Annual Report
2018
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 values drive how we do things.
Client Obsessed
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.
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 fix it.
Better Together
One team,
one best way
Brightness
of future
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’.
Our team personally
demonstrate that they
contribute to making
Kelly+Partners a great place
to work.
Committed to Lead
Profit leader
Better off
Profit is essential to a
sustainable business. We want
to demonstrate the quality of
our advice by earning it in our
business.
We help Private Business
Owners who want to be ‘better
off' by delivering trusted and
convenient compliance and
forward-looking advisory
services.
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KELLY+PARTNERS ANNUAL REPORT 2018
Values
Mission
Why we exist.
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
What we want to be.
The first choice advisor for business owners.
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Contents
MESSAGE FROM THE CHAIRMAN & CEO
STRATEGIC INTENT
ASX RELEASED PERFORMANCE HIGHLIGHTS
BOARD OF DIRECTORS
AND SENIOR MANAGEMENT
2018 FINANCIAL REPORT
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Message from
the Chairman
& CEO
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Central Tablelands
3
Western Sydney
10
Hong Kong
Central Coast
2
Norwest
5
12
Parramatta
15
Inner West
9
Oran Park
Northern Beaches
North Sydney
1
8
Sydney CBD
13
South West Sydney
4
11
Southern Highlands
Wollongong
7
Melbourne CBD
14
6
Central Tablelands
Central Coast
2
3
Western Sydney
Norwest
5
12
Parramatta
15
Inner West
9
Oran Park
Northern Beaches
8
North Sydney
1
Sydney CBD
13
South West Sydney
4
11
Southern Highlands
Wollongong
7
Dear Shareholders,
10
Hong Kong
Our commitment to helping our clients' accounting, tax, audit and advisory needs (principally SME and mid-market
businesses) via our 15 office locations delivered continued growth across all our business areas.
During the financial year, Kelly Partners Group Holdings made significant progress.
The 2018 financial year saw the Group deliver its Prospectus forecasts.
In summary:
+
+
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+
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+
KPG has exceeded Prospectus forecasts for FY18.
Consolidated FY18 Underlying NPATA1 of $10.2m, up 20% on FY17
Consolidated FY18 Underlying revenue1 of $39.6m, up 11% on FY17
Consolidated FY18 Underlying EBITDA1 of $13.4m, up 17% on FY17
Underlying FY18 EBITDA1 attributed to shareholders of $6.4m, up 9% on FY17
Underlying FY18 NPATA1 attributed to shareholders of $4.3m, up 27% on FY17
Statutory FY18 NPAT attributed to shareholders of $4.4m, up 257% on FY17
Statutory FY18 Earnings per Share of 9.63c, up 215% on FY17
1 Underlying P&L metrics exclude amortisation of intangibles and non-recurring items including shares issued to employees under the Employee Share Scheme as well
as the final costs relating to the Jun-17 IPO, restructuring costs and change in fair value of contingent consideration. Underlying revenue, EBITDA, NPATA and EPS are all
measures used by Kelly+Partners management to assess the operational performance of the business.
Mission - 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.
Strategy - We remain laser-like focussed on the SME private business owner market. Our service offering has been
focused again to include Chartered Accounting, Tax Legal, Private Wealth and Family Office.
Structure - Our business structure delivers 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 - Our first year as a public company has gone smoothly. We are looking to accelerate our continued growth via
top quartile industry organic growth and a very active acquisition program.
I remain extremely humbled by the quality of the KPGH team and its partners, for their dedication and willingness to
embrace change as we continue to grow and evolve.
Melbourne CBD
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Brett Kelly
Founder & Executive Chairman
Kelly Partners Group Holdings Limited
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Strategic
Intent
Strategic Intent
Helping clients realise a stronger financial future
through integrated financial advice.
1.
Maximise the Owner-Driver Model
2.
Fully deliver the Kelly+Partners Advice System
3.
Growth at >10% per annum
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ASX Released
Performance
Highlights
ASX Released
Performance Highlights
Full Year Financial Highlights
Strong growth in Underlying Pro forma FY18 P&L metrics
compared to prior year.
Underlying Pro forma FY18 P&L metrics above
prospectus forecasts.
EBITDA margins above prior year.
Reported NPAT attributed to shareholders up 257% on FY17.
Strong Revenue Growth
$m
FY18
FY17
% Change
Underlying Pro forma
Consolidated Revenue*
Number of Offices
Number of Operating Business
Number of Operating Partners
Number of Total Team
$39.6m
$35.7m
16
21
43
203
13
16
38
192
11%
23%
31%
13%
6%
* Underlying Pro forma revenue includes Sydney CBD business for a full 12 months for FY17.
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KELLY+PARTNERS ANNUAL REPORT 2018
Underlying
Pro forma
FY18 NPATA*
attributable to
Shareholders
Underlying
Pro forma
FY18 EBITDA*
attributable to
Shareholders
Underlying
Pro forma FY18
EPS* attributable
to Shareholders
Underlying
Consolidated
Pro forma FY18
Total Revenue
Underlying
Pro forma
EBITDA Margin
$4.3m
27%
on prior year
5%
on prospectus
$6.4m
9%
on prior year
0%
on prospectus
9.5cps
25%
on prior year
5%
on prospectus
$39.6m
11%
on prior year
8%
on prospectus
33.9%
31.8%
in prior year
35.1%
in prospectus
Reported FY18
NPAT attributable
to Shareholders
$4.4m ($2.8m)
in prior year
257%
* 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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Board of
Directors
and Senior
Management
Board of Directors and
Senior Management
Board of Directors
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 21 businesses over 15 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 2018
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.
24
KELLY+PARTNERS ANNUAL REPORT 2018
2018
Financial
Report
Kelly Partners Group
Holdings Limited
ABN 25 124 908 363
Financial Report
30 June 2018
26
KELLY+PARTNERS ANNUAL REPORT 2018
Contents
CORPORATE DIRECTORY
DIRECTORS' REPORT
AUDITOR'S INDEPENDENCE DECLARATION
28
29
40
CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME 41
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 TO
THE MEMBERS OF KELLY PARTNERS GROUP
HOLDINGS LIMITED
SHAREHOLDER INFORMATION
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44
45
76
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Kelly Partners Group Holdings Limited
Corporate directory
30 June 2018
Directors
Brett Kelly – Chairman, Executive Director
Stephen Rouvray – Deputy Chairman, Non-Executive Director
Pauline Michelakis – Executive Director
Paul Kuchta – Executive Director
Ryan Macnamee – Non-Executive Director
Company secretary
David Franks
Registered office
Share register
Auditor
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
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
http://www.kellypartnersgroup.com.au
Business objectives
Kelly Partners Group Holdings Limited has used cash and cash equivalents held at
the time of listing, in a way consistent with its stated business objectives.
Corporate Governance Statement 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
28
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'Group') 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 2018.
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 - Chairman
Stephen Rouvray - Deputy Chairman
Pauline Michelakis
Paul Kuchta
Ryan Macnamee
Principal activities
During the financial year the principal continuing activities of the Group 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:
Special Interim dividend for the year ended 30 June 2017 of $1.76 per ordinary share,
paid prior to the Company listing on the Australian Stock Exchange
First interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share, paid
on 16 November 2017
Second interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share,
paid on 16 February 2018
Third interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share,
paid on 16 May 2018
Consolidated
2017
$
2018
$
-
3,548,160
454,972
454,972
454,972
-
-
-
1,364,916
3,548,160
On 12 July 2018, the Company paid the final dividend for the year ended 30 June 2018 of $0.01 per ordinary share.
This dividend equates to a distribution of $454,972, based on the number of ordinary shares on issue as at 30 June
2018. The financial effect of dividends declared after the reporting date is not reflected in the 30 June 2018 financial
statements and will be recognised in subsequent financial reports.
Review of operations
In the year ended 30 June 2018, the Group has recorded a consolidated statutory net profit after providing for
income tax of $9,964,034 (2017: $1,085,446). The statutory net profit attributable to members of the parent entity
was $4,382,654 (2017: loss of $2,789,526).
Financial performance
Revenue and other gains for the year totalled $40,824,551 which was up 34.6% from $30,331,286 in 2017.
The directors consider Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA') to reflect the core
earnings of the Group. EBITDA is a financial measure which is not prescribed by Australian Accounting Standards
(‘AAS’) and represents the profit under AAS adjusted for non-cash and significant expenses.
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 profit after income tax expense
and underlying EBITDA.
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
Profit after income tax expense for the year
Finance costs
Income tax expense
Depreciation and amortisation expense
EBITDA
Add: non-recurring expenses
Restructuring costs
Shares issued to employees under ESS as part of IPO
Initial public offering and other acquisition costs
Fair value adjustment on conversion of convertible notes
Impairment of loan receivable
Other non-recurring expenses
Less: non-recurring revenue
Change in fair value of contingent consideration
Net non-recurring items
Consolidated
2017
$
2018
$
9,964,034
611,208
1,941,144
1,037,217
1,085,446
651,662
341,536
835,496
13,553,603
2,914,140
515,375
247,029
143,692
-
-
172,932
1,693,042
-
2,137,247
1,625,000
349,261
-
(1,201,200)
(122,172)
-
5,804,550
Underlying EBITDA
13,431,431
8,718,690
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 12 July 2018, the Company paid the final dividend for the year ended 30 June 2018 of $0.01 per ordinary
share. This dividend equates to a distribution of $454,972, based on the number of ordinary shares on issue as at 30
June 2018. The financial effect of dividends declared after the reporting date is not reflected in the 30 June 2018
financial statements and will be recognised in subsequent financial reports.
On 16 August 2018, an acquisition agreement was signed for the Company to acquire an accounting firm in the Inner
West of Sydney with the structure following KPG’s standard 51% Owner-Driver Model. The business will commence
trading as Kelly Partners (Inner West) from 4 September 2018.
On 22 August 2018, an acquisition agreement was signed for Kelly+Partners North Sydney, a subsidiary of Kelly
Partners Group Holdings Limited, to acquire a 100% interest in an accounting firm in North Sydney to assist in the
retirement and succession of the senior practitioner. The business will be tucked into the existing Kelly+Partners
North Sydney business to create synergies and operating leverage. The business will operate as part of
Kelly+Partners North Sydney from 1 September 2018.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly
affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group 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 Group’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 Group are not subject to any particular or significant Commonwealth, State or Territory
environmental regulations.
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KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
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.
Part of the Group’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.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Brett Kelly
Executive Chairman and Chief Executive Officer
BBus, CA, MTax, DipFS, RTA, JP
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 PwC Australia, 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.
None
None
Member of the Nomination and Remuneration Committee
23,253,378 ordinary shares
None
None
Stephen Rouvray
Deputy Chairman and Non-Executive Director
BEc, CA
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.
None
None
of
Nomination
Chairman
the
Chairman of the Audit and Risk Committee
50,000 ordinary shares
None
None
and
Remuneration
Committee
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Pauline Michelakis
Chief Financial Officer and Executive Director
BCom (Hons), CA
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.
None
None
Member of the Audit and Risk Committee
937,061 ordinary shares
None
None
Paul Kuchta
Executive Director
BBus, CA, FTIA, DipFP, RTA, JP
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.
None
None
152,995 ordinary shares
None
None
Ryan Macnamee
Non-Executive Director
BCom, GACID
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.
None
None
of
the
Member
Member of the Nomination and Remuneration Committee
125,046 ordinary shares
None
None
Audit
and
Risk
Committee
Company secretary
David Franks (BEc, CA, FFin, FGIA, JP) has held the position of Company Secretary since 1 February 2017.
32
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
David is a Chartered Accountant, Fellow of the Financial Services Institute of Australia, Fellow of the Governance
Institute of Australia, Justice of the Peace, Registered Tax Agent and holds a Bachelor of Economics (Finance and
Accounting) from Macquarie University. With over 20 years in finance and accounting, initially qualifying with Price
Waterhouse in their Business Services and Corporate Finance Divisions, David 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. David Franks is currently the Company Secretary for the following public entities: Adcorp Australia
Limited, Consolidated Operations Group Limited, Elk Petroleum Limited, Kelly Partners Group Holdings Limited,
Noxopharm Limited, White Energy Company Limited and White Energy Technology Limited. David is also a Senior
Executive of Automic Group Pty Ltd.
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 2018, and the number of meetings attended by each director were:
Full Board
Attended
Held
Nomination and
Remuneration Committee
Attended
Held
Audit and Risk
Committee
Attended
Held
Brett Kelly
Stephen Rouvray
Pauline Michelakis
Paul Kuchta
Ryan Macnamee
9
9
9
9
8
9
9
9
9
9
1
1
-
-
1
1
1
-
-
1
-
5
5
-
5
-
5
5
-
5
Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
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 Committee
Nomination and Remuneration Committee
Stephen Rouvray (Chairman)
Ryan Macnamee
Pauline Michelakis
Stephen Rouvray (Chairman)
Ryan Macnamee
Brett Kelly
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, 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
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
Principles used to determine the nature and amount of remuneration
The objective of the Group'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 Group 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.
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. A maximum annual aggregate remuneration of $70,000 is currently in place.
Executive remuneration
The Group 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 Group 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 Group and provides additional value to the
executive.
The Group may introduce incentive arrangements in the future in order to attract, motivate and retain its executives.
34
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
Group performance and link to remuneration
For the year ended 30 June 2018 there was no link between Group performance and key management personnel
remuneration.
Use of remuneration consultants
During the financial year ended 30 June 2018, the Group did not engage remuneration consultants to review its
existing remuneration policies.
Voting and comments made at the Company's 2017 Annual General Meeting ('AGM')
At the 2017 AGM, 94.30% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2017. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
The key management personnel of the Group consisted of the following directors of Kelly Partners Group Holdings
Limited:
●
●
●
●
●
Brett Kelly – Chairman, Chief Executive Officer, Executive Director
Stephen Rouvray – Deputy Chairman, Non-Executive Director
Pauline Michelakis – Chief Financial Officer, Executive Director
Paul Kuchta – Executive Director
Ryan Macnamee – Non-Executive Director
2018
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Pauline Michelakis
Cash
salary
and fees
$
27,397
27,397
339,950
304,850
699,594
Short-term benefits
Post-
employment
benefits
Cash
Super-
Non-
bonus monetary annuation
$
$
$
Share-
based
payments
Equity-
settled
$
Total
$
Leave
Annual/
long
service
leave
$
-
-
-
-
-
-
-
2,603
2,603
-
-
29,011
-
29,011
20,049
20,049
45,304
39,467
27,940
67,407
-
-
-
-
-
30,000
30,000
428,477
352,839
841,316
Refer to the section 'Service agreements' for Paul Kuchta's remuneration.
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Directors' report
30 June 2018
Short-term benefits
Post-
employment
benefits
Leave
Share -
based
payments
2017
Cash salary
and fees
$
Non-Executive Directors:
Stephen Rouvray (i)
Ryan Macnamee (i)
4,566
4,566
Cash
bonus monetary annuation
Super-
Non-
$
-
-
$
-
-
$
434
434
Annual/long
service
leave
$
Equity-
settled
$
Total
$
-
-
-
-
5,000
5,000
Executive Directors:
Brett Kelly (ii)
Pauline Michelakis (iii)
44,075
280,860
334,067
-
75,000
75,000
41,597
-
41,597
4,187
19,616
24,671
6,782
18,561
25,343
-
151,186
151,186
96,641
545,223
651,864
Refer to the section 'Service agreements' for Paul Kuchta's remuneration.
(i)
(ii)
Represents remuneration from the date of appointment
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 for the full financial year
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Pauline Michelakis
Fixed remuneration
2017
2018
At risk - STI
At risk - LTI
2018
2017
2018
2017
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Brett Kelly
Chairman, Chief Executive Officer, Executive Director
16 May 2017
No fixed period
Base salary 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, Non-Executive Director
2 May 2017
No fixed period
Director fees $30,000 inclusive of superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
36
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Pauline Michelakis
Chief Financial Officer, Executive Director
16 May 2017
No fixed period
Base salary $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
Not applicable
Not applicable
Paul Kuchta is an Operating Business Owner in the Kelly Partners Norwest
Partnership and receives a base distribution plus a distribution of profits from that
Operating Business in accordance with the terms of the Partnership Agreement.
Ryan Macnamee
Non-Executive Director
2 May 2017
No fixed period
Director fees of $30,000 inclusive of superannuation, to be reviewed annually by
the Nomination and Remuneration Committee.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the
year ended 30 June 2018.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2018.
Additional information
The earnings of the Group for the two years to 30 June 2018 are summarised below:
Revenue and other gains
EBITDA
Profit after income tax
2018
$
2017
$
40,824,551 30,331,286
13,553,603
2,914,140
9,964,034
1,085,446
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2018
2017
1.23
9.63
9.63
1.42
(8.37)
(8.37)
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
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 Group, including their personally related parties, is set out below:
Balance at
the start of Received as part
the year of remuneration Additions
Balance at
Disposals/ the end of
the year
other
Ordinary shares
Brett Kelly
Stephen Rouvray
Pauline Michelakis
Paul Kuchta
Ryan Macnamee
23,253,378
50,000
937,061
152,995
125,046
24,518,480
-
-
-
-
-
-
-
-
-
-
-
-
- 23,253,378
50,000
-
937,061
-
152,995
-
125,046
-
- 24,518,480
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of Kelly Partners Group Holdings Limited under option outstanding at the
date of this report.
Shares issued on the exercise of options
There were no ordinary shares of Kelly Partners Group Holdings Limited issued on the exercise of options during the
year ended 30 June 2018 and up to the date of this report.
Employee share plan
The Company has adopted an Employee 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.
On 3 July 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.
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.
38
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Directors' report
30 June 2018
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 33 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 33 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
Executive Chairman & CEO
27 August 2018
Sydney
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Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Phone: +61 2 9322 7000
Grosvenor Place
www.deloitte.com.au
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Kelly Partners Group Holdings Limited
Level 8, 32 Walker Street
North Sydney NSW 2000
Kelly Partners Group Holdings Limited
Level 8, 32 Walker Street
27 August 2018
North Sydney NSW 2000
Dear Board Members
27 August 2018
Kelly Partners Group Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
Dear Board Members
declaration of independence to the directors of Kelly Partners Group Holdings Limited.
Kelly Partners Group Holdings Limited
As lead audit partner for the audit of the financial statements of Kelly Partners Group Holdings Limited for the
financial year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
contraventions of:
declaration of independence to the directors of Kelly Partners Group Holdings Limited.
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
As lead audit partner for the audit of the financial statements of Kelly Partners Group Holdings Limited for the
financial year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
and
(ii) any applicable code of professional conduct in relation to the audit.
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
Yours sincerely
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU
Alfie Nehama
Partner
Chartered Accountants
Alfie Nehama
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
KELLY+PARTNERS ANNUAL REPORT 2018
40
Kelly Partners Group Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Other gains
Expenses
Depreciation and amortisation expense
Employment and related expenses
Rent and utilities
Initial public offering and other transaction costs
Business acquisition and restructuring costs
Fair value adjustment on conversion of convertible notes
Employee shares issued and related expenses
Other expenses
Finance costs
Total expenses
Profit before income tax expense
Income tax expense
Note
Consolidated
2017
$
2018
$
5
39,468,666 30,198,254
6
7
7
7
7
1,355,885
133,032
(1,037,217)
(835,496)
(17,776,114) (13,967,944)
(2,288,742) (2,140,933)
(143,692) (2,137,247)
(515,375) (1,693,042)
- (1,625,000)
-
(6,299,996) (5,852,980)
(651,662)
(28,919,373) (28,904,304)
(611,208)
(247,029)
11,905,178
1,426,982
8
(1,941,144)
(341,536)
Profit after income tax expense for the year
9,964,034
1,085,446
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Non-controlling interest
Owners of Kelly Partners Group Holdings Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of Kelly Partners Group Holdings Limited
-
-
9,964,034
1,085,446
5,581,380
3,874,972
4,382,654 (2,789,526)
9,964,034
1,085,446
5,581,380
3,874,972
4,382,654 (2,789,526)
9,964,034
1,085,446
Cents
Cents
Basic earnings per share
Diluted earnings per share
29
29
9.63
9.63
(8.37)
(8.37)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes
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Kelly Partners Group Holdings Limited
Consolidated statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
Total current assets
Non-current assets
Financial assets
Other financial assets
Property, plant and equipment
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Contingent consideration
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Contingent consideration
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained profits/(accumulated losses)
Equity attributable to the owners of Kelly Partners Group Holdings Limited
Non-controlling interest
Total equity
Note
Consolidated
2017
$
2018
$
9
10
11
12
3,410,934
10,086,644
626,925
481,870
3,212,746
7,793,561
548,211
180,074
14,606,373 11,734,592
13
14
15
16
17
14,780
2,853,078
2,439,659
24,993
3,297,177
2,495,730
23,876,857 24,423,046
501,369
29,882,819 30,742,315
698,445
44,489,192 42,476,907
18
19
20
21
22
2,795,950
4,627,422
97,012
1,181,645
231,418
152,721
4,376,867
4,459,553
67,194
1,159,336
-
147,656
9,086,168 10,210,606
23
24
25
26
27
10,139,039 10,497,486
306,414
149,498
1,432,618
46,244
11,283,221 12,432,260
827,427
270,511
-
46,244
20,369,389 22,642,866
24,119,803 19,834,041
28
14,171,477 13,988,051
719,566 (2,298,172)
14,891,043 11,689,879
8,144,162
9,228,760
24,119,803 19,834,041
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
42
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Consolidated statement of changes in equity
Kelly Partners Group Holdings Limited
For the year ended 30 June 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
Consolidated
Consolidated
Balance at 1 July 2016
Balance at 1 July 2016
Profit/(loss) after income tax expense for the year
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Transactions with owners in their capacity as owners:
Acquisition of subsidiary
Acquisition of subsidiary
Conversion of convertible note to ordinary shares
Conversion of convertible note to ordinary shares
Shares issued to employees
Shares issued to employees
Shares issued on IPO
Shares issued on IPO
Shares issued pre-IPO
Shares issued pre-IPO
Share issue costs, net of tax
Share issue costs, net of tax
Distributions to non-controlling interests
Distributions to non-controlling interests
Dividends paid (note 30)
Dividends paid (note 30)
Balance at 30 June 2017
Balance at 30 June 2017
Consolidated
Consolidated
Balance at 1 July 2017
Balance at 1 July 2017
Profit after income tax expense for the year
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Transactions with owners in their capacity as owners:
Shares issued to employees
Shares issued to employees
Share issue costs
Share issue costs
Distributions to non-controlling interests
Distributions to non-controlling interests
Dividends paid (note 30)
Dividends paid (note 30)
Balance at 30 June 2018
Balance at 30 June 2018
Issued Accumulated
Issued Accumulated
losses
capital
losses
capital
$
$
$
$
4,039,514
1,684,411
4,039,514
1,684,411
(2,789,526)
-
(2,789,526)
-
-
-
-
-
(2,789,526)
-
(2,789,526)
-
-
-
8,125,000
8,125,000
453,500
453,500
2,884,000
2,884,000
1,835,500
(994,360)
1,835,500
(994,360)
-
-
-
-
13,988,051
13,988,051
Issued
capital
Issued
capital
$
$
13,988,051
13,988,051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,548,160)
(3,548,160)
(2,298,172)
(2,298,172)
Retained
profits
Retained
profits
$
$
(2,298,172)
(2,298,172)
4,382,654
4,382,654
-
-
4,382,654
4,382,654
Non-
controlling
Non-
interest
controlling
interest
$
$
3,611,062
3,611,062
3,874,972
3,874,972
-
-
3,874,972
3,874,972
Total equity
Total equity
$
$
9,334,987
9,334,987
1,085,446
1,085,446
-
-
1,085,446
1,085,446
4,254,000
4,254,000
-
-
-
-
-
-
-
-
-
-
-
-
4,254,000
4,254,000
8,125,000
8,125,000
453,500
453,500
2,884,000
2,884,000
1,835,500
1,835,500
(994,360)
(3,595,872) (3,595,872)
(994,360)
(3,595,872) (3,595,872)
(3,548,160)
(3,548,160)
8,144,162 19,834,041
8,144,162 19,834,041
Non-
controlling
Non-
interest
controlling
interest
$
$
Total equity
Total equity
$
$
8,144,162 19,834,041
8,144,162 19,834,041
9,964,034
5,581,380
9,964,034
5,581,380
-
-
-
-
9,964,034
5,581,380
9,964,034
5,581,380
220,473
(37,047)
220,473
(37,047)
-
-
-
-
14,171,477
14,171,477
-
-
-
-
-
-
(1,364,916)
(1,364,916)
719,566
719,566
-
-
-
-
-
-
220,473
220,473
(37,047)
(4,496,782) (4,496,782)
(37,047)
(4,496,782) (4,496,782)
(1,364,916)
(1,364,916)
9,228,760 24,119,803
9,228,760 24,119,803
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
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Kelly Partners Group Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance costs paid
Income taxes paid
Note
Consolidated
2017
$
2018
$
41,277,137 35,330,709
(32,670,704) (27,475,337)
(651,662)
(284,633)
(611,208)
(1,390,313)
Net cash from operating activities
40
6,604,912
6,919,077
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for investments
Payments for property, plant and equipment
Payments for intangibles
Deposits refunded
Loans to related parties - loans advanced
Loans to related parties - proceeds from repayments
Loans to partners - loans advanced
Loans to partners - proceeds from repayments
Proceeds from disposal of investments
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from the issue of equity instruments, net of transaction costs
Proceeds from issue of convertible notes
Proceeds from borrowings
Distributions paid to non-controlling interests
Dividends paid
Repayment of borrowings
Repayment of finance lease
Share issue transaction costs
Net cash (used in)/from financing activities
38
15
16
- (6,202,672)
-
(4,918)
(390,420) (1,282,120)
(105,290)
(36,266)
(197,076)
-
- (1,491,338)
-
2,130,746
(450,559) (1,163,074)
815,944
1,071,764
10,000
-
(317,401) (6,977,878)
30
-
-
3,695,310
3,625,141
6,500,000
7,229,385
(4,496,782) (3,595,872)
(1,364,916) (3,548,160)
(3,831,299) (7,377,946)
-
(8,252)
(37,047)
-
(6,034,734)
2,824,296
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
252,777
2,765,495
1,187,485 (1,578,010)
Cash and cash equivalents at the end of the financial year
9
1,440,262
1,187,485
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
44
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 1. General information
The financial statements cover Kelly Partners Group Holdings Limited (the 'Company' or 'parent entity') and its
controlled entities as a consolidated entity consisting of Kelly Partners Group Holdings Limited and the entities (the
'Group') it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars,
which is Kelly Partners Group Holdings Limited and its controlled entities functional and presentation currency.
Kelly Partners Group Holdings Limited is a listed public company limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of business is:
Level 8, 32 Walker Street
North Sydney
NSW 2060
A description of the nature of the Group's operations and its principal activities are included in the directors' report,
which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 August 2018.
The directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting 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 significant impact on the financial performance or
position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention except for certain financial assets
at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 37.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Kelly Partners Group
Holdings Limited as at 30 June 2018 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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 activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the date that control ceases.
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position and statement of changes in equity of the
Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a
deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair value of any investment retained together
with any gain or loss in profit or loss.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Provision of services
Provision of services revenue is recognised by reference to the stage of completion of the services.
Where the contract outcome can be estimated reliably, revenue associated with the transaction is recognised in the
income statement by reference to the stage of completion at the year end, provided that a right to consideration has
been obtained through performance. Consideration accrues as contract activities progress by reference to the value
of work performed. Hence, the proportion of revenue recognised in the year equates to the proportion of cost
incurred to total anticipated cost, less amounts recognised in previous years where relevant. Where the outcome of a
transaction cannot be reliably estimated, revenue is only recognised to the extent of the recoverable costs incurred
to date. No revenue is recognised where there are significant uncertainties regarding recovery of the consideration
due or where the right to receive payment is contingent on events outside the control of the Group. Expected losses
are recognised as soon as they become probable based on latest estimates of revenue and costs.
Unbilled and unearned revenue is included in trade and other receivables.
Commissions and other income
Commissions and other income is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
46
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Kelly Partners Group Holdings Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed
an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group
has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate
to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement
ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group
member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the
subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-
current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is
held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All
other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows
presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings
in current liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Trade receivables are generally due for settlement
within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when
there is objective evidence that the Group will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered
indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is
immaterial.
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Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Other receivables are recognised at amortised cost, less any provision for impairment.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. They are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based
on the purpose of the acquisition and subsequent reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
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 are carried at amortised cost using the effective interest rate method. Gains and losses are
recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset
or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or
obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower
concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the
borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the
financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would
have been recognised had the impairment not been made and is reversed to profit or loss.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Buildings
Leasehold improvements
Plant and equipment
Motor vehicles
Not depreciated
3-10 years
3-7 years
8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the
lease or the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all
the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor
effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if
lower, the present value of minimum lease payments. Lease payments are allocated between the principal
component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining
balance of the liability.
48
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the
asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the
end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-
line basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite
life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life
intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are
accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are
not subsequently reversed.
Brand names and intellectual property
Brand names and intellectual property have indefinite useful lives and are not amortised.
Customer relationships
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 to 7 years.
Software - Computer software
Significant costs associated with computer software are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 1 to 3 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are
grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
Finance costs
All finance costs are expensed in the period in which they are incurred.
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date
are measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Equity-settled compensation
Equity-settled 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.
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
is available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is
measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's
operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in
the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
50
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in
profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing
investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value
is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the
difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the
acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Kelly Partners Group
Holdings Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of 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 shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or
as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The
Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant
to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'.
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Notes to the consolidated financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
AASB 9 introduces new requirements for classifying and measuring financial assets as follows:
●
Debit instruments meeting both a 'business model' test and a 'cash flow characteristics' test are measured at
amortised cost (the use of fair value is optional in some limited circumstances)
Investments in equity instruments not held for trading can be designated as 'fair value through other
comprehensive income' with only dividends being recognised in profit or loss
All other instruments (including derivatives) are measured at fair value with changes recognised in the profit or
loss
●
●
The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities.
New requirements apply where an entity chooses to measure a liability at fair value through profit and loss – in these
cases, the portion of the change in fair value related to changes in the entity’s own credit risk is presented in other
comprehensive income rather than within profit or loss, unless it creates a mismatch in profit or loss.
A new impairment model based on expected credit losses will apply to debt instruments measured at amortised cost
or fair value through other comprehensive income, contract assets and written loan commitments and financial
guarantee contracts. The loan loss allowance will be for either 12 month expected losses or lifetime expected losses.
The latter applies if credit risk has increased significantly since initial recognition of the financial instrument.
From the Group’s assessment of the requirements of AASB 9, the Group does not expect that the Group’s financial
statements will be materially impacted upon adoption.
AASB 15 Revenue from Contracts with Customers
This standard is currently applicable to annual reporting periods beginning on or after 1 January 2018. AASB 15
replaces all current guidance on revenue recognition from contracts with customers. It requires identification of
discrete performance obligations within a transaction and an associated transaction price allocation to these
obligations. Revenue is recognised upon satisfaction of these performance obligations, which occur when control of
the goods or services are transferred to the customer. Revenue received for a contract that includes variable amount
is subject to revised conditions for recognition, whereby it must be highly probable that no significant reversal of the
variable component may occur when the uncertainties around its measurement are removed.
The Group derives revenue from the provision of chartered accounting services, and has performed an analysis of
the impact of the new standard on each of the Group’s material revenue streams. This analysis included identifying
the performance obligations in each revenue stream, and reviewing engagement letter terms where necessary to
ascertain whether services revenue should be recognised at a point in time or over time. From the analysis
performed, the Group does not expect that at transition the Group’s financial statements will be materially impacted
upon adoption.
AASB 16 Leases
This standard is currently applicable to annual reporting periods beginning on or after 1 January 2019. AASB 16
replaces the current AASB 117 'Leases' standard and sets out a comprehensive model for identifying lease
arrangement and the subsequent measurement. A contract contains a lease if it conveys the right to control the use
of an identified asset for a period of time. The majority of leases from the lessee perspective within the scope AASB
16 will require the recognition of a 'right of use' asset and a related lease liability, being present value of future lease
payments. This will result in an increase in the recognised assets and liabilities in the Statement of Financial Position
as well as a change in expense recognition, with interest and depreciation replacing lease expense, with the
exception of for leases of low value assets and leases with a term of 12 months or less.
The Group expects to adopt the standard from 1 July 2019 and the primary impact from adoption will be the
treatment of premises and leased office equipment across the Group. The adoption of the standard will increase net
current assets and lease liabilities due to the recognition of the lease liability and right of use asset; expense relating
to minimum lease payments will reduce and there will be an increase in interest expense. The quantum of these
changes is currently being determined.
IASB revised Conceptual Framework for Financial Reporting
The revised Conceptual Framework has been issued by the International Accounting Standards Board ('IASB'), but
the Australian equivalent has yet to be published. The revised framework is applicable for annual reporting periods
beginning on or after 1 January 2020 and the application of the new definition and recognition criteria may result in
future amendments to several accounting standards. Furthermore, entities who rely on the conceptual framework in
determining their accounting policies for transactions, events or conditions that are not otherwise dealt with under
Australian Accounting Standards may need to revisit such policies. The Group will apply the revised conceptual
framework from 1 July 2020 and is yet to assess its impact.
52
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are discussed below.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets have suffered any 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 cash flows.
Note 4. 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.
The operating segment information is the same information as provided throughout the financial statements and are
therefore not duplicated.
No revenue from a single customer exceeds 10% of group revenue.
Note 5. Revenue
Provision of services
Note 6. Other gains
Change in fair value of contingent consideration
Commissions
Other income
Other gains
Consolidated
2017
$
2018
$
39,468,666 30,198,254
Consolidated
2017
$
2018
$
1,201,200
113,688
40,997
-
104,293
28,739
1,355,885
133,032
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Notes to the consolidated financial statements
30 June 2018
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Impairment of financial assets
Trade receivables
Loan receivable
Total impairment
Depreciation and amortisation
Depreciation
Amortisation
Total depreciation and amortisation
Finance costs
Interest on bank overdrafts and loans
Net loss on disposal
Net loss on disposal of property, plant and equipment
Rental expense relating to operating leases
Minimum lease payments
Employment and related expenses
Salaries and wages
Superannuation
Other on costs
Employee leave
Total employment and related expenses
Consolidated
2017
$
2018
$
460,499
-
223,049
349,361
460,499
572,410
385,738
651,479
415,935
419,561
1,037,217
835,496
611,208
651,662
60,753
-
2,089,822
1,727,222
15,654,722 12,463,725
830,627
596,310
77,282
1,167,849
825,937
127,606
17,776,114 13,967,944
54
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 8. Income tax expense
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Increase/(decrease) in deferred tax liabilities (note 24)
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Fair value adjustment on conversion of convertible note
IPO related and other transaction costs
Other non-allowable items
Adjustment recognised for prior periods
Distributions to non-controlling interests
Income tax expense
Consolidated
2017
$
2018
$
1,480,699
523,407
(62,962)
596,131
(250,992)
(3,603)
1,941,144
341,536
523,407
(250,992)
11,905,178
1,426,982
3,571,553
428,095
-
-
(219,888)
487,500
301,000
57,825
3,351,665
(62,962)
(1,347,559)
1,274,420
(3,603)
(929,281)
1,941,144
341,536
As the majority of operating businesses are structured as partnerships, the income tax expense attributable to the
minority interests in these partnerships are not included in the consolidated accounts. This is with the exception of
subsidiaries that are in a corporate structure where the consolidated income tax expense is included in the profit
attributable to minority interests in these subsidiaries. The remaining balance of the consolidated income tax
expense is included in the profit attributable to the shareholders in the parent entity.
Note 9. Current assets - cash and cash equivalents
Cash at bank and in hand
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Consolidated
2017
$
2018
$
3,410,934
3,212,746
Balances as above
Bank overdrafts (note 19)
Balance as per statement of cash flows
3,410,934
3,212,746
(1,970,672) (2,025,261)
1,440,262
1,187,485
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Notes to the consolidated financial statements
30 June 2018
Note 10. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Accrued income
Other receivables
Consolidated
2017
$
2018
$
6,858,723
(261,958)
6,596,765
6,596,354
(245,814)
6,350,540
3,484,037
5,842
1,443,021
-
10,086,644
7,793,561
Impairment of receivables
The Group has recognised a loss of $460,499 (2017: $223,049) in profit or loss in respect of impairment of
receivables for the year ended 30 June 2018.
The ageing of the impaired receivables provided for above are as follows:
91+ days
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Consolidated
2017
$
2018
$
261,958
245,814
Consolidated
2017
$
2018
$
245,814
245,101
(52,812)
(176,145)
28,927
243,238
(17,354)
(8,997)
261,958
245,814
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $1,953,486 as at
30 June 2018 ($1,623,678 as at 30 June 2017).
The ageing of the past due but not impaired receivables are as follows:
61-90 days
91+ days
Consolidated
2017
$
2018
$
523,493
1,429,993
435,722
1,187,956
1,953,486
1,623,678
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KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 11. Current assets - other financial assets
Loans to partners
Note 12. Current assets - other assets
Prepayments
Note 13. Non-current assets - financial assets
Shares in listed entities - at fair value
Shares in non-listed entities - at cost
Note 14. Non-current assets - other financial assets
Loans to partners
Note 15. Non-current assets - property, plant and equipment
Buildings - at cost
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Consolidated
2017
$
2018
$
626,925
548,211
Consolidated
2017
$
2018
$
481,870
180,074
Consolidated
2017
$
2018
$
14,780
-
14,993
10,000
14,780
24,993
Consolidated
2017
$
2018
$
2,853,078
3,297,177
Consolidated
2017
$
2018
$
625,825
571,396
1,968,640
1,765,045
(1,217,403) (1,056,405)
708,640
751,237
2,044,946
1,784,215
(1,418,885) (1,099,058)
685,157
626,061
664,032
(227,496)
436,536
665,307
(134,770)
530,537
2,439,659
2,495,730
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Notes to the consolidated financial statements
30 June 2018
Note 15. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 1 July 2016
Additions
Additions through business combinations
Disposals - written down value
Depreciation expense
Balance at 30 June 2017
Additions
Disposals - written down value
Depreciation expense
Leasehold
improve-
ments
$
Plant and
equipment
$
Motor
vehicles
$
Buildings
$
Total
$
-
571,396
-
-
-
571,396
54,429
-
-
478,271
270,595
-
(5,566)
(34,660)
708,640
88,582
-
(45,985)
485,528
264,466
198,040
(4,397)
(258,480)
685,157
203,975
(22,483)
(240,588)
477,669
175,663
-
-
(122,795)
1,441,468
1,282,120
198,040
(9,963)
(415,935)
530,537
43,434
(38,270)
(99,165)
2,495,730
390,420
(60,753)
(385,738)
Balance at 30 June 2018
625,825
751,237
626,061
436,536
2,439,659
Note 16. Non-current assets - intangible assets
Goodwill - at cost
Consolidated
2017
$
2018
$
17,847,638 17,847,638
Brand names and intellectual property - at cost
3,300,000
3,300,000
Customer relationships - at cost
Less: Accumulated amortisation
Computer software - at cost
Less: Accumulated amortisation
6,008,429
5,957,719
(3,356,471) (2,717,664)
3,240,055
2,651,958
93,904
(16,643)
77,261
43,832
(8,479)
35,353
23,876,857 24,423,046
58
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 16. Non-current assets - intangible assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Brand
names and
intellectual
property
$
Goodwill
$
Customer
relation-
ships
$
Computer
Software
$
Total
$
Balance at 1 July 2016
Additions
Additions through business combinations
Amortisation expense
12,525,784
-
5,321,854
-
3,300,000
-
-
-
275,540
-
3,381,983
(417,468)
36,267
-
1,179 16,102,503
36,267
8,703,837
(419,561)
(2,093)
Balance at 30 June 2017
Additions
Amortisation expense
17,847,638
-
-
3,300,000
-
-
3,240,055
50,710
(638,807)
35,353 24,423,046
105,290
54,580
(12,672)
(651,479)
Balance at 30 June 2018
17,847,638
3,300,000
2,651,958
77,261 23,876,857
Brand names and intellectual property have indefinite useful lives and are not amortised.
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
Consolidated
2017
$
2018
$
3,538,147
5,001,779
3,391,692
5,916,020
3,538,147
5,001,779
3,391,692
5,916,020
17,847,638 17,847,638
The carrying value of indefinite life intangibles is $3,300,000 (2017: $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
Consolidated
2017
%
2018
%
2.5%
16.5%
2.5%
16.5%
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Notes to the consolidated financial statements
30 June 2018
Note 17. Non-current assets - other assets
Deposits
Note 18. Current liabilities - trade and other payables
Trade payables
GST payable
Sundry payables and accrued expenses
Refer to note 31 for further information on financial instruments.
Note 19. Current liabilities - borrowings
Bank overdrafts
Bank loans
Refer to note 31 for further information on financial instruments.
Note 20. Current liabilities - provisions
Employee entitlements
Note 21. Current liabilities - contingent consideration
Contingent consideration
Refer to note 26 for details of the nature of contingent consideration.
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KELLY+PARTNERS ANNUAL REPORT 2018
Consolidated
2017
$
2018
$
698,445
501,369
Consolidated
2017
$
2018
$
389,572
857,393
1,548,985
809,148
608,160
2,959,559
2,795,950
4,376,867
Consolidated
2017
$
2018
$
1,970,672
2,656,750
2,025,261
2,434,292
4,627,422
4,459,553
Consolidated
2017
$
2018
$
1,181,645
1,159,336
Consolidated
2017
$
2018
$
231,418
-
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 22. Current liabilities - other liabilities
Deferred rent
Note 23. Non-current liabilities - borrowings
Bank loans
Refer to note 31 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank overdrafts
Bank loans
Consolidated
2017
$
2018
$
152,721
147,656
Consolidated
2017
$
2018
$
10,139,039 10,497,486
Consolidated
2017
$
2018
$
1,970,672
2,025,261
12,795,789 12,931,778
14,766,461 14,957,039
The Group has 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.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdrafts
Bank loans
Used at the reporting date
Bank overdrafts
Bank loans
Unused at the reporting date
Bank overdrafts
Bank loans
Consolidated
2017
$
2018
$
2,552,000
2,963,334
14,127,364 16,186,317
16,679,364 19,149,651
1,970,672
2,025,261
12,795,789 12,931,778
14,766,461 14,957,039
581,328
1,331,575
1,912,903
938,073
3,254,539
4,192,612
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Notes to the consolidated financial statements
30 June 2018
Note 24. Non-current liabilities - deferred tax liabilities
Net deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Accrued expenses
Income assessable on receipt
Differences between accounting and tax depreciation
Customer relationship intangibles
Expense deductible over five years
Deferred tax liability
Movements:
Opening balance
Charged/(credited) to profit or loss (note 8)
Credited to equity (note 8)
Additions through business combinations (note 38)
Other movements
Closing balance
Note 25. Non-current liabilities - provisions
Employee entitlements
Note 26. Non-current liabilities - contingent consideration
Contingent consideration
Consolidated
2017
$
2018
$
(401,179)
954,713
14,587
782,918
(523,612)
(371,938)
400,760
20,122
930,685
(673,215)
827,427
306,414
306,414
523,407
-
-
(2,394)
(124,334)
(250,992)
(276,154)
904,066
53,828
827,427
306,414
Consolidated
2017
$
2018
$
270,511
149,498
Consolidated
2017
$
2018
$
-
1,432,618
Prior year contingent consideration comprised the contingent consideration component of the purchase price for Kelly
Partners Southern Highlands and Kelly Partners Sydney.
A reconciliation of the movement in contingent consideration (current and non-current) for the financial year is set
out below:
Opening balance
Recognition on acquisition (note 38)
Change in fair value of contingent consideration
Settled in cash
62
KELLY+PARTNERS ANNUAL REPORT 2018
Consolidated
2017
$
2018
$
1,432,618
-
(1,201,200)
-
100,551
1,432,618
-
(100,551)
231,418
1,432,618
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 27. Non-current liabilities - other liabilities
Deposits held
Note 28. Equity - issued capital
Consolidated
2017
$
2018
$
46,244
46,244
2018
Shares
2017
Shares
Consolidated
2017
$
2018
$
Ordinary shares - fully paid
45,497,181 45,344,181 14,171,477 13,988,051
Movements in ordinary share capital
Details
Date
Shares Issue price
$
Balance
Share split: 1 share to 1,000 shares
Shares issued pre-IPO
Share split: 1 share to 15.9 shares
Shares issued during the year:
Shares issued to employees
Conversion of convertible note to ordinary shares
Shares issued on IPO
Transaction costs arising on share issue, net of tax
1 July 2016
2 November 2016
14 June 2017
2,016
2,013,984
115,522
31,750,159
$0.000
$15.889
$0.000
1,684,411
-
1,835,500
-
453,500
8,125,000
2,884,000
-
$1.000
$1.000
$1.000
$0.000
453,500
8,125,000
2,884,000
(994,360)
Balance
Shares issued to employees
Transaction costs arising on share issue, net of tax
30 June 2017
3 July 2017
45,344,181
153,000
-
13,988,051
220,473
(37,047)
$1.441
$0.000
Balance
30 June 2018
45,497,181
14,171,477
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
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.
Share buy-back
There is no current on-market share buy-back.
Capital risk 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.
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 29. Earnings per share
Profit after income tax
Non-controlling interest
Consolidated
2017
$
2018
$
9,964,034
1,085,446
(5,581,380) (3,874,972)
Profit/(loss) after income tax attributable to the owners of Kelly Partners Group Holdings
Limited
4,382,654
(2,789,526)
Weighted average number of ordinary shares used in calculating basic earnings per
share
45,495,923
33,342,437
Weighted average number of ordinary shares used in calculating diluted earnings per
share
45,495,923
33,342,437
Number
Number
Basic earnings per share
Diluted earnings per share
Note 30. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
Special Interim dividend for the year ended 30 June 2017 of $1.76 per ordinary share,
paid prior to the Company listing on the Australian Stock Exchange
First interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share, paid
on 16 November 2017
Second interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share,
paid on 16 February 2018
Third interim dividend for the year ended 30 June 2018 of $0.01 per ordinary share,
paid on 16 May 2018
Cents
Cents
9.63
9.63
(8.37)
(8.37)
Consolidated
2017
$
2018
$
-
3,548,160
454,972
454,972
454,972
-
-
-
1,364,916
3,548,160
On 12 July 2018, the Company paid the final dividend for the year ended 30 June 2018 of $0.01 per ordinary share.
This dividend equates to a distribution of $454,972, based on the number of ordinary shares on issue as at 30 June
2018. The financial effect of dividends declared after the reporting date is not reflected in the 30 June 2018 financial
statements and will be recognised in subsequent financial reports.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
1,464,371
1,215,268
Consolidated
2017
$
2018
$
64
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 30. Equity - dividends (continued)
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting
date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
●
●
Note 31. Financial instruments
Financial risk management objectives
The Group 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 Group‘s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of
financial markets.
The Group 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.
Market risk
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group 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 Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. At the reporting date,
the Group 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% and -1% (2017: +1% and -1%), 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.
Weighted
average
interest
rate
%
2018
+1%
$
Weighted
average
interest
rate
%
-1%
$
2017
+1%
$
-1%
$
5.02%
5.24%
(19,980)
(128,637)
19,980
128,637
5.23%
5.00%
(21,323)
(119,798)
21,323
119,798
Borrowings
Bank overdrafts
Bank loans
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss
to the Group.
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.
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Notes to the consolidated financial statements
30 June 2018
Note 31. Financial instruments (continued)
The Group 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 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.
The Board receives monthly reports summarising the turnover, trade receivables balance and aging profile of each of
the key customers individually and the Group'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.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. The Group maintains cash to meet its liquidity requirements for up to a 30-day period.
The Group 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 Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
The Group‘s liabilities have contractual maturities which are summarised below:
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing
Bank overdrafts
Bank loans
Total non-derivatives
Weighted
average
interest
rate
%
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-
-
-
389,572
2,406,378
231,418
-
-
-
-
-
-
-
-
-
389,572
2,406,378
231,418
5.02%
5.24%
1,970,672
2,656,750
7,654,790
-
3,261,459
3,261,459
-
6,144,861
6,144,861
-
1,970,672
732,719 12,795,789
732,719 17,793,829
66
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 31. Financial instruments (continued)
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing
Bank overdrafts
Bank loans
Total non-derivatives
Weighted
average
interest
rate
%
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-
-
-
809,148
3,567,719
-
-
-
1,432,618
-
-
-
-
-
-
809,148
3,567,719
1,432,618
5.23%
5.00%
2,025,261
2,434,292
8,836,420
-
2,434,292
3,866,910
-
8,063,194
8,063,194
-
2,025,261
- 12,931,778
- 20,766,524
Fair value of financial instruments
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.
Note 32. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is
set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Other key management personnel transactions
For details of other transactions with key management personnel, refer to note 36.
Consolidated
2017
$
2018
$
782,541
45,304
13,471
-
469,655
24,671
6,352
151,186
841,316
651,864
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Notes to the consolidated financial statements
30 June 2018
Note 33. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu,
the auditor of the Company:
Audit services
Audit or review of the financial statements
Other services
Due diligence services
IPO-related services
IPO related services: reviewing the financial report
Consolidated
2017
$
2018
$
140,000
90,000
-
-
-
-
93,840
375,000
55,000
523,840
140,000
613,840
Note 34. Contingent liabilities
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 Group did not have any contingencies at 30 June 2018 (30
June 2017: None).
Note 35. Commitments
Operating leases have been taken out for office premises and office equipment.
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
The above balances are gross of sublease income of:
Within one year
One to five years
More than five years
Consolidated
2017
$
2018
$
2,449,126
9,379,540
1,500,550
2,185,998
6,202,550
834,846
13,329,216
9,223,394
295,683
514,401
16,413
168,368
171,634
-
826,497
340,002
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
1,107,626
-
68
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 36. Related party transactions
Parent entity
Kelly Partners Group Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 39.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the
directors' report.
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.
Loans to related parties
Key management personnel:
Loans to directors
Balance at the beginning of the year
- loans advanced
- repayment of loans advanced
Balance at the end of the year
2018
$
2017
$
-
(639,408)
- (1,491,338)
-
2,130,746
-
-
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:
Related party
Subsidiary
2018
Interest
held
2017
Interest
held
Pauline Michelakis
Paul Kuchta
Kelly Partners Private Wealth Sydney
Kelly Partners Norwest Partnership
7.50%
25.50%
10.00%
44.00%
Note 37. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
2018
$
2017
Restated
$
3,164,443 (2,132,529)
3,164,443 (2,132,529)
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 37. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained profits/(accumulated losses)
Total equity
2018
$
2017
Restated
$
5,849,107
3,297,763
23,966,944 23,051,311
3,449,523
2,847,363
8,454,246
9,495,641
15,512,698 13,555,670
14,171,477 13,988,051
(432,381)
1,341,221
15,512,698 13,555,670
Comparatives
During the financial year a reconciliation of deferred tax balances was performed which identified that the parent
entity’s deferred tax asset has been previously understated. As a consequence, the parent entity’s comparative
figures for 2017 have been restated.
The restatement resulted in an increase in non-current assets of $705,778, a decrease in the accumulated losses of
$705,778, a decrease in loss for the year of $705,778 and a decrease in total comprehensive loss of $705,778 for
the year ended 30 June 2017.
The restatement did not impact the consolidated financial statements for the year ended 30 June 2018.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June
2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for
the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 38. 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.
70
KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 38. Business combinations (continued)
Details of the acquisition are as follows:
Customer relationships
Deferred tax liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash payable to vendor
Deferred consideration
Fair value
$
400,718
(120,215)
280,503
711,487
991,990
760,572
231,418
991,990
$231,418 of the purchase price has been paid in cash in August 2018.
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 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 for the 2017 financial year.
Details of the acquisition are as follows:
Receivables and accrued revenue
Property, plant and equipment
Customer relationships
Deferred tax asset
Deferred tax liability
Payroll accruals
Other liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash payable to vendor
Contingent consideration
Non-controlling interest
Fair value
$
5,085,950
198,040
2,981,295
100,558
(894,389)
(370,110)
(831,261)
6,270,083
3,538,117
9,808,200
4,353,000
1,201,200
4,254,000
9,808,200
Contingent consideration
The Group has agreed to pay the selling shareholder additional consideration based upon achieving an agreed
revenue target for the calendar year ending 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.
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 38. Business combinations (continued)
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 in the 2017 financial year.
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. Refer to note 36 for details
of the settlement of the consideration.
Note 39. Interests in subsidiaries
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Principal place of business /
Country on incorporation
Ownership interest
2017
%
2018
%
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
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 Private Wealth Sydney Partnership
(previously Kelly Partners Wealth Management
Partnership)
Kelly Partners Marketing Advisory Pty Ltd (previously
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
72
KELLY+PARTNERS ANNUAL REPORT 2018
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%
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%
100.00%
100.00%
51.00%
100.00%
51.00%
51.00%
100.00%
100.00%
51.00%
100.00%
Australia
51.00%
51.00%
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 39. Interests in subsidiaries (continued)
Name
Principal place of business /
Country on incorporation
Ownership interest
2017
%
2018
%
Australia
Australia
Australia
Australia
Australia
Australia
Kelly Partners (Sydney) Pty Limited
KP GH PM Pty Limited
Kelly Partners Parramatta Partnership
Kelly Partners (Tax Legal) Pty Ltd
Kelly Partners (Sydney) Audit Partnership
KP GH LM Pty Ltd
Kelly Partners Lifestyle Management Services
Partnership
Australia
Kelly Partners Private Wealth Group Holdings Pty Ltd Australia
Australia
KP GH WM MCBD Pty Ltd
Kelly Partners Private Wealth Melbourne Partnership Australia
Australia
KP GH CA Pty Ltd
Australia
Kelly Partners Corporate Advisory Partnership
New Zealand
KP GH NZ Pty Ltd
New Zealand
Kelly Partners New Zealand Partnership
Australia
KP GH GII Pty Ltd
Kelly Partners Government, Incentives & Innovation
Partnership
Kelly Partners SMSF Advisory Pty Ltd
Kelly Partners (Investment Office) Pty Ltd
Kelly Partners Legacy Team Pty Ltd
Kelly Partners (Sports & Entertainment) Pty Ltd
Kelly Partners (Private Wealth) Pty Ltd
KP GH MEL Pty Ltd
Kelly Partners Melbourne CBD Partnership
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
50.50%
100.00%
51.00%
51.00%
50.04%
100.00%
51.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
51.00%
100.00%
51.00%
100.00%
75.50%
100.00%
100.00%
100.00%
100.00%
51.00%
50.05%
100.00%
51.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
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
Profit attributable to non-controlling interests
Distributions to non-controlling interests
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Consolidated
2017
$
2018
$
5,581,380
4,496,782
7,320,580
19,569,897 14,801,149
3,874,972
3,595,872
5,588,724
12,455,315 14,331,633
(3,255,324) (4,021,267)
(4,931,628) (5,280,290)
11,588,943 10,618,800
(c) Consequences of changes in a parent's ownership in a subsidiary that do not result in a loss of
control
There were no changes to the parent entity's ownership in subsidiaries during the current and prior financial year.
(d) Significant restrictions
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.
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Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 40. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Net fair value loss on other financial assets
Impairment of trade receivables
Impairment of loan receivable
Fair value loss on conversion of convertible notes
Shares issued to employees
Change in fair value of contingent consideration
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provision for income tax
Net cash from operating activities
Note 41. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2016
Proceeds from borrowings
Repayment of borrowings
Repayment of finance lease
Balance at 30 June 2017
Proceeds from borrowings
Repayment of borrowings
Balance at 30 June 2018
Consolidated
2017
$
2018
$
9,964,034
1,085,446
1,037,217
60,753
213
460,499
-
-
220,473
(1,201,200)
835,496
9,963
-
223,049
349,361
1,625,000
453,500
-
(2,293,083)
521,013
(2,194,825)
29,818
1,198,680
430,748
1,064,817
(356,983)
6,604,912
6,919,077
Bank
loans
$
Lease
liability
$
Total
$
13,080,339
7,229,385
(7,377,946)
-
12,931,778
3,695,310
(3,831,299)
8,252 13,088,591
-
7,229,385
- (7,377,946)
(8,252)
(8,252)
- 12,931,778
-
3,695,310
- (3,831,299)
12,795,789
- 12,795,789
Note 42. Events after the reporting period
On 12 July 2018, the Company paid the final dividend for the year ended 30 June 2018 of $0.01 per ordinary
share. This dividend equates to a distribution of $454,972, based on the number of ordinary shares on issue as at 30
June 2018. The financial effect of dividends declared after the reporting date is not reflected in the 30 June 2018
financial statements and will be recognised in subsequent financial reports.
On 16 August 2018, an acquisition agreement was signed for the Company to acquire an accounting firm in the Inner
West of Sydney with the structure following KPG’s standard 51% Owner-Driver Model. The business will commence
trading as Kelly Partners (Inner West) from 4 September 2018.
On 22 August 2018, an acquisition agreement was signed for Kelly+Partners North Sydney, a subsidiary of Kelly
Partners Group Holdings Limited, to acquire a 100% interest in an accounting firm in North Sydney to assist in the
retirement and succession of the senior practitioner. The business will be tucked into the existing Kelly+Partners
North Sydney business to create synergies and operating leverage. The business will operate as part of
Kelly+Partners North Sydney from 1 September 2018.
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KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2018
Note 42. Events after the reporting period (continued)
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly
affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
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Kelly Partners Group Holdings Limited
Directors' declaration
30 June 2018
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30
June 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Brett Kelly
Executive Chairman & CEO
27 August 2018
Sydney
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KELLY+PARTNERS ANNUAL REPORT 2018
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Deloitte Touche Tohmatsu
Sydney, NSW, 2000
ABN 74 490 121 060
Australia
Grosvenor Place
225 George Street
Phone: +61 2 9322 7000
Sydney, NSW, 2000
www.deloitte.com.au
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of Kelly Partners
Group Holdings Limited
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
Opinion
2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated
We have audited the financial report of Kelly Partners Group Holdings Limited (the “Entity”), and its
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June
notes to the financial statements, including a summary of significant accounting policies, and the directors’
2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated
declaration.
statement of changes in equity and the 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’
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
declaration.
2001, including:
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
(i)
2001, including:
performance for the year then ended; and
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
(ii)
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
Basis for Opinion
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
of our report. We are independent of the Group in accordance with the auditor independence requirements of
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Code.
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
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
Code.
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 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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
auditor’s report.
opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Key Audit Matters
opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our
Key Audit Matters
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
Key audit matters are those matters that, in our professional judgement, were of most significance in our
opinion on these matters.
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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
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Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Recoverability of Goodwill and Intangible
Assets
As at 30 June 2018 the Group has recognised
goodwill of $17,847,638 and other intangibles
of $2,651,958 as a result of acquisitions over a
number of years as disclosed in Note 16.
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.
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 16 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report,
Corporate Directory and Additional Information for Listed Public Companies, 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.
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.
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KELLY+PARTNERS ANNUAL REPORT 2018
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.
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.
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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 33 to 38 of the Director’s Report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Kelly Partners Group Holdings Limited, for the year ended 30 June
2018, 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, 27 August 2018
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KELLY+PARTNERS ANNUAL REPORT 2018
Kelly Partners Group Holdings Limited
Shareholder information
30 June 2018
The shareholder information set out below was applicable as at 30 September 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Number
of holders
Number of options
over
ordinary
shares
of holders
of ordinary
shares
192
148
91
142
38
611
15
-
-
-
-
-
-
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Kelly Investments 1 Pty Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Kalumic Pty Ltd
Aust Executor Trustees Ltd
Hampton Pty Ltd
BNP Paribas Noms Pty Ltd
Gildale Family Company Pty Ltd
David Bullock + Kay Bullock + Anthony Bullock
Dr David John Ritchie + Dr Gillian Joan Ritchie
Kenneth Ko
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Brojo Investments 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
Mrs Sunaina Kalra
Unquoted equity securities
There are no unquoted equity securities.
Ordinary shares
Number held
% of total
shares
issued
23,253,378
6,127,288
900,000
787,007
663,474
609,400
500,000
466,420
458,984
400,000
393,504
378,156
326,767
286,120
278,172
264,263
264,263
250,054
225,054
225,000
51.11
13.47
1.98
1.73
1.46
1.34
1.10
1.03
1.01
0.88
0.86
0.83
0.72
0.63
0.61
0.58
0.58
0.55
0.49
0.49
37,057,304
81.45
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Kelly Partners Group Holdings Limited
Shareholder information
30 June 2018
Substantial holders
Substantial holders in the Company are set out below:
Kelly Investments 1 Pty Ltd
HSBC Custody Nominees (Australia) Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Number of
shares held
23,253,378
6,185,000
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.
There are no other classes of equity securities.
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KELLY+PARTNERS ANNUAL REPORT 2018
Kelly+Partners
Team
Brett Kelly
Scott Elwin
Craig Bullock
Ada Poon
Charbel Geagea
Rex Hoeben
Sam Gorgi
Adam Quinn
Anna Lewis
Peter Campbell
Albert Cachia
Ben Twyford
Bill Bartlett
Lauren Helmrich
Andrew Howe
Joel Russell
Kenneth Ko
Linda Chapman
Trent Doughty
Paul Kuchta
Vanessa Sirotic
Barry Frank
Mark Prag
Suketu Majithia
Tony Nunes
Peter Dawkins
Andew Zoghbi
Kim Meredith
Shane Hay
Tony Eagar
Brendan Lyons
Ryan McCabe
Ming Lew
Paula Booth
Darren Hodgson
Daniel Kuchta
Troy Marsh Apps
David Irwin
Daniel Chiha
Chris Dent
Scott Coombes
James Russell
David Duff
Peter Cohilj
Kim Lim
Elisha Hill
David Le Page
Karina Rauch
Michelle Irwin
Pauline Michelakis
Family Business Insight 1
Family businesses
with a long term focus,
outperform those with
a short term view.
Family Business Insight 2
Very few people
understand wealth.
Even less people
understand families.
Family Business Insight 3
Family advice needs
a team approach.
Generations of
benefit will follow.
Private Businesses
Private Clients
kellypartners.com.au
Private Businesses
Private Clients
Family Office
kellypartners.com.au
Private Businesses
Private Clients
Family Office
kellypartners.com.au
2
3
Family Business Insight 4
Family Business Insight 5
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’.
Family Business Insight 6
Generous parents leave
their wealth to grateful
children. We help manage
a smooth transition.
Private Businesses
Private Clients
Family Office
kellypartners.com.au
Private Businesses
Private Clients
Family Office
kellypartners.com.au
4
Private Businesses
Private Clients
kellypartners.com.au
5