantly in its brand through regular advertising and marketing
campaigns. This has included television, radio, and newspaper advertisements and this is expected to continue in the
future. These marketing and advertising campaigns are expected to continue to build awareness of the Kelly+Partners
brand, as well as attract prospective clients and potential new Operating Business opportunities.
+ Property and Leases - Kelly+Partners owns a majority interest in a property on the Central Coast which is leased to the
Kelly Partners Central Coast Partnership. All other offices operate in a leased office with lease terms varying from
3-5 years.
Business Line
Revenue Risk
Typical Service Providers
Consulting and Advisory
High – volatile, project based
Big 4
Audit
Low – stable, commoditised
Big 4, National Mid-Tier
Tax and Compliance
Low – stable, recurring
Kelly+Partners
Small Private Firms
Bookkeeping
1 Management estimates.
High – exposed to digital
disruption and outsourcing
Small Private Firms
Software Providers
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KELLY+PARTNERS ANNUAL REPORT 2017 Ability to create value through Operating Business transformation and integration
The Company has a long track record of delivering transformational outcomes for businesses which have joined the
Kelly+Partners network. The key deliverables from this process include:
+ Expense Reduction – centralisation of back office functions and more focused workplace processes and protocols.
+ Better Staff Experience – more motivated and strategically aligned Operating Business Owners and staff, under the
umbrella of a dynamic culture and single brand strategy.
+ Better Client Experience – clients benefit from improved service, increased Company technical expertise, wider
product offering, and improved IT systems.
+ Better Cashflow – improved systems for controlling WIP (work in progress) and collecting debtors.
+ Revenue Growth – freeing up Operating Business Owner time coupled with a wider product offering drives stronger
top line growth.
Centralisation of Services
The Company’s investment in centralised work groups, business processes and technology has created a highly scalable
business that is able to deliver high levels of productivity and service. The centralised management team are located in
the North Sydney and Hong Kong offices, and provide the following services to our Operating Business network:
+ Marketing, Branding and Events
+ Proprietary Client Systems and Procedures
+ Finance Management and Controls
+ Risk Management, Business Registrations, Accreditations and Quality Assurance
+ Technology Platform and Website
+ Human Resources and Training
+ Executive Management and Corporate Strategy
This centralised approach also delivers significant operational leverage, enabling the Company to expand its office
network at a relatively low cost whilst continuing to deliver higher profit margins for all Operating Businesses.
This is reflected in EBITDA margins for Kelly+Partners which are significantly higher than the industry average.
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Pressure points for smaller
accounting practices
X Succession planning
X Staff attraction and retention
X Management of sub-scale back office functions
X Undifferentiated service offering
X Technological change
X Increasing regulatory and compliance burdens
X Client demands increasing
Kelly+Partners solution
Facilitate succession and long term strategic alignment
under an owner-driver model
Centralise back office to drive workplace efficiencies
Improve profile via single brand strategy
Attract and develop key staff
Proprietary accounting systems and procedures
Leverage expertise / service offering across the network
Business Fitness, The Good, The Bad & The Ugly Report 2017
40%
of accounting firms
surveyed will have a
partner retiring / exiting
over the next 5 years
79%
of accounting firms
surveyed have no
succession plan in place
Source: Business Fitness, The Good, The Bad & The Ugly Report 2017.
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KELLY+PARTNERS ANNUAL REPORT 2017 Structure
Kelly+Partners has developed an owner-driver Operating Business model within the accounting sector.
This structure has been successful in other industries in Australia, most notably insurance brokers (eg. Steadfast and
Austbrokers). The majority of the Operating Businesses are structured as Partnerships (with the exception of Kelly
Partners Sydney CBD and Kelly Partners Hong Kong), with a wholly-owned subsidiary of the Company holding the
Partnership interest. Each Partnership is governed by partnership agreement, the key elements of which include:
+ majority control position for the Company through >50% ownership interest in each Operating Business (excluding
Kelly Partners Oran Park);
+ 10 year Partnership Term with automatic roll-over for a further 10 years, which generates long-term strategic
alignment of individual Operating Business Owners and the Company (with the exception of Kelly Partners Sydney
CBD and Kelly Partners Hong Kong which are structured as companies);
+ the Company provides centralised management and back-office services for a fixed percentage fee based
on revenue;
+ the Company provides centralised brand, marketing, systems, procedures, and intellectual property for a fixed
percentage fee based on revenue;
+ agreed operating methods and financial metrics;
+ defined monthly distributions or dividends;
+ clear succession plan for older Operating Business Owners, with pre-agreed structures to facilitate proactively-
managed generational change;
+ consideration to comprise mix of upfront and deferred (earn-out); and
+ all debt secured against individual Operating Business, both jointly and severally, with no recourse back to
the Company.
For Operating Businesses which are structured as Partnerships, a company ("Agent Company") is incorporated to act as
the undisclosed agent for the Partnership, and enters into contracts including leases for and on behalf of the Partnership.
An exception to the Partnership structure is the Operating Business located in the Sydney CBD, which is structured as
a company (Kelly Partners (Sydney) Pty Ltd ACN 616 117 634) and the Operating Business located in Hong Kong, which
is also structured as a company (Kelly Partners Management Services (Hong Kong) Limited). A wholly-owned subsidiary
of the Company holds a >50% shareholding interest in Kelly Partners (Sydney) Pty Ltd and Kelly Partners Management
Services (Hong Kong) Limited).
The terms of the shareholders agreement which governs the relationship between the Company's Subsidiary and the
Operating Business Owners of the Operating Businesses located in the Sydney CBD and Hong Kong are substantially the
same as the Partnership Agreements set out above (other than the 10 year term, which does not apply to the company
structure).
The Operating Business model provides both retention and alignment of Operating Business Owners and staff in each
individual business. While the Operating Business Owners in each Operating Business are responsible for the day-to-day
management of the business, the Company has the ability to monitor and manage each Operating Business through
collection of monthly data and assessment against performance benchmarks and pre-determined budgets. In addition,
the Company assists to drive operating efficiencies through a common back office platform, which centralises key
functions such as finance, technology, marketing, human resources, and administration.
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Key Elements of the Business Model
7. Growth
Growing Network
and Service Offering
6. System
Proprietary Client Systems
and Procedures
1. Mission + Values
Clearly defined
mission and values
To help Private Business Owners who want to get control of their financial universe and go somewhere by delivering the Kelly+Partners Financial Advice System
BRIG HTNE
S
S
Business
Model
2. Brand
Single Brand and Marketing
3. Market
SME focus in
Greater Sydney area
5. Management
Centralised
Back Office Services
4. Structure
Owner-Driver
Operating Business Model
36
KELLY+PARTNERS ANNUAL REPORT 2017 People and culture
Kelly+Partners staff are motivated to deliver results for our clients. A wide range of incentives are offered by
Kelly+Partners to recognise and reward both personal and team results.
Generally, promotions occur within the pool of current employees which ensures that the best people within
Kelly+Partners experience career progression into leadership positions where they can have the most significant positive
impact. The average age of an Operating Business Owner at Kelly+Partners is 41 years old.
We are proud of our diversity at Kelly+Partners. We hire people from a multitude of backgrounds and our training aims
to take a comprehensive and personal approach allowing us to focus the right people to the right roles. We believe the
diversity profile of our workforce reflects the broader Australian society and our client base.
Much of the value we offer our clients is created through the specialist skills and knowledge in our team. We are
therefore committed to ensuring our people receive quality training and development opportunities with a view to
building a long-term career.
Our training and development goal is to create:
+ accountants who are always professional;
+ exhibit integrity at all times; and
+ display a strong work ethic.
The training programs at Kelly+Partners consists of both formal and informal training, mentoring programs and
networking events. We believe this provides the support and resources our staff need to drive their own learning.
Kelly+Partners endeavours to meet the highest standard of business behaviour, compliance and ethics and this
is reflected in our training programs.
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Client base
Kelly+Partners’ primary client base is located within the Greater Sydney area. This broad definition includes from
Wollongong / Southern Highlands to the south, to Newcastle / Central Coast in the north, and the Central Tablelands to
the west. However, we also have many clients located in rural NSW, Victoria and Queensland. In addition, we maintain an
office in Hong Kong to undertake specialised finance and bookkeeping services.
Other key metrics on our client base can be summarised below.
Kelly+Partners’ Key Metrics
5,300 Number of
88% NSW
active client groups
Geographical revenue spread
2% pa Annual
85% of revenue is
accounting and
tax services
client churn
Our client base of over 5,300 groups is 88% located in New South Wales, as represented on the location map below:
Map of Kelly+Partners Client Base
Dubbo
Newcastle
Sydney
Number of Clients
by Postcode
>150
50 - 150
up to 50
Wollongong
North Sydney
Parramatta
Sydney CBD
38
KELLY+PARTNERS ANNUAL REPORT 2017 Growth strategy
The Company’s growth plan is based on a three-pronged strategy: organic growth, network expansion and the
introduction of new services.
Organic Growth
Underpinning organic growth for Kelly Partners is increased demand for accounting and taxation services driven by
the Australian tax system’s increasingly complex rules, legislation and compliance requirements. At the same time, our
increasing brand presence and market penetration delivers growth in our existing locations through:
+ the targeted acquisition of key people and fee parcels to add to existing businesses
+ the application of our client acquisition process
+ the application of our proprietary systems ('Integrated Advice Model' and 'Flight Plan')
Since formation, organic revenue growth for Kelly+Partners has averaged approximately 4% pa. The Company sets an
annual revenue growth target of 5% for mature Operating Businesses, comprising a 2% volume growth and a 3% price
growth. In addition, the Company has developed specific revenue and cost plans to improve EBITDA margins with a
target level of 32.5% per Operating Business. If achieved, this improvement will be an important driver of future
earnings growth. At present, approximately one-third of Operating Businesses generate EBITDA margins which exceed
or are in-line with this target.
Network Expansion
According to a recent industry survey1, there is a generational shift unfolding in the Australian accounting sector.
Over the next five years, up to 40% of accounting firms (who were surveyed) have accounting partners / owners who are
looking to retire, or exit the industry. Adding pressure to this dynamic is the fact that nearly 80% of accounting partners
(who were surveyed) do not have a succession plan.
Kelly+Partners is well positioned to take advantage of this demographic shift given our successful track record of
identifying and transforming accounting practices in need of a succession plan. Our owner-driver model delivers
long-term Operating Business Owner alignment, enhanced staff culture, improved financial performance, the roll-
out of proprietary accounting systems and procedures, and a centralised platform in which to drive growth. As has
been demonstrated by our revenue CAGR of 37% over the past 10 years (FY07 to FY16), our successful track record with
business transformations has been a key driver of historical growth for Kelly+Partners.
The key characteristics which the Company requires when assessing a new Operating Business to add to the network
are summarised below:
+ alignment with Kelly+Partners' vision and culture;
+ capacity to meet Kelly+Partners’ target financial and operating metrics;
+ long-term commitment of Operating Business Owners via an approximate 49% ownership;
+ long-term client relationships, with strong SME and/or SMSF profile;
+ focus on tax and accounting services (which are recurring business lines);
+ must be fully owned by existing partners or shareholders; and
+ provides geographic expansion opportunities for Kelly+Partners;
The Company follows a strict process to identify and assess external accounting firms. Please refer to the description of
our 'Kelly+Partners Opportunity Filters'.
Kelly+Partners has identified a number of locations in the Greater Sydney area as targets for future geographic expansion
of its accounting network. Over time, the Company anticipates that our owner-driver network will expand into these
regions through either bolt-on opportunities, or the launch of new greenfield Operating Businesses, with clients
acquired through referrals, online enquiries and other marketing activities. This regional growth model will further
cement Kelly+Partners as the premier tax and accounting provider for SMEs in Greater Sydney.
1 Business Fitness, The Good, The Bad & The Ugly Report 2017.
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Target Geographic Locations in Greater Sydney
New Services
Accountants provide a broad range of financial services to their client base which includes: accounting, audit, tax,
compliance, financial advice, corporate advice, wealth management, superannuation / SMSFs, insurance, family office,
and estate planning.
+ Kelly Partners Tax Consulting (launched in 2012 and located in the Sydney CBD office) – SME businesses often
require advice on more than one area of tax. Our tax consulting team comprise a core group of taxation experts, each
with strong knowledge and experience across the tax spectrum.
+ Kelly Partners Wealth Management (launched in 2016 and located in the North Sydney office) – As part of our service
offering to private SMEs, Kelly+Partners is well positioned to assist business owners and founders to ensure both their
businesses and their personal wealth is organised in a coordinated fashion. Services provided include superannuation
/ SMSFs, asset protection, financial advice, insurance, tax management, retirement planning, estate planning, and
family office.
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KELLY+PARTNERS ANNUAL REPORT 2017 Kelly+Partners Opportunity Filters
Broad sweep of private
accounting firms
Mission + Values
Want to join
Kelly+Partners
Core business is accounting
and taxation services
5 filters
which potential
acquisitions are
assessed on
Private business /
SME focus
Complementary to
geographic goals
Target list of greenfield
sites and bolt-on
opportunities
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Kelly+Partners
Network
CENTRAL COAST
NORTH SYDNEY
WESTERN SYDNEY
2006
2006
2009
WOLLONGONG
ORAN PARK
NORTHERN BEACHES
SOUTHERN HIGHLANDS
2013
2014
2015
20 16
SOUTH WEST SYDNEY
NORWEST
CENTRAL TABLELANDS
2011
2012
2013
SOUTHERN HIGHLANDS
HONG KONG
SYDNEY CBD
PARRAMATTA
20 16
2016
2017
2017
Community
Spirit
Community engagement and corporate responsibility
We’re serious about supporting Sydney’s communities
As a local business, we have a responsibility to the communities in which we operate and one of the most enjoyable
parts of our job is meeting our neighbours and getting involved with local events.
Managing our environmental impact
As a rapidly expanding business we are committed to finding ways of reducing our environmental impact and carbon
footprint. In addition, we endeavour to be considerate within our local communities.
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Board of
Directors
and Senior
Management
Board of Directors
and Senior Management
The Board comprises an Executive Chairman, a non-Executive Deputy Chairman, one non-Executive Director and two
Executive Directors. The Directors bring to the Board relevant skills and experience, including industry and business
knowledge, financial management and corporate governance experience.
Director details
Expertise and experience
Brett Kelly
BBus, CA, MTax, DipFS, RTA, JP
Founder, Executive
Chairman and Chief
Executive Officer
Non Independent
Stephen Rouvray
BEc, CA
Deputy Chairman and
Non-Executive Director
Appointed 2017
Independent
Brett is the founder and CEO of Kelly+Partners. He has more
than 20 years commercial and professional accountancy
experience, specialising in assisting private clients, private
business owners and families. He commenced his career as a
Chartered Accountant with 5 years at Price Waterhouse, and
then worked at 3 mid-sized accounting firms. In 2006, Brett
founded Kelly+Partners with accounting businesses in North
Sydney and the Central Coast, before building out the network
to 16 businesses over 13 locations to date. Brett is also the best-
selling author of four books on life, business and wisdom.
Stephen has over 45 years experience in financial services
across many senior leadership roles. He was Chief Financial
Officer, Company Secretary and Manager of Investor Relations
for AUB Group (formerly Austbrokers) from 2005 until 2015.
Prior to this, he was General Manager for ING Australia Holdings
from 2002 to 2005 having joined ING’s predecessor company,
Mercantile Mutual, in 1985. Over this 20 year period, Stephen
held the position of Group Company Secretary, which included
its subsidiary companies operating in the life and general
insurance, investment management, funds management and
banking sectors. At the start of his career, he worked in the
accountancy profession from 1971 to 1984. Since retiring as CFO,
Stephen continues to represent AUB as a Director for a number
of its subsidiaries and associates.
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KELLY+PARTNERS ANNUAL REPORT 2017 Director details
Expertise and experience
Pauline Michelakis
BCom (Hons), CA
Executive Director and
Chief Financial Officer
Appointed 2017
Non Independent
Pauline joined Kelly+Partners in 2013 as Group CFO. She has
more than 20 years experience in senior financial roles in
financial services and investment companies. Pauline is a
Chartered Accountant who commenced her career in 1981 as
an auditor with Arthur Young & Company (now Ernst & Young),
In 1986 she joined listed international investment company
AFP Group in an executive role. In total, Pauline worked for
the group for 10 years, including 5 years as General Manager
Finance of Lang Corporation, the ASX-listed Australian spin-off
(subsequently renamed Patrick Corporation Limited). She also
held chief financial roles at Kaplan Funds Management and
Committed Capital Limited, before joining Kelly+Partners.
Paul Kuchta
BBus, CA, FTIA, DipFP, RTA, JP
Executive Director
Appointed 2017
Non Independent
Paul is a Chartered Accountant with more than 17 years
accounting experience specialising in the provision of
accounting, compliance, tax and advisory services to private
SMEs and their owners. He commenced his career with Farrar &
Company Chartered Accountants in 1998, where he worked for
10 years. Paul then joined Crowe Horwath in 2008 for a further
4 years. He was a founding partner of Kelly Partners Norwest
when the business was launched in 2012.
Ryan Macnamee
BCom, GACID
Non-Executive Director
Appointed 2017
Independent
Ryan is an experienced business technology executive with
over 25 years of IT management experience. He has been
Chief Information Officer (CIO) at Laing O’Rourke since 2012,
including 3.5 years as the Global CIO. Ryan is responsible for
all IT functions within Laing O’Rourke with a focus on strategic
objectives, global alignment and delivering business value.
Prior to his current role, he held several senior IT management
positions at Woolworths from 2008 to 2012. Earlier in his
career, Ryan undertook various senior IT positions at financial,
insurance, construction and retail operations globally. He is also
on the board of the Open Data Institute, a position he has held
since 2014.
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Senior management
Key Manager details
Expertise and experience
David Franks
BEc, CA, FFin, JP
Company Secretary
Appointed 2017
David has over 20 years experience in finance and accounting,
initially qualifying as a Chartered Accountant with Price
Waterhouse in their Business Services and Corporate Finance
Divisions. Since that time, he has been CFO, Company Secretary
and / or Director for numerous ASX listed and unlisted public
and private companies, in a range of industries covering
energy, retail, transport, financial services, mineral exploration,
technology, automotive, software development and healthcare.
Kenneth Ko
BBus, CA, HKICPA
Group Finance Manager
Appointed 2015
Kenneth joined Kelly+Partners in 2015 as Finance Manager.
He is a Chartered Accountant with more than 10 years
chartered and commercial accounting experience. He
commenced his career with BDO Chartered Accountants
in 2007, and then joined Chandler Macleod in 2011 in a
commercial accounting role. In 2013, he moved to Coca Cola
Amatil to lead their financial accounting team. Kenneth joined
Kelly+Partners’ head office in North Sydney as Finance Manager
in 2015. He subsequently founded the Hong Kong business in
2016, maintaining his role as Finance Manager.
Brendan Lyons
BSc, MAppFin, GradDipAppFin
Head of Corporate
Development
Appointed 2017
Brendan joined Kelly+Partners in January 2017 as Head of
Corporate Development. He has over 20 years experience in
equity markets, financial analysis, and business management.
Previously, Brendan was co-Head of Australian Equities at
Goldman Sachs for 4 years from 2012 to 2015. In total, he worked
for Goldman Sachs / JBWere for 18 years, including 10 years
as an equity partner. During this time, Brendan held various
senior roles in Institutional Equities and Equities Research
across Sydney, Melbourne, London and New York. Prior to this,
he worked at Deutsche Bank for 4 years as an equities analyst.
More recently in 2016, Brendan consulted to Lithium Power
International on their successful public listing on ASX.
54
KELLY+PARTNERS ANNUAL REPORT 2017 2017
Financial
Report
Kelly Partners Group
Holdings Limited and
Controlled Entities
(formerly known as
Kelly Partners Group Holdings Pty Limited)
ABN 25 124 908 363
Financial Report
For the Year Ended 30 June 2017
56
KELLY+PARTNERS ANNUAL REPORT 2017 Contents
CORPORATE DIRECTORY
DIRECTORS' REPORT
AUDITOR'S INDEPENDENCE DECLARATION
59
60
72
CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME 73
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS' DECLARATION
INDEPENDENT AUDITOR'S REPORT
ADDITIONAL INFORMATION
FOR LISTED PUBLIC COMPANIES
74
75
76
77
107
108
112
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Corporate Directory
Kelly Partners Group Holdings Limited and Controlled Entities
ABN 25 124 908 363
Corporate Directory
30 June 2017
Directors
Brett Kelly – Chairman, Executive Director
Stephen Rouvray – Deputy Chairman, Non-Executive Director
Ryan Macnamee – Non-Executive Director
Pauline Michelakis – Executive Director
Paul Kuchta – Executive Director
Company secretary
David Franks
Registered office
Share register
Level 8
32 Walker Street
North Sydney NSW 2060
Telephone: (02) 9923 0800
Computershare Investor Services Pty Limited
Level 4
60 Carrington Street
Sydney NSW 2000
Telephone: 1300 787 272
Auditor
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
Stock exchange listing
Kelly Partners Group Holdings Limited shares are listed on the Australian Securities
Exchange (ASX code: KPG)
Website
www.kellypartnersgroup.com
Corporate Governance
Kelly Partners Group Holdings’ Corporate Governance Statement and ASX Appendix 4G
detailing compliance with the third edition of the ASX Corporate Governance Principles
and Recommendations is available on the website
www.kellypartnersgroup.com.au/investor-centre/corporate-governance-2
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Kelly Partners Group
Holdings Limited and
Controlled Entities
Directors' Report
30 June 2017
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity') consisting of Kelly Partners Group Holdings Limited (referred to hereafter as the
'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2017.
Directors
The following persons were directors of Kelly Partners Group Holdings Limited during the whole of the financial year
and up to the date of this report, unless otherwise stated:
Brett Kelly
Stephen Rouvray (appointed 2 May 2017)
Pauline Michelakis (appointed 2 May 2017)
Paul Kuchta (appointed 2 May 2017)
Ryan Macnamee (appointed 2 May 2017)
Principal activities
During the financial year the principal continuing activities of the consolidated entity were the provision of chartered
accounting services, predominantly to private businesses and high net worth individuals.
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2017 of $Nil (2016: $775) per ordinary share
Special Interim dividend for the year ended 30 June 2017 of $1.76 (2016: $Nil)
per ordinary share, paid prior to the Company listing on the Australian Stock Exchange
Consolidated
2017
$
-
3,548,160
2016
$
1,562,400
-
3,548,160
1,562,400
The Directors anticipate that the first dividend to shareholders following the Company listing on the Australian Stock
Exchange in June 2017, will be in relation to the quarter ending 30 September 2017, and is expected to be paid in
December 2017 as per the Prospectus.
There is no Dividend Re-investment plan in operation.
Operating and financial review
In its maiden financial results as a listed company, Kelly Partners Group Holdings has recorded a consolidated
statutory net profit after providing for income tax of $1,085,446 (30 June 2016: $4,301,117). The statutory net loss after tax
attributable to members of the parent entity was ($2,789,526) (30 June 2016: profit $2,007,396). This result has been
impacted by several non-recurring items as identified in the Prospectus attributable to the Initial Public Offering in
June 2017 as well as business acquisition and restructuring costs. Underlying EBITDA is a key measurement used by
management and the board to assess and review business performance and accordingly the following table provides a
reconciliation between statutory net profit and underlying EBITDA as well as underlying EBITDA per the Prospectus.
Revenue for the year totalled $30.2 million which was up 43% from $21.1 million in 2016. Underlying EBITDA was up 67%
for the Consolidated entity.
60
KELLY+PARTNERS ANNUAL REPORT 2017
Financial Performance
Revenue
Other Income
Total Revenue and other income
Net Profit after tax (NPAT)
Add tax
Add interest expense/(income)
EBIT*
Depreciation and amortisation
Statutory EBITDA**
Add non-recurring items
Initial Public Listing costs***
Fair value adjustment on conversion of convertible notes
Business acquisition and restructuring costs
Impairment of loan receivable
2017
$
2016
$
30,198,254
21,066,210
133,032
810,540
30,331,286
21,876,750
1,085,446
4,301,117
341,536
632,859
651,662
438,058
2,078,644
5,372,034
835,496
544,287
2,914,140
5,916,321
2,137,247
1,625,000
1,693,042
349,361
-
-
-
-
%
43%
39%
-75%
-46%
49%
-61%
54%
-51%
-
-
-
-
Fair value adjustment on contingent consideration
-
(688,500)
Underlying EBITDA**
Underlying EBITDA attributable to Shareholders
8,718,790
5,227,821
4,336,666
2,712,869
67%
60%
*EBIT is defined as earnings before interest and tax.
**EBITDA is EBIT before depreciation and amortisation.
***Includes $453,500 for one off bonus shares to employees as part of the public listing of the company.
The result includes Kelly Partners (Sydney) Pty Ltd for the 6 months from 1 January 2017.
The financial information in this table has been derived from the audited financial statements. The underlying EBITDA
is non-IFRS financial information and as such has not been audited in accordance with Australian Auditing Standards.
Comparison to Prospectus Forecast
The table below sets out the FY17 underlying EBITDA as disclosed in the Prospectus dated 16 May 2017.
Pro forma EBITDA shown in Prospectus
Items included in Prospectus in arriving at Pro forma EBITDA, not included
in reporting Underlying EBITDA:
Attributable to FY17 acquisitions and other new offices prior to acquisition by
Kelly Partners
EBITDA
IP and service fee
Pro forma listed public company costs, prior to listing*
Underlying EBITDA per Prospectus**
Underlying EBITDA attributable to Shareholders per Prospectus
2017
$
10,766,000
(1,935,000)
(517,000)
231,000
8,545,000
4,258,731
*Listed public company costs represent the anticipated incremental costs that the Company would incur as a listed
public company. The adjustment represents the annualised costs, less the proportion not expensed prior to the
Company listing
** Underlying EBITDA per Prospectus represents the FY17 pro forma EBITDA shown in the prospectus dated 16 May 2017,
adjusted to eliminate pro forma earnings and costs which were included in the forecast to demonstrate the full year’s
effect, but not reflected fully in the annual results until FY18.
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Directors' Report | 30 June 2017
Significant changes in the state of affairs
In December 2016, the Company raised $6,500,000 from the issue of 6,500,000 Convertible Notes. The Notes were
converted to 8,125,000 ordinary shares immediately prior to the Initial Public Offering in June 2017, described below.
On 1 January 2017, a subsidiary of the Company subscribed for 50.05% of the issued capital in Kelly Partners (Sydney) Pty
Ltd with an additional amount payable in 2019 contingent upon Kelly Partners (Sydney) Pty Ltd achieving certain agreed
revenue targets for the 2018 calendar year. Immediately prior to the subscription of shares, Kelly Partners (Sydney) Pty
Ltd acquired the accounting and taxation business and assets of BMF Chartered Accountants and Business Services
(Barry Mendel Frank & Co Services Pty Ltd).
On 28 April 2017, the Company converted from a proprietary company to a public company, changing its name from
Kelly Partners Group Holdings Pty Limited, to Kelly Partners Group Holdings Limited.
On 15 June 2017, the Company issued 2,884,000 shares and successfully completed its Initial Public Offering and was
admitted to the Official List of the Australian Securities Exchange under ASX code KPG. Official quotation of securities
commenced on 21 June 2017.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
There has not been any other matter or circumstances occurring subsequent to the end of the financial year that
significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or
the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The Company will continue to pursue its policy of increasing the profitability and market share in the markets within
which it operates during the next financial year.
The Company’s growth plan is based on a three-pronged strategy: organic growth, network expansion and the
introduction of new services.
Economic, Environmental and Social Sustainability Risks
The operations of the Company are not subject to any particular or significant Commonwealth, State or Territory
environmental regulations.
Accounting services, which require associated expert advice typically provided by accountants, are important
particularly in the case of small and medium enterprises where the complexity of taxation and other compliance
requirements are increasing, and therefore it is unlikely that there would be a material risk in relation to economic
sustainability. Risks that may arise include rapidity in changes in technology and simplification of tax legislation. The
risks in relation to economic sustainability are considered as part of determining strategy and management regularly
monitor market developments.
The importance of the accounting services sector to the small and medium enterprise sector in providing expert advice
and specialist services reduces the risk around social sustainability.
Part of the Company’s commitment to managing these risks is ensuring that it has governance systems, structures,
values, principles, frameworks and policies to define its decision making context for managing its business sustainably.
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KELLY+PARTNERS ANNUAL REPORT 2017 Directors' Report | 30 June 2017
Information on directors
Director details
Expertise and experience
Brett Kelly
BBus, CA, MTax, DipFS, RTA, JP
Founder, Executive
Chairman and Chief
Executive Officer
Brett is the Founder and CEO of Kelly+Partners. He has more
than 20 years commercial and professional accountancy
experience, specialising in assisting private clients, private
business owners and families. He commenced his career as a
Chartered Accountant with 5 years at Price Waterhouse, and
then worked at 3 mid-sized accounting firms. In 2006, Brett
founded Kelly+Partners with accounting businesses in North
Sydney and the Central Coast, before building out the network
to 15 businesses over 13 locations to date. Brett is also the best-
selling author of four books on life, business and wisdom.
Current directorships of
other listed entities:
Directorships of listed
entities over the last 3
years:
Nil
Nil
Special responsibilities:
Member of the Nomination and Remuneration Committee
Interests in shares:
23,253,378 ordinary shares
Interests in options:
Contractual rights to
shares:
Stephen Rouvray
BEc, CA
Deputy Chairman and
Non-Executive Director
Current directorships of
other listed entities:
Directorships of listed
entities over the last 3
years:
Special responsibilities:
None
None
Stephen has over 45 years’ experience in financial services
across many senior leadership roles. He was Chief Financial
Officer, Company Secretary and Manager of Investor Relations
for AUB Group (formerly Austbrokers) from 2005 until 2015.
Prior to this, he was General Manager for ING Australia Holdings
from 2002 to 2005 having joined ING’s predecessor company,
Mercantile Mutual, in 1985. Over this 20 year period, Stephen
held the position of Company Secretary which included its
subsidiary companies operating in the life & general insurance,
investment management, funds management and banking
sectors. At the start of his career, he worked in the accountancy
profession from 1971 to 1984. Since retiring as CFO, Stephen
continues to represent AUB as a Director for a number of its
subsidiaries and associates.
Nil
Nil
Chairman of the Nomination and Remuneration Committee
Chairman of the Audit and Risk Committee
Interests in shares:
50,000 ordinary shares
Interests in options:
None
Contractual rights to
shares:
None
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Directors' Report | 30 June 2017
Information on directors continued
Director details
Expertise and experience
Pauline Michelakis
BCom (Hons), CA
Executive Director and
Chief Financial Officer
Pauline joined Kelly+Partners in 2013 as Group CFO. She has
more than 20 years’ experience in senior financial roles in
financial services and investment companies. Pauline is a
Chartered Accountant who commenced her career in 1981 as
an auditor with Arthur Young & Company (now EY). In 1986 she
joined listed international investment company AFP Group
in an executive role. In total, she worked for the group for 10
years, including 5 years as General Manager Finance of Lang
Corporation, the ASX-listed Australian spin-off (subsequently
renamed Patrick Corporation Limited). She also held CFO roles
at Kaplan Funds Management and Committed Capital Limited
before joining Kelly+Partners.
Current directorships of
other listed entities:
Directorships of listed
entities over the last 3
years:
Nil
Nil
Special responsibilities:
Member of the Audit and Risk Committee
Interests in shares:
937,061 ordinary shares
Interests in options:
Contractual rights to
shares:
Paul Kuchta
BBus, CA, FTIA, DipFP, RTA, JP
Executive Director
None
None
Paul is a Chartered Accountant with more than 17 years
accounting experience specialising in the provision of
compliance, tax and advisory services to private SME’s and
their owners. He commenced his career with Farrar & Company
Chartered Accountants in 1998, where he worked for 10 years.
Paul then joined Crowe Horwath in 2008 for a further 4 years.
He was a founding partner of Kelly+Partners Norwest when the
practice was launched in 2012.
Special responsibilities:
None
Interests in shares:
152,995 ordinary shares
Interests in options:
Contractual rights to
shares:
None
None
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KELLY+PARTNERS ANNUAL REPORT 2017 Directors' Report | 30 June 2017
Information on directors continued
Director details
Expertise and experience
Ryan Macnamee
BCom, GACID
Non-Executive Director
Appointed 2017
Independent
Current directorships of
other listed entities:
Directorships of listed
entities over the last 3
years:
Special responsibilities:
Ryan is an experienced business technology executive with
over 25 years of IT management experience. He has been
Chief Information Officer (CIO) at Laing O’Rourke since 2012,
including 3.5 years as the Global CIO. Ryan is responsible for
all IT functions within Laing O’Rourke with a focus on strategic
objectives, global alignment and delivering business value.
Prior to his current role, he held several senior IT management
positions at Woolworths from 2008 to 2012. Earlier in his
career, Ryan undertook various senior IT positions at financial,
insurance, construction and retail operations globally. He is also
on the Board of the Open Data Institute, a position he has held
since 2014.
Nil
Nil
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Interests in shares:
125,046
Interests in options:
Contractual rights to
shares:
None
None
Company secretary
David Franks (BEc, CA, FFin, JP) has held the position of Company Secretary since 1 February 2017.
David has over 20 years’ experience in finance and accounting, initially qualifying as a Chartered Accountant with Price
Waterhouse Coopers in their Business Services and Corporate Finance Divisions. Since that time, he has been CFO,
Company Secretary and/or Director for numerous ASX listed and unlisted public and private companies, in a range of
industries covering energy retailing, transport, financial services, mineral exploration, technology, automotive, software
development and healthcare.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during
the year ended 30 June 2017, and the number of meetings attended by each director were:
Full board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attend
Held
Attend
Held
Attend
Held
Brett
Kelly
Stephen
Rouvray
Pauline
Michelakis
Paul
Kuchta
Ryan
Macnamee
5
4
4
4
4
5
4
4
4
4
1
1
-
-
1
1
1
-
-
1
-
1
1
-
1
-
1
1
-
1
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee
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Directors' Report | 30 June 2017
Committee membership
As at the date of this report, the Company had an Audit and Risk Committee and a Nomination and Remuneration
Committee. Members acting on the Committees of the Board during the year were:
Audit and Risk
Nomination and Remuneration
Stephen Rouvray (Chairman)
Ryan Macnamee
Pauline Michelakis
Stephen Rouvray (Chairman)
Ryan Macnamee
Brett Kelly
All Committee members were appointed on 2 May 2017.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated
entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
+ Principles used to determine the nature and amount of remuneration
+ Details of remuneration
+ Service agreements
+ Share-based compensation
+ Additional information
+ Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria
for good reward governance practices:
+ competitiveness and reasonableness
+ acceptability to shareholders
+ performance linkage / alignment of executive compensation
+ transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration
arrangements for its directors and executives. The performance of the consolidated entity depends on the quality of
its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high
quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
+ having economic profit as a core component of plan design
+ focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
+ attracting and retaining high calibre executives
Additionally, the reward framework should seek to enhance executives' interests by:
+ rewarding capability and experience
+ reflecting competitive reward for contribution to growth in shareholder wealth
+ providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
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Directors' Report | 30 June 2017
Principles used to determine the nature and amount of remuneration continued
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination
and Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to
ensure non-executive directors' fees and payments are appropriate and in line with the market.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. Shareholders will be asked to approve a maximum annual aggregate remuneration of $60,000 at the Annual
General Meeting.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
+ base pay and non-monetary benefits
+ short-term performance incentives
+ share-based payments
+ other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually
by the Nomination and Remuneration Committee based on individual and business unit performance, the overall
performance of the consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The Company may introduce incentive arrangements in the future in order to attract, motivate and retain its executives.
For the year ended 30 June 2017 there was no link between company performance and key management personnel
remuneration. In the year ended 30 June 2017, the earnings per share was ($8.37) cents. Shares in the company were
issued at the IPO on 21 June 2017 at $1.00 per share and closed on 30 June 2017 at $1.42 per share.
Use of remuneration consultants
During the financial year ended 30 June 2017, the consolidated entity did not engage remuneration consultants to
review its existing remuneration policies.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of Kelly Partners Group
Holdings Limited:
+ Brett Kelly – Chairman, Chief Executive Officer, Executive Director
+ Stephen Rouvray – Deputy Chairman, Independent, Non-executive Director
+ Ryan MacNamee – Independent, Non-executive Director
+ Pauline Michelakis – Chief Financial Officer, Executive Director
+ Paul Kuchta – Executive Director
The table below provides remuneration for key management personnel for the 12 months ended 30 June 2017.
Due to the Company listing in June 2017 with no remuneration report required for the year ended 30 June 2016 no
comparatives for the year ended 30 June 2016 have been disclosed.
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Directors' Report | 30 June 2017
Details of remuneration continued
Short-term benefits
Post-
employment
benefits
Paid
absence
Share based
payments
Cash
salary
and fees
Cash
bonus
Non-
monetary
Super-
annuation
Annual/
Long
service
leave
Equity-
settled
shares
Total
2017
$
$
$
$
Non-Executive
Directors:
Stephen Rouvray
(iii)
Ryan Macnamee
(iii)
Executive
Directors:
Brett Kelly
(ii)
4,566
4,566
44,075
-
-
-
$
-
-
$
$
-
-
-
5,000
5,000
96,641
-
-
434
434
41,597
4,187
6,782
Pauline Michelakis
(i)
280,860
75,000
Paul Kuchta
(iv)
-
-
-
-
19,616
18,561
151,186
545,223
-
-
-
-
334,067
75,000
41,597
24,671
25,343
151,186
651,864
(i) Represents remuneration for the full financial year
(ii) Cash salary and fees represents remuneration from 16 May 2017, the date of appointment as CEO. The director did not previously draw a salary.
(iii) Represents remuneration from the date of appointment
(iv) Refer to Service Agreements on page 69
The proportion of remuneration linked to performance and the fixed proportion are as follows
Name
Fixed Remuneration
At risk – STI
At risk - LTI
2017
$
100%
100%
100%
100%
-
2017
$
-
-
-
-
-
2017
$
-
-
-
-
-
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Pauline Michelakis
Paul Kuchta (1)
(1) Refer to service agreement on page 69
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KELLY+PARTNERS ANNUAL REPORT 2017 Directors' Report | 30 June 2017
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Brett Kelly
Chairman, Chief Executive Officer, Executive Director
Agreement commenced:
16 May 2017
Term of agreement:
No fixed period
Details:
Name:
Title:
Base salary for the year ending 30 June 2018 of $360,000 inclusive of superannuation,
to be reviewed annually by the Nomination and Remuneration Committee. 12 month
termination notice by either party, non-solicitation and non-compete clauses.
Stephen Rouvray
Deputy Chairman, Independent, Non-Executive Director
Agreement commenced:
2 May 2017
Term of agreement:
No fixed period
Details:
Name:
Title:
Director fees for the year ending 30 June 2018 of $30,000 inclusive of superannuation, to
be reviewed annually by the Nomination and Remuneration Committee.
Ryan Macnamee
Independent, Non-Executive Director
Agreement commenced:
2 May 2017
Term of agreement:
No fixed period
Details:
Name:
Title:
Director fees for the year ending 30 June 2018 of $30,000 inclusive of superannuation, to
be reviewed annually by the Nomination and Remuneration Committee.
Pauline Michelakis
Chief Financial Officer, Executive Director
Agreement commenced:
16 May 2017
Term of agreement:
No fixed period
Details:
Name:
Title:
Base salary for the year ending 30 June 2018 of $325,000 inclusive of superannuation,
to be reviewed annually by the Nomination and Remuneration Committee. 6 month
termination notice by either party, non-solicitation and non-compete clauses.
Paul Kuchta
Executive Director
Agreement commenced:
Not applicable
Term of agreement:
Not applicable
Details:
Paul Kuchta as an Operating Business Owner in the Kelly Partners Norwest Partnership
receives a base distribution plus a distribution of profits from that Operating Business in
accordance with the terms of the Partnership Agreement.
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2017 are set out below:
Name
Date
Pauline Michelakis
16 May 2017
Shares
151,186
Issue price
$1.00
$
151,186
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Directors' Report | 30 June 2017
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the
year(1)
Received as part
of remuneration
Additions
Disposals/
other(2)
Balance at the
end of the year
Ordinary shares
Brett Kelly
25,353,378
Stephen Rouvray
Ryan Macnamee
Pauline Michelakis
Paul Kuchta
-
-
635,821
152,995
-
-
-
151,186
-
-
2,100,000
23,253,378
50,000
125,046
150,054
-
-
-
-
-
50,000
125,046
937,061
152,995
26,142,194
151,186
325,100
2,100,000
24,518,480
(1)Reflects share splits undertaken during the year.
(2)Disposed of through the IPO.
Option holding
There were no options over ordinary shares in the company held during the financial year.
Key management personnel with loans above $100,000 in the reporting period:
The following table outlines amounts in relation to loans above $100,000 made to key management personnel of the
Group. The loans were fully repaid by the key management personnel as of 30 June 2017.
Balance at
1 Jul 2016
Interest
charged
Allowance
for doubtful
receivables
Balance at
30 Jun 2017
Highest loan
balance during
the period
Brett Kelly
639,408
$
$
-
$
-
$
-
$
1,307,053
This concludes the remuneration report which has been audited.
Shares under option
Unissued ordinary shares of Kelly Partners Group Holdings Limited under option at the date of this report are as follows:
There are no shares under option at the date of this report.
Employee share plan
The Company has adopted an Employees Share Scheme in order to assist in the motivation and retention of selected
employees of the Company. The Employee Share Scheme is designed to align the interest of eligible employees more
closely with the interest of Shareholders, by providing an opportunity for eligible employees to receive equity interest in
the Company.
There were no grants under the employee share scheme as at 30 June 2017.
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Directors' Report | 30 June 2017
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of
the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 26 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 26 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
+ all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
+ none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
Officers of the company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the company who are former partners of Deloitte Touche Tohmatsu.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Brett Kelly
Chairman, Chief Executive Officer
Director
24 August 2017
Sydney
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KELLY+PARTNERS ANNUAL REPORT 2017 Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the Year Ended 30 June 2017
Revenue
Other income
Depreciation and amortisation expense
Employment and related expenses
Other expenses
Rent and utilities
Finance costs
IPO and other transaction costs
Business acquisition and restructuring costs
Fair value adjustment on conversion of
convertible notes
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income,
net of income tax
Other comprehensive income
Total comprehensive income for the year
Profit (loss) attributable to:
Members of the parent entity
Non-controlling interest
Total comprehensive income attributable to:
Members of the parent entity
Non-controlling interest
(Loss)/earnings per share
Basic (cents per share)
Diluted (cents per share)
Note
4
4
5
5
5
5
6
d
n
a
s
s
o
L
r
o
t
i
f
o
r
P
f
o
t
n
e
m
e
t
a
t
S
d
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t
a
d
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l
o
s
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o
C
e
m
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I
e
v
i
s
n
e
h
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e
h
t
O
2017
2016 (Restated)
$
30,198,254
133,032
(835,496)
$
21,066,210
810,540
(544,287)
(13,967,944)
(10,582,514)
(5,852,980)
(2,140,933)
(651,662)
(2,137,247)
(1,693,042)
(1,625,000)
1,426,982
(341,536)
1,085,446
-
1,085,446
(2,789,526)
3,874,972
1,085,446
(2,789,526)
3,874,972
1,085,446
(3,563,357)
(1,814,558)
(438,058)
-
-
-
4,933,976
(632,859)
4,301,117
-
4,301,117
2,007,396
2,293,721
4,301,117
2,007,396
2,293,721
4,301,117
(8.37)
(8.37)
6.26
6.26
The accompanying notes form part of these financial statements
73
Consolidated Statement of Financial Position
As At 30 June 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other non-financial assets
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial assets
Other non-financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liabilities
Provisions
Other liabilities
Other financial liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings
Total equity attributable to equity holders of
the company
Non-controlling interest
TOTAL EQUITY
2017
2016 (Restated)
Note
$
$
7
8
10
14
9
10
11
13
12
14
15
16
18
17
16
13
18
17
19
20
3,212,746
7,793,561
548,211
180,074
11,734,592
24,993
3,297,177
2,495,730
-
24,423,046
501,369
30,742,315
42,476,907
4,376,867
4,459,553
67,194
1,159,336
147,656
10,210,606
661,383
2,967,616
894,320
156,600
4,679,919
20,075
2,859,758
1,441,468
124,334
16,102,503
359,357
20,907,495
25,587,414
1,543,670
4,686,702
424,177
670,073
102,171
7,426,793
10,497,486
8,580,550
306,414
149,498
46,244
1,432,618
12,432,260
22,642,866
19,834,041
13,988,051
(2,298,172)
11,689,879
8,144,162
19,834,041
-
122,986
21,547
100,551
8,825,634
16,252,427
9,334,987
1,684,411
4,039,514
5,723,925
3,611,062
9,334,987
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The accompanying notes form part of these financial statements
KELLY+PARTNERS ANNUAL REPORT 2017
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2017
2017
Balance at 1 July 2016 (Restated)
1,684,411
4,039,514
3,611,062
9,334,987
Ordinary
Shares
Retained
Earnings
Non-
controlling
Interests
$
$
$
Total
$
Loss attributable to members of the
parent entity
Profit attributable to non-controlling
interests
Total other comprehensive income
for the year
Distributions to non-controlling
interests
Dividends provided for or paid
24
Acquisition of subsidiary
Contribution of equity, net of
transaction costs
Shares issued to employees
Conversion of convertible note to
ordinary shares
Shares issued on IPO
Shares issued pre-IPO
Share issue costs, net of tax
Balance at 30 June 2017
2016
-
-
-
-
-
-
453,500
8,125,000
2,884,000
1,835,500
(994,360)
(2,789,526)
-
(2,789,526)
-
-
-
3,874,972
3,874,972
-
-
(3,595,872)
(3,595,872)
(3,548,160)
-
(3,548,160)
-
-
-
-
-
-
4,254,000
4,254,000
-
-
-
-
-
453,500
8,125,000
2,884,000
1,835,500
(994,360)
13,988,051
(2,298,172)
8,144,162
19,834,041
Ordinary
Shares
Retained
Earnings
Non-
controlling
Interests
$
$
$
Total
$
Balance at 1 July 2015 (Restated)
1,684,411
3,348,633
3,615,730
8,648,774
Profit or loss attributable to
members of the parent entity
Profit attributable to non-controlling
interests
Total other comprehensive income
for the year
Distributions to non-controlling
interests
Dividends paid or provided for
24
Acquisition of non-controlling
interests without a change in control
Disposal of non-controlling interests
without a change in control
-
-
-
-
-
-
-
2,007,396
-
2,007,396
-
-
-
2,293,721
2,293,721
-
-
(2,305,919)
(2,305,919)
(1,562,400)
-
(1,562,400)
(41,271)
(31,449)
(72,720)
287,156
38,979
326,135
Balance at 30 June 2016 (Restated)
1,684,411
4,039,514
3,611,062
9,334,987
The accompanying notes form part of these financial statements
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Consolidated Statement of Cash Flows
For the Year Ended 30 June 2017
Note
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers and employees
Interest paid
Income taxes paid
Net cash provided by operating activities
32
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Deposits refunded/(paid)
Purchase of investments
Loans advanced to unrelated entities
Loans to related parties - loans advanced
Loans to related parties - proceeds from
repayments
Payment for intangible assets
Proceeds from disposal of intangible asset
Payments for acquisition of business
Proceeds from disposal of partnership interests
2017
$
35,330,709
(27,475,337)
(651,662)
(284,633)
6,919,077
(1,282,120)
-
(4,918)
-
(1,491,338)
2016
$
23,608,696
(18,686,605)
(412,971)
(859,039)
3,650,081
(1,157,594)
(62,963)
(10,075)
(326,462)
(3,977,944)
2,130,746
1,635,468
(36,266)
-
(6,202,672)
-
(30,800)
55,000
(93,390)
229,500
Net cash used by investing activities
(6,886,568)
(3,739,260)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to non-controlling interests
Net proceeds from the issue of equity instruments,
net of transaction costs
Proceeds from issue of convertible notes
Proceeds from borrowings
Repayment of borrowings
Proceeds from loans from related parties
Dividends paid
Repayment of finance lease commitments
Net cash provided by (used by) financing activities
Net increase (decrease) in cash and cash
equivalents held
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of financial year
7
(3,595,872)
(1,983,536)
3,625,141
6,500,000
6,066,311
(6,306,182)
-
(3,548,160)
(8,252)
2,732,986
-
-
4,609,352
(1,916,291)
860
(1,562,400)
(23,634)
(875,649)
2,765,495
(964,828)
(1,578,010)
1,187,485
(613,182)
(1,578,010)
76
The accompanying notes form part of these financial statements
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements
For the Year Ended 30 June 2017
The financial report covers Kelly Partners Group Holdings Limited ('Company') and its controlled entities ('the Group').
Kelly Partners Group Holdings Limited is a for-profit Company limited by shares, incorporated and domiciled in Australia.
Each of the entities within the Group prepare their financial statements based on the currency of the primary economic
environment in which the entity operates (functional currency). The consolidated financial statements are presented in
Australian dollars which is also the parent entity’s functional and presentation currency.
Comparatives are consistent with prior years, unless otherwise stated. Amounts in the financial statements and Directors'
Report have been rounded to the nearest dollar.
1 Basis of Preparation
These financial statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group. For the purpose of preparing the
consolidated financial statements, the Company is a for-profit entity.
Accounting standards include Australian Accounting Standards. Compliance with Australian Standards ensure that the
financial statements and notes of the company comply with International Financial Reporting Standards ('IFRS').
The financial statements were authorised for issue by the directors on 24 August 2017.
The financial statements have been prepared on an accruals basis and are based on historical costs modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Significant accounting policies adopted in the preparation of these financial statements are presented below and are
consistent with prior reporting periods unless otherwise stated.
2 Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the financial statements of the Company and its controlled entities from
the date on which control is obtained until the date that control is lost.
Intragroup assets, liabilities, equity, income, expenses and cashflows relating to transactions between entities in the
consolidated entity have been eliminated in full for the purpose of these financial statements.
Appropriate adjustments have been made to a controlled entity’s financial position, performance and cash flows where
the accounting policies used by that entity were different from those adopted by the consolidated entity. All controlled
entities have a June financial year end.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the parent has control. Control is established when
the parent is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the relevant activities of the entity.
(b) Business combinations
Business combinations are accounted for by applying the acquisition method which requires an acquiring entity to be
identified in all cases. The acquisition date under this method is the date that the acquiring entity obtains control over
the acquired entity.
The fair value of identifiable assets and liabilities acquired are recognised in the consolidated financial statements at the
acquisition date.
Goodwill or a gain on bargain purchase may arise on the acquisition date, which is calculated by comparing the
consideration transferred and the amount of non-controlling interest in the acquiree with the fair value of the net
identifiable assets acquired. Where consideration is greater than the net assets acquired, the excess is recorded as
goodwill. Where the net assets acquired are greater than the consideration, the measurement basis of the net assets are
reassessed and then a gain from bargain purchase recognised in profit or loss.
All acquisition-related costs are recognised as expenses in the periods in which the costs are incurred except for costs to
issue debt or equity securities.
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Notes to the Financial Statements | For the Year Ended 30 June 2017
(b) Business combinations continued
Any contingent consideration which forms part of the combination is recognised at fair value at the acquisition date. If
the contingent consideration is classified as equity then it is not remeasured and the settlement is accounted for within
equity. Otherwise subsequent changes in the value of the contingent consideration liability are measured through profit
or loss.
(c) Property, Plant and Equipment
Classes of property, plant and equipment are measured using the cost model as specified below.
Where the cost model is used, the asset is carried at its cost less any accumulated depreciation and any impairment
losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling
and restoring the asset, where applicable.
Depreciation
The depreciable amount of all property, plant and equipment is depreciated on a straight-line or diminishing value
method from the date that management determine that the asset is available for use.
Assets held under a finance lease and leasehold improvements are depreciated over the lesser of the term of the lease
and the assets' useful life.
The depreciation rates used for each class of depreciable asset are shown below:
Fixed asset class
Plant and Equipment
Motor Vehicles
Leasehold Improvements
Depreciation rate
10% - 40%
12.5%
10% - 30%
At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is
reviewed. Any revisions are accounted for prospectively as a change in estimate.
When an asset is disposed, the gain or loss is calculated by comparing proceeds received with its carrying amount and is
taken to profit or loss.
(d) Financial instruments
Financial instruments are recognised initially using trade date accounting, i.e. on the date that Company becomes party
to the contractual provisions of the instrument.
On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments
measured at fair value through profit or loss where transaction costs are expensed as incurred).
Financial Assets
Financial assets are divided into the following categories which are described in detail below:
+ loans and receivables.
Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the
instrument and its purpose. A financial instrument’s category is relevant to the way it is measured and whether any
resulting income and expenses are recognised in profit or loss or in other comprehensive income.
All income and expenses relating to financial assets are recognised in the consolidated statement of profit or loss and
other comprehensive income in the ‘finance income’ or ‘finance costs’ line item respectively.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise principally through the provision of goods and services to customers but also incorporate other
types of contractual monetary assets.
After initial recognition these are measured at amortised cost using the effective interest method, less provision for
impairment. Any change in their value is recognised in profit or loss.
The Company’s trade and most other receivables fall into this category of financial instruments.
Discounting is omitted where the effect of discounting is considered immaterial.
Significant receivables are considered for impairment on an individual asset basis when they are past due at the
reporting date or when objective evidence is received that a specific counterparty will default.
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KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
Loans and receivables continued
The amount of the impairment is the difference between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable.
For trade receivables, impairment provisions are recorded in a separate allowance account with the loss being
recognised in profit or loss. When confirmation has been received that the amount is not collectable, the gross carrying
value of the asset is written off against the associated impairment provision.
Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.
In some circumstances, the Company renegotiates repayment terms with customers which may lead to changes in the
timing of the payments, the Company does not necessarily consider the balance to be impaired, however assessment is
made on a case-by-case basis.
Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the
instrument.
The Company‘s financial liabilities include borrowings, trade and other payables (including finance lease liabilities),
which are measured at amortised cost using the effective interest rate method.
Impairment of financial assets
At the end of the reporting period the Company assesses whether there is any objective evidence that a financial asset
or group of financial assets is impaired.
Financial assets at amortised cost
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred,
the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the
estimated future cash flows discounted at the financial assets original effective interest rate.
Impairment on loans and receivables is reduced through the use of an allowance account. All other impairment losses
on financial assets at amortised cost are taken directly to the asset.
(e) Impairment of non-financial assets
At the end of each reporting period, the Group determines whether there is any evidence of an impairment indicator
for non-financial assets.
Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet
available for use, the recoverable amount of the assets is estimated.
Where assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit
(CGU) is estimated.
The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value
in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.
Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.
Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except
for goodwill.
(f) Intangible Assets
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
i) the consideration transferred;
ii) any non-controlling interest; and
iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The value of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100% interest
will depend on the method adopted in measuring the aforementioned non-controlling interest. The Group can elect to
measure the non-controlling interest in the acquiree either at fair value ('full goodwill method') or at the non-controlling
interest's proportionate share of the subsidiary's identifiable net assets ('proportionate interest method'). The Group
determines which method to adopt for each acquisition.
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Notes to the Financial Statements | For the Year Ended 30 June 2017
Under the 'full goodwill method', the fair values of the non-controlling interests are determined using valuation
techniques which make the maximum use of market information where available.
Brand names and intellectual property
Brand names and intellectual property have indefinite useful lives. Intangible assets with indefinite useful lives are tested
for impairment annually either individually or at cash-generating unit level consistent with the methodology outlined
for goodwill above. Such intangibles are not amortised. Assets with indefinite useful lives are reviewed each reporting
period to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful
life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted
for on a prospective basis.
Customer relationship intangibles
Customer relationship intangibles acquired in a business combination are initially recognised at their fair value at
the acquisition date. Customer relationship intangibles have a finite life and are subsequently carried at cost less any
accumulated amortisation and any impairment losses. Customer relationship intangibles are amortised over their useful
life ranging from 3 to 7 years.
Software
Software is recorded at cost. Software has a finite life and is carried at cost less any accumulated amortisation and
impairment losses. It has an estimated useful life of between one and three years.
Amortisation
Amortisation is based on the cost of an asset less its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets,
other than goodwill, from the date that they are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(g) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily
convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
Bank overdrafts also form part of cash equivalents for the purpose of the consolidated statement of cash flows and are
presented within current liabilities on the consolidated statement of financial position.
(h) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuer’s may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuer’s are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a
comparison, where applicable, with external sources of data.
(i) Employee benefits
Provision is made for the Group's liability for employee benefits arising from services rendered by employees to the end
of the reporting period. Employee benefits that are expected to be wholly settled within one year have been measured
at the amounts expected to be paid when the liability is settled.
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KELLY+PARTNERS ANNUAL REPORT 2017 Notes to the Financial Statements | For the Year Ended 30 June 2017
(i) Employee benefits continued
Employee benefits expected to be settled more than twelve months after the end of the reporting period have been
measured at the present value of the estimated future cash outflows to be made for those benefits.
Employee benefits are presented as current liabilities in the consolidated statement of financial position if the Group
does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date
regardless of the classification of the liability for measurement purposes under AASB 119.
(j) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(k) Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number
of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
(l) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options which vest immediately are recognised as a deduction from equity, net of any tax effects.
(m) Equity-settled compensation
Equity settled share based compensation benefits are provided to employees.
Equity settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
The cost of equity settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period.
(n) Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the Company, on or before the end of the financial year but not distributed at the reporting date.
(o) Income Tax
The tax expense recognised in the consolidated statement of profit or loss and other comprehensive income relates to
current income tax expense plus deferred tax expense (being the movement in deferred tax assets and liabilities and
unused tax losses during the year).
Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for the year and
is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax
bases of assets and liabilities to the carrying amounts in the consolidated financial statements.
Deferred tax is not provided for the following:
+ the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit (tax loss);
+ taxable temporary differences arising on the initial recognition of goodwill; and
+ temporary differences related to investment in subsidiaries, associates and jointly controlled entities to the extent that
the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it
is probable that taxable profit will be available against which the deductible temporary differences and losses can be
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Notes to the Financial Statements | For the Year Ended 30 June 2017
(o) Income Tax continued
utilised.
Current tax assets and liabilities are set off against each other where there is a legally enforceable right to set off the
recognised amounts and there is an intention either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Deferred tax assets and liabilities are set off against each other where there is a legal right to set off current tax assets
against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle
current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously in each
future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Current and deferred tax is recognised as an income or an expense and included in the profit or loss for the period
except where the tax arises from a transaction which is recognised in other comprehensive income or equity, in which
case the tax is recognised in other comprehensive income or equity respectively.
Tax consolidated group
From 1 July 2012 the Company and its wholly-owned Australian controlled entities formed a tax-consolidated group
under the legislation and as a consequence these entities are taxed as a single entity. Kelly Partners Group Holdings
Limited is the head entity of the tax consolidated group.
Each entity in the tax consolidated group accounts for their own current and deferred tax amounts. These tax amounts
are measured using the ‘stand-alone taxpayer’ approach to allocation.
Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are
immediately transferred to the parent entity.
The tax consolidated group has entered into a tax funding agreement whereby each entity within the Group contributes
to the income tax payable by the Group in proportion to their contribution to the Group’s taxable income. Differences
between the amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the
funding agreement are recognised as either a contribution by, or distribution to the head entity.
(p) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset (except for
legal ownership) are transferred to entities in the Group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged
as expenses on a straight-line basis over the life of the lease term.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of
the lease term.
(q) Revenue and other income
Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits
associated with the transaction will flow to the entity and specific criteria relating to the type of revenue as noted below,
has been satisfied.
Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns,
discounts and rebates.
Rendering of services
Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be
measured reliably. If this is the case then the stage of completion of the services is used to determine the appropriate
level of revenue to be recognised in the period.
If the outcome cannot be reliably measured then revenue is recognised to the extent of expenses recognised that are
recoverable.
(r) Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
(s) Goods and Services Tax (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
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KELLY+PARTNERS ANNUAL REPORT 2017 Notes to the Financial Statements | For the Year Ended 30 June 2017
(s) Goods and Services Tax (GST) continued
amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payable are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the
consolidated statement of financial position.
Cash flows in the consolidated statement of cash flows are included on a gross basis and the GST component of cash
flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
(t) Adoption of new and revised accounting standards
The Group has adopted all of the new, revised or amended Accounitng Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. The adoption of
these Accounting Standards and Interpretations did not have any impact on the financial performance or position of the
Group.
(u) New Accounting Standards and Interpretations
AASB 9 Financial Instruments
This standard is applicable for annual reporting periods beginning on or after 1 January 2018.
AASB 9 issued in December 2009 introduced new requirements for the classification and measurement of financial
assets. AASB 9 was subsequently amended in December 2010 to include requirements for the classification and
measurement of financial liabilities and for derecognition, and in December 2013 to include the new requirements for
general hedge accounting.
Another revised version of AASB 9 was issued in December 2014 mainly to include:
(a) Impairment requirements for financial assets
(b) Limited amendments to the classification and measurement requirements by introducing a ‘fair value through other
comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.
All recognised financial assets that are within the scope of AASB 9 are required to be subsequently measured at
amortised cost or fair value. Specifically:
- Debt investments that are held within a business model whose objective is to collect the contractual cash flows, and
that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are
generally measured at amortised cost at the end of subsequent accounting periods
- Debt instruments that are held within a business model whose objective is achieved both by collecting contractual
cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI.
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model, as opposed to an
incurred credit loss model under AASB 139. The expected credit loss model requires an entity to account for expected
credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since
initial recognition. In the words, it is no longer necessary for a credit event to have occurred before credit losses are
recognised.
The Group will adopt this standard from 1 July 2018 but the impact of its adoption has not yet been assessed by the
Group.
AASB 15 Revenue from contracts with customers
This standard is applicable for annual reporting periods beginning on or after 1 January 2018.
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts
with customers. AASB 15 will supersede the current revenue recognition guidance including AASB 118 Revenue, AASB 111
Construction Contracts and the related Interpretations when it becomes effective.
The core principle of AASB 15 is that an entity should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligations in the contract
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(u) New Accounting Standards and Interpretations continued
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under AASB 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of the
goods or services underlying the particular performance obligation is transferred to the customer.
Far more prescriptive guidance has been added in AASB 15 to deal with specific scenarios. Furthermore, extensive
disclosures are required by AASB 15.
The Group will adopt this standard from 1 July 2018 but the impact of its adoption has not yet been assessed by the
Group.
AASB 16 Leases
This standard is applicable for annual reporting periods beginning on or after 1 January 2019.
AASB 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments
for both lessors and lessees. AASB 16 will supersede the current lease guidance including IAS 117 Leases and the related
interpretations when it becomes effective.
AASB 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a
customer. Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for
lessee accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be
recognised for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low value assets.
The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions)
less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease
liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently,
the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst
others. Furthermore, the classification of cash flows will also be affected as operating lease payments under AASB 117 are
presented as operating cash flows; whereas under the AASB 16 model, the lease payments will be split into a principal
and an interest portion which will be presented as financing and operating cash flows respectively.
The Group will adopt this standard from 1 July 2019. Whilst the directors are yet to assess the impact of AASB 16,
it is noted that operating leases will be capitalised on the balance sheet by recognising a 'right-of-use' asset and a
lease liability for the present value of the obligation and the rental expense will be replaced with depreciation of the
right-of-use asset and interest on the lease liability.
3 Critical Accounting Estimates and Judgments
The directors make estimates and judgements during the preparation of these financial statements regarding
assumptions about current and future events affecting transactions and balances.
These estimates and judgements are based on the best information available at the time of preparing the financial
statements, however as additional information is known then the actual results may differ from the estimates.
The significant estimates and judgements made have been described below.
Key estimates - impairment of goodwill and other indefinite life intangible assets
Goodwill is tested for impairment annually and whenever there is an indicator of impairment in accordance with the
accounting policy stated in Note 2. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based
on the current cost of capital and growth rates of the estimated future cashflows. Details of the impairment testing is
included in note 12.
Key estimates - business combinations
The Group has exercised judgement in determining the purchase price allocation for acqusitions, including the fair
value of the intangible assets and resulting goodwill, taking into account all available information at the eporting date.
Details of acquisitions are included in Note 28.
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4 Revenue and Other Income
Provision of services
Total Revenue
Other Income
Other income
Commissions
Fair value adjustment on contingent
consideration
2017
$
2016
$
30,198,254
30,198,254
21,066,210
21,066,210
2017
$
28,739
104,293
2016
$
23,507
98,533
-
688,500
133,032
810,540
5 Result for the Year
Profit before tax includes the following specific expenses:
Finance Costs
Financial liabilities measured at
amortised cost:
Interest on bank overdrafts
and loans
Interest on finance leases
Total interest expense
Other expenses:
Provision for impairment
of receivables:
Impairment of trade receivables
Impairment of loan receivable
Rental expense on operating leases:
2017
$
2016
$
651,662
435,857
-
651,662
2,201
438,058
223,049
349,361
14,325
-
Lease payments
1,727,222
1,337,023
Depreciation and amortisation
Depreciation
Amortisation
415,935
419,561
835,496
272,010
272,277
544,287
Employee benefits expense
Salaries and wages expense
12,463,725
9,702,221
Superannuation expense
Other on costs expense
Employee leave expense
830,627
596,310
77,282
589,336
383,607
(92,649)
13,967,944
10,582,515
s
t
n
e
m
e
t
a
t
S
l
a
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c
n
a
n
i
F
e
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t
o
t
s
e
t
o
N
85
Notes to the Financial Statements | For the Year Ended 30 June 2017
6 Income Tax Expense
(a) The major components of tax expense (income) comprise:
2017
$
2016
$
Current tax expense
Local income tax - current period
596,131
628,415
Deferred tax expense
Origination and reversal of
temporary differences
Under/(over) provision in respect
of prior years
(250,992)
(3,603)
5,505
(1,061)
Total income tax expense
341,536
632,859
(b) Reconciliation of income tax to accounting profit:
Profit before income tax
Tax rate
Add:
Tax effect of:
- fair value adjustment on conversion
of convertible note
- IPO related and other transaction
costs
- other non-allowable items
Less:
Tax effect of:
2017
$
2016
$
1,426,982
4,933,976
30%
30%
428,095
1,480,193
487,500
301,000
57,825
846,325
-
-
91,567
91,567
- other non-assessable items
-
(246,429)
- distributions to non-controlling
interests
- overprovision for income tax in
prior year
Income tax expense
(929,281)
(691,411)
(3,603)
(1,061)
(932,884)
(938,901)
341,536
632,859
86
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
7 Cash and cash equivalents
2017
$
2016
$
Cash at bank and in hand
3,212,746
661,383
Reconciliation of cash
Cash and cash equivalents reported in the consolidated statement of cash flows are reconciled to the equivalent
items in the consolidated statement of financial position as follows:
Cash and cash equivalents
2017
$
3,212,746
2016
$
661,383
Bank overdrafts
16
(2,025,261)
(2,239,393)
Balance as per consolidated
statement of cash flows
8 Trade and other receivables
CURRENT
Trade receivables
Provision for impairment
(a)
Accrued income
Total current trade and other
receivables
(a) Impairment of receivables
1,187,485
(1,578,010)
2017
$
2016
$
6,596,354
(245,814)
1,443,021
2,934,877
(28,927)
61,666
7,793,561
2,967,616
Reconciliation of changes in the provision for impairment of receivables is as follows:
Balance at beginning of the year
Additional impairment loss
recognised
Provision used
Reversal of impairment
Balance at end of the year
(b) Aged analysis
The ageing analysis of receivables is as follows:
0-30 days
31-60 days
61-90 days (past due not impaired)
91+ days (past due not impaired)
91+ days (considered impaired)
2017
$
28,927
243,238
(17,354)
(8,997)
245,814
2016
$
63,959
-
(14,325)
(20,707)
28,927
2017
$
2016
$
3,843,619
1,906,702
883,243
435,722
1,187,956
245,814
6,596,354
301,073
204,633
493,542
28,927
2,934,877
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t
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87
Notes to the Financial Statements | For the Year Ended 30 June 2017
(b) Aged analysis continued
Provision for impairment of receivables
Current trade receivables are generally on 30 day terms and are assessed for recoverability based on the underlying
terms of the individual contract. The business acquired in the current financial year (Kelly Partners (Sydney) Pty Ltd)
had adopted a quarterly billing cycle historically. A provision for impairment is recognised when there is objective
evidence that an individual trade receivable is impaired.
Credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or group of
counterparties other than those receivables specifically provided for.
9 Other financial assets
NON-CURRENT
Investments
Investments comprise:
Listed investments, at cost
- shares in listed corporations
Unlisted investments, at cost
- shares in other corporations
10 Other financial assets
CURRENT
Loans to partners
NON-CURRENT
Loans to partners
2017
$
2016
$
24,993
20,075
14,993
10,075
10,000
10,000
2017
$
2016
$
548,211
548,211
894,320
894,320
3,297,177
3,297,177
2,859,758
2,859,758
88
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
11 Property, plant and equipment
Buildings
At cost
Total buildings
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Leased plant and equipment
Capitalised leased assets
Accumulated depreciation
Total leased plant and equipment
Motor vehicles
At cost
Accumulated depreciation
Total motor vehicles
Leasehold improvements
At cost
Accumulated depreciation
Total leasehold improvements
Total property, plant and equipment
2017
$
571,396
571,396
1,721,620
(1,043,750)
677,870
62,595
(55,308)
7,287
665,307
(134,770)
530,537
1,765,045
(1,056,405)
708,640
2,495,730
2016
$
-
-
1,276,518
(806,301)
470,217
62,595
(47,284)
15,311
489,644
(11,975)
477,669
1,284,623
(806,352)
478,271
1,441,468
Movements in carrying amounts of property, plant and equipment
Movement in the carrying amounts for each class of property, plant and equipment between the beginning
and the end of the current financial year:
Year ended 30 June 2017
Balance at the beginning of year
Additions
Additions through business
combination
Disposals - written down value
Depreciation expense
Buildings
Plant and
Equipment
Motor
Vehicles
Leasehold
Improvements
Total
$
-
571,396
-
-
-
$
$
$
$
485,528
264,466
198,040
(4,397)
477,669
175,663
478,271
1,441,468
270,595
1,282,120
-
-
-
198,040
(5,566)
(9,963)
(258,480)
(122,795)
(34,660)
(415,935)
Balance at the end of the year
571,396
685,157
530,537
708,640
2,495,730
Year ended 30 June 2016
Balance at the beginning of year
Additions
Depreciation expense
Balance at the end of the year
Buildings
$
-
-
-
-
Plant and
Equipment
$
305,359
348,210
(168,041)
485,528
Motor
Vehicles
Leasehold
Improvements
Total
$
-
489,644
(11,975)
477,669
$
$
252,284
557,643
317,981
1,155,835
(91,994)
(272,010)
478,271
1,441,468
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89
Notes to the Financial Statements | For the Year Ended 30 June 2017
12 Intangible Assets
Goodwill
Cost
Brand names and intellectual
property
Cost
Customer relationships
Cost
Accumulated amortisation
Net carrying value
Computer software
Cost
Accumulated amortisation
Net carrying value
Total Intangibles
2017
$
2016
$
17,847,638
12,525,784
3,300,000
3,300,000
5,957,719
2,575,736
(2,717,664)
(2,300,196)
3,240,055
275,540
43,832
(8,479)
35,353
7,566
(6,387)
1,179
24,423,046
16,102,503
Movements in carrying amounts of intangible assets
Brand
names and
intellectual
property
Customer
relationships
Computer
software
Goodwill
Total
$
$
$
$
$
Year ended 30 June 2017
Balance at the beginning of the year
3,300,000
275,540
Additions
Additions through business
combinations
Amortisation
-
-
-
-
3,381,983
(417,468)
Closing value at 30 June 2017
3,300,000
3,240,055
1,179
36,267
12,525,784
16,102,503
-
36,267
-
5,321,854
8,703,837
(2,093)
35,353
-
(419,561)
17,847,638
24,423,046
Year ended 30 June 2016
Balance at the beginning of the year
(restated)
Additions
Disposal of non-controlling interest
Disposal of non-controlling interest
Amortisation (restated)
Other
Brand
names and
intellectual
property
Customer
relationships
Computer
software
Goodwill
Total
$
$
3,300,000
547,817
$
-
$
$
12,694,031
16,541,848
-
-
-
-
-
-
-
-
7,566
51,400
58,966
-
-
(163,364)
(163,364)
(55,000)
(55,000)
(272,277)
(6,387)
-
(278,664)
-
-
1,179
(1,283)
(1,283)
12,525,784
16,102,503
Closing value at 30 June 2016
3,300,000
275,540
Brand names and intellectual property have indefinite useful lives and are not amortised.
90
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
12 Intangible Assets continued
Impairment testing
For the purpose of impairment testing, goodwill and other indefinite life intangibles are allocated to cash-generating
units ("CGU") which are based on the Group's operating divisions. The aggregate carrying amount of goodwill allocated
to each CGU is:
Kelly Partners (Sydney) Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Wollongong Partnership
Other partnerships
Total
2017
2016
$
3,538,147
$
-
5,001,779
5,001,779
3,391,692
3,391,692
5,916,020
4,132,313
17,847,638
12,525,784
The carrying value of indefinite life intangibles is $3,300,000 (2016: $3,300,000).
The recoverable amount of each cash-generating unit above is determined based on value in use calculations. These
calculations use cashflow projections over a five year period, based on financial budgets approved by management.
These budgets use historical growth rates to project revenue. Costs are calculated taking into account historical gross
margins as well as estimated inflation rates over the period which are consistent with inflation rates applicable to
the locations in which the CGU operates. With regard to the assessment of the CGU's, management believes that
no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to
materially exceed its recoverable amount.
The following assumptions were used in the calculations:
Growth Rate
Discount rate
13 Tax
Deferred Tax Assets
2017
%
2.50
16.50
Opening
Balance
(Charged)/
credited to
income
Credited to
equity
Business
combination
Other
movements
Closing
Balance
$
$
$
Deferred tax assets
Accruals
186,406
(9,205)
Income assessable on receipt
(35,680)
12,212
Differences between accounting
and tax depreciation
(12,546)
(8,512)
Balance at 30 June 2016
138,180
(5,505)
Accruals
176,767
84,633
Income assessable on receipt
(32,163)
(368,597)
Differences between accounting
and tax depreciation
Customer relationship intangibles
Expense deductible over five years
Write-off of loan
(20,270)
148
-
-
-
83,919
397,061
276,154
53,828
-
-
-
-
-
-
-
-
-
$
-
-
-
-
$
$
(434)
176,767
(8,695)
(32,163)
788
(20,270)
(8,341)
124,334
110,538
-
-
(1,014,604)
-
-
-
-
-
-
-
371,938
(400,760)
(20,122)
(930,685)
673,215
(53,828)
-
Balance at 30 June 2017
124,334
250,992
276,154
(904,066)
(53,828)
(306,414)
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m
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91
Notes to the Financial Statements | For the Year Ended 30 June 2017
14 Other assets
CURRENT
Prepayments
NON-CURRENT
Deposits
15 Trade and other payables
CURRENT
Unsecured liabilities
Trade payables
GST payable
Sundry payables and accrued
expenses
2017
$
2016
$
180,074
156,600
501,369
359,357
2017
$
2016
$
809,148
608,160
2,959,559
409,621
382,493
751,556
4,376,867
1,543,670
Refer to Note 23 for further information on financial instruments.
16 Borrowings
CURRENT
Unsecured liabilities:
Secured liabilities:
Bank overdraft
Lease liability
Bank loans
Total current borrowings
NON-CURRENT
Secured liabilities:
Lease liability
Bank loans
Total non-current borrowings
22
22
2017
$
2016
$
2,025,261
2,239,393
-
2,434,292
4,459,553
2017
$
-
10,497,486
10,497,486
5,489
2,441,820
4,686,702
2016
$
2,763
8,577,787
8,580,550
The consolidated entity has established debt facilities in place for each of its Operating Businesses with the loans
of each Operating Business being non-recourse to the cash flows and assets of the parent entity. The loans comprise
of overdraft facilities, term loans and equipment finance facilities. Typically each Operating Business’ debt facilities are
granted security by that entity as well as having personal guarantees from the Operating Business Owners. The lease
liabilities are secured over the leased assets.
92
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
17 Other liabilities
CURRENT
Deferred rent
NON-CURRENT
Deposits held
18 Provisions
CURRENT
Employee entitlements
NON-CURRENT
Employee entitlements
19 Other Financial Liabilities
NON-CURRENT
Contingent consideration
2017
$
2016
$
147,656
102,171
46,244
21,547
2017
$
2016
$
1,159,336
670,073
149,498
122,986
2017
$
2016
$
1,432,618
100,551
Contingent consideration comprises the contingent component of the purchase price for Kelly Partners Southern
Highlands and Kelly Partners Sydney. Prior period contingent consideration related to the acquisition of Kelly Partners
Oran Park and was settled during the year.
A reconciliation of the movement in contingent consideration for the financial year is set out below:
Opening balance
Recognised on acquisition (Note 28)
Revaluation of liability
Settled in cash
2017
$
100,551
1,432,618
2016
$
789,051
-
-
(688,500)
(100,551)
1,432,618
-
100,551
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93
Notes to the Financial Statements | For the Year Ended 30 June 2017
20 Issued Capital
45,344,181 (2016: 2,016) Ordinary
shares
Transaction costs arising on share
issue, net of tax
Total
Ordinary shares
At the beginning of the reporting
period
Other changes to share capital
Shares issued (1 July 2015)
Share split: 1 share to 1,000 shares (2
November 2016)
Shares issued pre-IPO
Share split: 1 share to 15.9 shares (14
June 2017)
Shares issued during the year
Shares issued to employees
Conversion of convertible note to
ordinary shares
Shares issued on IPO
At the end of the reporting period
2017
$
2016
$
14,982,411
1,684,411
(994,360)
-
13,988,051
1,684,411
2017
No.
2,016
-
2,013,984
2,016,000
115,522
2,131,522
31,750,159
33,881,681
453,500
8,125,000
2,884,000
45,344,181
2016
No.
1,954
62
-
2,016
-
2,016
-
2,016
-
-
-
2,016
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company.
The Company does not have authorised capital or par value in respect of its shares.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
Capital Management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the
shareholders and partners with adequate returns and ensure that the Group can fund its operations and continue as
a going concern. The Group's debt and capital includes ordinary share capital and financial liabilities, supported by
financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital
structure in response to changes in these risks and the market. These responses include the management of debt levels,
distributions to shareholders and partners and share issues.
There have been no changes to the strategy adopted by management to manage the capital of the Group since the
prior year.
94
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
21 Earnings per Share
Weighted average number of
ordinary shares outstanding during
the year used in calculating basic
EPS
Weighted average number of
ordinary shares outstanding during
the year used in calculating dilutive
EPS
22 Capital and Leasing Commitments
(a)Finance Leases
Minimum lease payments:
- not later than one year
- between one year and five years
Minimum lease payments
Less: finance changes
Present value of minimum lease
payments
(b) Operating Leases
Minimum lease payments under
non-cancellable operating leases:
- not later than one year
- between one year and five years
- later than five years
2017
No.
2016
No.
33,342,437
32,045,397
33,342,437
32,045,397
2017
$
-
-
-
-
-
2017
$
2016
$
6,210
2,869
9,079
(827)
8,252
2016
$
2,185,998
6,202,550
834,846
9,223,394
1,409,961
3,383,942
-
4,793,903
Operating leases have been taken out for office premises and office equipment. The above balances are gross of
sublease income of $168,368 not later than one year and $171,634 between one year and five years (2016: $165,824 not
later than one year and $253,482 between one year and five years).
23 Financial Risk Management
The Company is exposed to a variety of financial risks through its use of financial instruments: market risk (including
interest rate risk and price risk), credit risk and liquidity risk.
The Company‘s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability
of financial markets.
The Company does not use derivative financial instruments or speculate in financial assets.
Risk management is carried out by senior management under policies approved by the Board of Directors ("the Board").
The policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls
and risk limits. Management identifies and evaluates financial risks within the group's businesses and reports to the
Board on a regular basis.
The group's financial instruments consist mainly of deposits with banks, accounts receivable and payable, bank loans
and overdrafts, loans to and from subsidiaries, and leases.
s
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a
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o
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N
95
Notes to the Financial Statements | For the Year Ended 30 June 2017
23 Financial Risk Management continued
Market risk
Price risk
The group is not exposed to any significant price risk.
Liquidity risk
Liquidity risk arises from the Company’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due.
The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. The Company maintains cash to meet its liquidity requirements for up to a 30-day period.
The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term
financial liabilities as well as cash-outflows due in day-to-day business.
Liquidity needs are monitored in various time bands, on a day-to-day and week-by-week basis, as well as on the basis of
a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day periods are identified monthly.
At the reporting date, these reports indicate that the Company expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
The Company‘s liabilities have contractual maturities which are summarised below:
Within 1 year
1 to 2 years
3 to 5 years
Total
2017
2016
2017
2016
2017
2016
2017
2016
$
$
Non-derivative financial
liabilities
Non-interest bearing
Trade payables
Other payables
809,148
409,621
3,567,719
1,134,049
$
-
-
Contingent consideration
-
100,551
1,432,618
Interest bearing
Bank overdrafts
2,025,261 2,239,393
-
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
809,148
409,621
3,567,719
1,134,049
1,432,618
100,551
2,025,261
2,239,393
Bank loan
2,434,292 2,441,820 2,434,292 2,441,820 8,063,194 3,694,147
12,931,778 8,577,787
Finance lease liabilities
-
5,489
-
2,763
-
-
-
8,252
Total
8,836,420 6,330,923 3,866,910 2,444,583 8,063,194 3,694,147 20,766,524 12,469,653
Interest rate risk
The Company is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk.
The Company's policy is to minimise interest rate cash flow risk exposures on long-term financing. At the reporting date,
the Company is exposed to changes in market interest rates through its bank borrowings, which are subject to variable
interest rates.
The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in
interest rates of +1.00% and -1.00% (2016: +1.00%/-1.00%), with effect from the beginning of the year. These changes are
considered to be reasonably possible based on observation of current market conditions. The calculations are based on
the financial instruments held at each reporting date. All other variables are held constant.
2017
2016
Weighted
average
interest rate
%
5.23
4.16
+1%
$
-1%
$
(21,323)
(119,798)
21,323
119,798
Weighted
average
interest rate
%
4.97
4.33
+1%
$
-1%
$
(20,239)
(96,015)
20,239
96,015
Borrowings
Bank overdrafts
Bank loans
96
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
23 Financial Risk Management continued
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to
the Company.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit
exposure to clients, including outstanding receivables and committed transactions.
The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk
of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management.
Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until
creditworthiness can be re-established.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.
Ongoing credit evaluation is performed on the financial condition of accounts receivable.
The Board receives monthly reports summarising the turnover, trade receivables balance and aging profile of each of
the key customers individually and the Company's other customers analysed by division as well as a list of customers
currently transacting on a prepayment basis.
Management considers that all the financial assets that are not impaired for each of the reporting dates under review
are of good credit quality, including those that are past due.
The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. The carrying value less impairment provision of trade and other receivables and of trade and other
payables is a reasonable approximation of their fair values due to the short-term nature of these balances.
24 Dividends
The following dividends were
declared and paid:
Final dividend for the year ended
30 June 2017 of $Nil (2016:$775) per
ordinary share
Special interim dividend for the year
ended 30 June 2017 of $1.76 (2016:
$Nil) per ordinary share, paid prior to
the Company listing
Total
Franking account
The franking credits available for
subsequent financial years at a tax
rate of 30%
2017
$
-
2016
$
1,562,400
3,548,160
-
3,548,160
1,562,400
2017
$
2016
$
1,215,268
2,026,084
The above available balance is based on the dividend franking account at year-end adjusted for:
(a)Franking credits that will arise from the payment of the current tax liabilities;
(b)Franking debits that will arise from the payment of dividends recognised as a liability at the year end;
(c)Franking credits that will arise from the receipt of dividends recognised as receivables at the end of the year.
The ability to use the franking credits is dependent upon the entity's future ability to declare dividends.
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Notes to the Financial Statements | For the Year Ended 30 June 2017
25 Key Management Personnel Disclosures
The table below provides remuneration for key management personnel for the 12 months ended 30 June 2017. Due
to the Company listing in June 2017 with no remuneration report required for the year ended 30 June 2016 no
comparatives for the year ended 30 June 2016 have been disclosed.
Short-term employee benefits
Paid absences
Post-employment benefits
Share-based payments(1)
2017
$
450,664
25,343
24,671
151,186
651,864
(1) As disclosed in the prospectus at the time of the Company's IPO, certain members of management received shares
as payment for services provided to the Company in relation to the IPO.
Other key management personnel transactions
For details of other transactions with key management personnel, refer to Note 31: Related Party Transactions.
26 Remuneration of Auditors
Remuneration of the auditor of
the parent entity, Deloitte Touche
Tohmatsu (2016: William Buck), for:
- auditing the financial report
- due diligence services
- IPO-related services
- IPO related services: reviewing the
financial report
2017
$
2016
$
90,000
93,840
375,000
55,000
613,840
28,000
-
-
-
28,000
98
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
27 Interests in Subsidiaries
(a)Composition of the Group
Subsidiaries:
KP GH NS Pty Limited
Kelly Partners North Sydney Partnership
KP GH CC Pty Limited
Kelly Partners Central Coast Partnership
KP GH WS Pty Limited
Kelly Partners (Western Sydney) Partnership
KP GH SWS Pty Limited
Kelly Partners South West Sydney Partnership
Kelly Partners Management Services Pty Limited
(formerly Kelly Partners Services Pty Limited)
Kelly Partners Services Trust
KP GH NW Pty Limited
Kelly Partners Norwest Partnership
KP GH TC Pty Limited
Kelly Partners Tax Consulting Partnership
Kelly Partners Strategy Consulting Pty Ltd
KP GH CT Pty Limited
Kelly Partners Central Tablelands Partnership
KP GH WO Pty Limited
Kelly Partners Wollongong Partnership
KP GH NB Pty Limited
Kelly Partners Northern Beaches Partnership
KP GH SH Pty Limited
Kelly Partners Southern Highlands Partnership
Kelly Partners (South West Sydney) Trust
Kelly Partners Oran Park Partnership
Super Certain Pty Limited
Kelly Partners Management Services (Hong Kong) Limited
KP GH FIN Pty Ltd
KP GH WM Pty Ltd
KP GH HK Pty Limited
Kelly Partners Finance Partnership
Kelly Partners Wealth Management Partnership
Round 12 Collective Pty Ltd
Kelly Partners Property (Central Coast) Pty Ltd
Kelly Partners Property Group Holdings Pty Ltd
Kelly Property Group Pty Ltd
Kelly Partners (Central Coast) Property Trust
KP GH SYD CBD Pty Ltd
Kelly Partners (Sydney) Pty Limited
KP GH PM Pty Limited
Kelly Partners Parramatta Partnership
Formation
Date
Percentage
Owned (%)*
Percentage
Owned (%)*
2017
2016
2006
2006
2006
2006
2008
2008
2011
2011
2011
2011
2012
2012
2012
2012
2012
2013
2013
2013
2013
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016
2016
2016
2016
2016
2016
2016
2017
2017
2017
2017
100.00
58.50
100.00
50.10
100.00
51.00
100.00
50.50
100.00
100.00
100.00
51.00
100.00
51.00
100.00
100.00
51.00
100.00
51.00
100.00
51.00
100.00
51.00
50.50
25.30
50.50
51.00
100.00
100.00
100.00
51.00
51.00
51.00
51.00
100.00
100.00
51.00
100.00
50.05
100.00
51.00
100.00
58.50
100.00
50.10
100.00
51.00
100.00
50.50
100.00
100.00
100.00
51.00
100.00
51.00
-
100.00
51.00
100.00
51.00
100.00
51.00
100.00
51.00
50.50
25.30
50.50
51.00
-
-
100.00
-
-
-
-
-
-
-
-
-
-
-
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*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
Notes to the Financial Statements | For the Year Ended 30 June 2017
27 Interests in Subsidiaries continued
(a) Composition of the Group
All entities are incorporated in Australia with the exception of Kelly Partners Management Services (Hong Kong) Limited,
which is incorporated in Hong Kong.
The Group has control over the Kelly Partners Oran Park Partnership because it controls the controlling partner of the
partnership, the Kelly Partners (South West Sydney) Trust.
(b) Subsidiaries with non-controlling interests
The following table summarises the aggregate financial information in relation to the share of the Group's subsidiaries
held by non-controlling interests. The information is before inter-company eliminations with other companies within
the group.
Revenue
Net profit after income tax
Distribution to NCI
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Consolidated
2017
Consolidated
2016
$
$
14,801,149
10,193,527
3,874,972
3,595,872
5,588,724
14,331,633
2,293,721
2,305,919
2,396,782
8,137,653
(4,021,267)
(2,855,332)
(5,280,290)
(2,818,898)
10,618,800
4,860,205
(c) Consequences of changes in a parent's ownership in a subsidiary that do not result in a loss of control
Acquisition of ownership interest
There were no changes to the parent entity's ownership in subsidiaries during the current financial year.
On 1/7/15, the Group disposed of a 4.25% interest in the Kelly Partners North Sydney Partnership. On 1/7/15 the Group
disposed of an 11.96% interest in the Kelly Partners Western Sydney Partnership. Control was maintained and therefore
the Group structure did not change, although the non-controlling interest increased.
On 1/7/15 the Group acquired an additional 10.1% interest in the Kelly Partners Central Coast Partnership. Control was
maintained and therefore the Group structure did not change, although the non-controlling interest decreased.
The effect of this transaction on the equity attributable to owners of the parent is shown below:
Changes in NCI arising on
acquisition/disposals
Less: Consideration received/(paid)
Recorded directly in equity
Kelly Partners North
Sydney Partnership
Kelly Partners
Western Sydney
Partnership
Kelly Partners
Central Coast
Partnership
$
(38,004)
229,500
191,496
$
(976)
260,000
259,024
$
31,449
(72,720)
(41,271)
Any difference between the amount by which non-controlling interest is adjusted and the fair value of consideration
received is recognised directly in equity and attributed to the owners of the parent. There is no change in the carrying
value of goodwill.
(d) Significant restrictions relating to subsidiaries
There are no significant restrictions on the ability of the holding company or its subsidiaries to access or use the assets
and settle the liabilities of the Group.
100
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
28 Business Combinations
Kelly Partners Southern Highlands
On 1 July 2016, the Group obtained control of Gillespies Southern Highlands under the terms of an acquisition
agreement.
The goodwill is attributable to synergies expected to be achieved from integrating the business into the Group's existing
business.
The following table shows the recognised amounts of assets acquired and liabilities assumed at the acquisition date.
Assets or liabilities acquired:
Intangible assets - customer
relationships
Deferred tax liabilities
Total identifiable net assets
acquired
Goodwill
Acquisition date fair value of total
consideration transferred
Cash used to acquire business, net
of cash acquired
Acquisition date fair value of total
consideration transferred
Less: deferred consideration
Net cash used
Fair value
$
400,718
(120,215)
280,503
711,487
991,990
991,990
(231,418)
760,572
$231,418 of the purchase price has been deferred and is payable in cash in July 2018.
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Notes to the Financial Statements | For the Year Ended 30 June 2017
28 Business Combinations
Kelly Partners (Sydney)
In January 2017, the Group acquired a controlling interest in Kelly Partners (Sydney) Pty Ltd. The purchase price was
settled through the payment of cash and a contingent amount is also payable upon achieving an agreed revenue target.
The acquired business contributed revenues of $4,840,193 and profit before tax of $1,412,929 to the Group for the period
from 1 January 2017 to 30 June 2017, after expensing its costs for restructuring. The contribution to profit before tax
attributable to members of the parent entity is $574,038.
The goodwill is attributable to synergies expected to be achieved from integrating the business into the Group's existing
business.
Receivables and accrued income
Property, plant and equipment
Customer relationships
Payroll accruals
Other liabilities
Deferred tax liability
Deferred tax asset
Fair value
$
5,085,950
198,040
2,981,295
(370,110)
(831,261)
(894,389)
100,558
Total identifiable net assets acquired
6,270,083
Total consideration transferred,
including contingent consideration
Plus: non-controlling interest
Less: fair value of identifiable net
assets acquired
Goodwill arising on acquisition
Contingent consideration
5,554,200
4,254,000
(6,270,083)
3,538,117
The Group has agreed to pay the selling shareholder additional consideration based upon achieving an agreed revenue
target for the calendar year ended 31 December 2018. The fair value of this obligation at the acquisition date is $1,201,200
and is included in the total consideration transferred as disclosed in the above table.
Acquisition costs
In acquiring both Kelly Partners Sydney and Kelly Partners Southern Highlands, the Group incurred acquisition costs of
$963,645. These have been included in business acquisition expenses.
Kelly Partners Strategy Consulting
On 1 April 2017 Kelly Partners Group Holdings Pty Limited acquired 100% of the interest in Kelly Partners Strategy
Consulting Pty Limited. The purchase price of $1,137,160 included net assets of $44,328. Please see Note 31(d) for details
of the settlement of the consideration.
29 Operating Segments
The Group has only one reportable segment. The Group primarily provides accounting and tax services to small and
medium enterprises predominantly in Australia. This assessment is based on the internal reports that are reviewed by
the Board of Directors (identified as the Chief Operating Decision Maker) in assessing performance and in determining
allocation of resources. No revenue from a single customer exceeds 10% of group revenue.
30 Contingencies
Bank guarantees have been provided in relation to the leases of various premises by the Group. These guarantees will
only be payable in specific circumstances, such as failure to meet rental liabilities. In the opinion of the directors, no loss
will result to the Group as a result of these guarantees.
Except as noted above, in the opinion of the directors, the Company did not have any contingencies at 30 June 2017
(30 June 2016: None).
102
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
31 Related Parties
The Group's main related parties are as follows:
(a) Entities exercising control over the Group
The ultimate parent entity, which exercises control over the Group, is Kelly Partners Group Holdings Limited.
(b) Key management personnel
Disclosures relating to key management personnel are set out in Note 25: Key Management Personnel Compensation
and the remuneration report included in the directors' report.
(c) Other related parties
Other related parties include immediate family members of key management personnel and entities that are controlled
or significantly influenced by those key management personnel, individually or collectively with their immediate family
members.
(d) Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated. The following transactions occurred with related parties:
Loans from/(to) related parties:
Key management personnel:
Loans from/(to) directors:
- beginning of the year
- repayment of loans to related parties
2017
$
2016
$
(639,408)
-
1,036,278
(331,882)
- loans advanced to related parties
(1,491,338)
(2,955,320)
- repayment of loans from related parties
2,130,746
- interest on loans from related parties
- end of the year
-
-
1,587,209
24,307
(639,408)
In the prior year the Group provided loans from key management personnel at rates comparable to the average
commercial rate of interest. These loans were unsecured and repaid during the course of the prior year. The Group also
provided loans to key management personnel which were non-interest bearing and were repaid prior to the IPO.
The Company acquired a 100% interest in Kelly Partners Strategy Consulting, an entity related to Brett Kelly, on 1 April
2017. The consideration of $1,137,670 was determined by an independent valuation and was settled through a partial set
off of loans owing to the Company.
The following related parties hold a direct interest in the respective subsidiary of the Group:
#
1
2
Related Party
Subsidiary of which interest is held
Pauline Michelakis
Kelly Partners Wealth Management Partnership
Paul Kuchta
Kelly Partners Norwest Partnership
Interest
held
10%
44%
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Notes to the Financial Statements | For the Year Ended 30 June 2017
32 Cash Flow Information
(a) Reconciliation of result for the year to cashflows from operating activities
Reconciliation of net income to net cash provided by operating activities:
Profit for the year
Cash flows excluded from profit
attributable to operating activities
Non-cash flows in profit:
- depreciation and amortisation
- loss on disposal of assets
- impairment of trade receivables
- impairment of loan receivable
- reversal of retention payable
- fair value loss on conversion of
convertible notes
- shares issued to employees
Changes in assets and liabilities, net
of the effects of purchase
and disposal of subsidiaries:
- (increase)/decrease in trade
receivables and other assets
- (increase)/decrease in deferred tax
assets
- increase/(decrease) in trade and
other payables
- increase/(decrease) in income
taxes payable
- increase/(decrease) in related party
loans
- increase/(decrease) in provisions
2017
$
2016
$
1,085,446
4,301,117
835,495
9,963
223,049
349,361
-
1,625,000
453,500
544,287
-
-
(25,737)
(688,500)
-
-
1,198,680
(302,037)
430,748
68,245
1,064,818
(102,760)
(356,983)
(131,766)
-
-
24,307
(37,075)
3,650,081
Cashflow from operations
6,919,077
(b) Borrowing facilities
The following facilities were available at the end of the reporting period:
2017
$
2016
$
2,963,334
16,186,317
3,072,529
11,330,626
2,025,263
12,931,778
2,239,393
10,487,422
938,071
3,254,539
833,136
843,204
Total
Bank overdrafts
Bank loan
Used at reporting date
Bank overdrafts
Bank loan
Unused at reporting date
Bank overdrafts
Bank loan
104
KELLY+PARTNERS ANNUAL REPORT 2017
Notes to the Financial Statements | For the Year Ended 30 June 2017
33 Parent entity
The following information has been extracted from the books and records of the parent, Kelly Partners Group Holdings
Limited and has been prepared in accordance with Accounting Standards. The financial information for the parent
entity, Kelly Partners Group Holdings Limited has been prepared on the same basis as the consolidated financial
statements except as disclosed below.
Investments in controlled entities
Investments in controlled entities are accounted for at cost in the financial statements of the parent entity.
Statement of Financial Position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Equity
Issued capital
Retained earnings
Total Equity
Statement of Profit or Loss and
Other Comprehensive Income
Total profit or loss for the year
Other comprehensive income
Total comprehensive income
2017
$
2016
$
3,297,763
19,047,770
22,345,533
(2,847,363)
(6,648,279)
(9,495,642)
13,988,051
(1,138,159)
12,849,892
1,416,487
11,488,868
12,905,355
(1,912,493)
(4,060,143)
(5,972,636)
1,684,411
5,248,308
6,932,719
(2,838,307)
2,077,670
-
-
(2,838,307)
2,077,670
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Notes to the Financial Statements | For the Year Ended 30 June 2017
34 Events Occurring After the Reporting Date
No matters or circumstances have arisen since the end of the financial year which significantly affected or could
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial years.
35 Prior period restatement
The acquisition accounting for historical acquisitions did not include the allocation of goodwill to identifiable intangible
assets as part of the purchase price allocation process.
As a result, an amount of goodwill of $2,575,736 was recognised on acquisitions which should have been attributed to
customer relationship intangible assets.
The impact of the restatement on the comparative financial information is disclosed in the table below. The restatement
resulted in an increase to customer relationships of $275,540, a decrease to goodwill of $2,575,736, and decreases of
$1,056,441 and $1,243,755 to non-controlling interests and retained earnings, respectively.
The impact of the restatement at the beginning of the comparative period (ie 1 July 2015) is an increase to customer
relationships of $547,821, a decrease to goodwill of $2,575,736, and decreases of $982,463 and $1,104,456 to non-
controlling interests and retained earnings, respectively.
The restatement did not impact the statement of cash flows.
Previously reported
at 30 June 2016
Restated
at 30 June 2016
$
$
272,010
4,573,394
544,287
4,301,117
2,268,691
2,304,703
2,007,396
2,293,721
18,402,699
124,334
23,207,691
5,283,272
4,667,500
11,635,183
16,102,503
124,334
20,907,495
4,039,517
3,611,059
9,334,987
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Depreciation and amortisation expense
Profit for the year
Profit attributable to:
Members of the parent
NCI
Consolidated Statement of Financial
Position
Intangible assets
Deferred tax assets
Total non-current assets
Retained earnings
Non-controlling interests
Total equity
36 Company Details
The registered office of the company is:
Kelly Partners Group Holdings Limited
Level 8, 32 Walker Street
NORTH SYDNEY NSW 2060
106
KELLY+PARTNERS ANNUAL REPORT 2017
Kelly Partners Group
Holdings Limited and
Controlled Entities
Directors' Declaration
The directors declare that:
(a) in the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable
(b in the directors' opinion, the attached financial statements are in compliance with International Financial Reporting
Standards, as stated in Note 1 to the financial statements
(c) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position
and performance of the consolidated entity, and
(d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Brett Kelly
Director
Sydney, 24 August 2017
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Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of Kelly Partners
Group Holdings Limited
Opinion
We have audited the financial report of Kelly Partners Group Holdings Limited (the “Entity”), and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June
2017, the consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the Directors of the Entity, would be in the same terms if given to the Directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate t o provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter
Accounting for Acquisitions
On 1 January 2017 the Group acquired a
controlling interest in Kelly Partners (Sydney)
Pty Limited as disclosed in note 28.
Accounting for acquisitions is a complex and
judgemental exercise, requiring management to
determine:
the fair value of the total purchase
consideration including any contingent
amounts pertaining to revenue targets; and
How the scope of our audit responded to the Key
Audit Matter
Our procedures in relation to the assessment of
managements purchase price allocation included, but
were not limited to:
Understanding the process that management and
the directors were following to account for the
acquisitions,
Obtaining a detailed understanding of the terms and
conditions of the purchase contracts to enable us to
critically assess management’s accounting
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
108
KELLY+PARTNERS ANNUAL REPORT 2017
Key Audit Matter
the identifiable intangible assets such as
customer relationships, to be recognised
separately from goodwill.
Recoverability of Goodwill and Intangible
Assets
As at 30 June 2017 the Group has recognised
goodwill of $17,847,638 and other intangibles
of $3,240,055 as a result of acquisitions over a
number of years as disclosed in Note 28.
The directors’ assessment of the recoverability
of goodwill requires the exercise of significant
judgement, including:
Identifying the cash generating units
(CGU’s) to which the goodwill has been
allocated; and
Estimating the future growth rates, nominal
discount rates and expected cash flows of
each CGU.
How the scope of our audit responded to the Key
Audit Matter
treatment including the determination of the
contingent consideration, and
Evaluating the appropriateness of the values
attributed to the intangible assets acquired as part
of each business acquisition, including:
o Assessing the identification and valuation of
customer relationships to the group
including the rate of any applicable
amortisation, and
o
Performing procedures over the intangible
asset valuations, specifically:
analysing cash flow assumptions
including contributory asset charges,
assessing the discount rate used, and
challenging the reasonableness of the
valuation outputs.
We also assessed the appropriateness of the disclosures
in Note 3 and 28 to the financial statements.
Our procedures included, but were not limited to:
Assessing the Group’s categorisation of CGU’s and
the allocation of goodwill to the carrying value of
the CGU’s based on our understanding of the
Group’s business,
Challenging management’s ability to accurately
forecast cash flows by assessing the precision of the
prior year forecasts against actual outcomes, and
Engaging our valuation specialists to assist with:
o Comparing the discount rate utilised by
management to an independently
calculated discount rate,
o Comparing the Group’s forecast cash flows
for each CGU to the budgets, and
challenging the growth rates used, and
o
Performing sensitivity analysis on the
growth and discount rates.
We also assessed the appropriateness of the disclosures
in Note 12 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report,
which we obtained prior to the date of this auditor’s report, and also includes additional information which will
be included in the Group’s annual report (but does not include the financial report and our auditor’s report
thereon), which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
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In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
the work we have performed on the other information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
When we read the additional other information, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to the directors and use our professional judgement to determine
the appropriate action.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control
as the Directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit
opinion.
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KELLY+PARTNERS ANNUAL REPORT 2017
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 66 to 70 of the Director’s Report for the year
ended 30 June 2017.
In our opinion, the Remuneration Report of Kelly Partners Group Holdings Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of Kelly Partners Group Holdings Limited are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Alfred Nehama
Partner
Chartered Accountants
Sydney, 24 August 2017
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Additional Information for Listed Public Companies
For the Year Ended 30 June 2017
ASX Additional Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out below. This
information is effective as at 27 September 2017.
Substantial shareholders
The number of substantial shareholders and their associates are set out below:
Shareholders
Number of shares
Kelly Investments 1 Pty Ltd
Ellerston Capital Limited
23,253,378
6,185,000
Voting rights
Ordinary Shares
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Options
No voting rights. There are no options.
Distribution of equity security holders
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,000 and over
Total
No of ordinary shares
No of shareholders
171,794
787,505
908,858
4,794,099
38,834,925
45,497,181
183
240
109
151
37
720
There were 4 holders of less than a marketable parcel of ordinary shares.
The difference to the number of shares issued per the statutory accounts is 153,000 shares that were issued under the
Employee Share Scheme post 30 June 2017 (1,000 shares were issued to each of the 153 employees who were eligible
under the Employee Share Scheme as outlined in Section 9.7 of the Prospectus).
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KELLY+PARTNERS ANNUAL REPORT 2017
Additional Information for Listed Public Companies
For the Year Ended 30 June 2017
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
KELLY INVESTMENTS 1 PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
KALUMIC PTY LTD
AUST EXECUTOR TRUSTEES LTD
HAMPTON PTY LTD
GILDALE FAMILY COMPANY PTY LTD
DAVID BULLOCK + KAY BULLOCK + ANTHONY BULLOCK
KENNETH KO
NATIONAL NOMINEES LIMITED
BROJO INVESTMENTS PTY LTD
ALUA NOMINEES PTY LTD
BRJT ACCOUNTING PTY LTD
WINDA HOLDINGS PTY LTD
DAVID BULLOCK + KAY BULLOCK + ANTHONY BULLOCK
SCOTT ELWIN FAMILY CO PTY LTD
MRS PENELOPE ALICE MARJORIE SEIDLER
HALCYCON PTY LTD
BARYL HOLDINGS PTY LTD
20
ELLERSTON CAPITAL LIMITED ACN 110 397 674
Totals: Top 20 holders
Total Remaining Holders Balance
Unissued equity securities
Options issued - None. There are no options.
Securities exchange
Units % Units
23,253,378
6,210,690
885,000
787,007
564,750
563,354
466,420
458,984
51.11
13.65
1.95
1.73
1.24
1.24
1.03
1.01
393,504
0.86
378,341
326,767
294,030
286,120
278,172
264,263
264,263
250,054
225,054
200,077
175,000
0.83
0.72
0.65
0.63
0.61
0.58
0.58
0.55
0.49
0.44
0.38
36,525,228
80.28
8,971,953
19.72
The Company is listed on the Australian Securities Exchange. The Home exchange is Sydney.
Listing rule 3.13.1 and 14.3
Further to Listing Rule 3.13.1 and Listing Rule 14.3 the Annual General Meeting of the Company is scheduled for Friday 10
November 2017
Listing rule 4.10.19
The Company's primary reason for raising funds under its prospectus dated 16 May 2017 is to provide greater financial
flexibility and thereby facilitate continued growth acorss the business and to contiue to attract the best clients,
Operating Business Owners and staff to our accounting network. During the period from admission to 30 June 2017
the Company used the funds raised in accordance with its purpose and continues to do so.
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Kelly+Partners
Team
Brett Kelly
Scott Elwin
Craig Bullock
Ada Poon
Rex Hoeben
Adam Quinn
Anna Lewis
Albert Cachia
Ben Twyford
Bill Bartlett
Lauren Helmrich
Joel Russell
Ryan Bultitude
Kenneth Ko
Linds Chapman
Trent Doughty
Vanessa Sirotic
Barry Frank
Mark Prag
Suketu Majithia
Peter Dawkins
Andew Zoghbi
Kim Meredith
Daniel Kuchta
Charbel Geagea
Peter Campbell
Bill Croker
Andrew Howe
Paul Kuchta
Tony Nunes
Ryan McCabe
Troy Marsh Apps
Dylan Barry
Daniel Chiha
Darren Hodgson
Scott Coombes
Duncan Kerr
David Duff
Elisha Hill
Karina Rauch
Ming Lew
David Irwin
Christ Dent
Kim Lim
James Russell
Family Business Insight 1
Family Business Insight 2
Family Business Insight 3
Family businesses
with a long term focus,
outperform those
with a short term view.
Very few people
understand wealth.
Even less people
understand families.
Family advice needs
a team approach.
Generations of
benefit will follow.
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Family Office
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Family Office
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Family Office
Family Business Insight 4
Family Business Insight 5
Family Business Insight 6
Clarity of direction
yields results.
We help family businesses
stay true to their values.
Family businesses need
long term relationships.
We strive to make
our clients ‘better off’.
Generous parents leave their
wealth to grateful children.
We help manage
a smooth transition.
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Family Office
Private Businesses
Private Businesses
Private Clients
Private Clients
Family Office
Family Office