KELLY PARTNERS GROUP HOLDINGS LIMITED
ABN 25 124 908 363
2021
ANNUAL REPORT
Kelly Partners Group Holdings Limited
Contents
30 June 2021
Corporate directory
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Kelly Partners Group Holdings Limited
Shareholder information
End of annual report
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1
Kelly Partners Group Holdings Limited
Corporate directory
30 June 2021
Directors
Brett Kelly – Chairman, Executive Director
Stephen Rouvray – Deputy Chairman, Non-Executive Independent Director
Ryan Macnamee – Non-Executive Independent Director
Paul Kuchta – Executive Director
Ada Poon - Executive Director
Company secretary
Joyce Au
Notice of annual general meeting
The annual general meeting ('AGM') of Kelly Partners Group Holdings Limited will be
held on Friday, 8 October 2021. The format and venue of the AGM is yet to be
finalised due to the uncertainty brought upon by the recent COVID-19 outbreak in
NSW.
Registered office
Share register
Auditor
Level 8
32 Walker Street
North Sydney, NSW 2060
Telephone: (02) 9923 0800
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney, NSW 2000
Telephone: 1300 787 272
William Buck Accountants & Advisors
Level 29
66 Goulburn Street
Sydney, NSW 2000
Stock exchange listing
Kelly Partners Group Holdings Limited shares are listed on the Australian Securities
Exchange (ASX code: KPG) since 21 June 2017
Website
http://www.kellypartnersgroup.com.au
Corporate Governance Statement
The directors and management are committed to conducting the business of Kelly
Partners Group Holdings Limited in an ethical manner and in accordance with the
highest standards of corporate governance. Kelly Partners Group Holdings Limited
has adopted and has substantially complied with the ASX Corporate Governance
Principles and Recommendations (Fourth Edition) ('Recommendations') to the extent
appropriate to the size and nature of its operations.
The Group’s Corporate Governance Statement, which sets out the corporate
governance practices that were in operation during the financial year and identifies
and explains any Recommendations that have not been followed and ASX Appendix
4G are released to the ASX on the same day the Annual Report is released. The
Corporate Governance Statement and Corporate Governance Compliance Manual
can be found on the Company’s website - www.kellypartnersgroup.com.au/investor-
centre/corporate-governance-2.
2
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
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 2021.
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
Ryan Macnamee
Paul Kuchta
Ada Poon
Principal activities
During the financial year, the principal continuing activities of the Group were the provision of chartered accounting and
other professional services, predominantly to private businesses and high net worth individuals.
Strategy
The Company aims to build per-share intrinsic value by:
(1)
(2) Further increase our subsidiaries' earnings through tuck-in acquisitions;
(3)
Improving the earning power of our subsidiaries;
(a) Growing our accounting subsidiaries;
(b) Growing our complementary businesses;
(4) Repurchasing Company’s shares when available at a meaningful discount from intrinsic value; and
(5) Making an occasional large acquisition (i.e. greater than $5m in revenue).
3
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
The following table presents the performance of the business against the comparative year in delivering the Group's
strategy:
(1)
(2)
Strategy
Measure
FY21
FY20
FY 19
FY18
FY 17
(IPO)
Improving the earning power of its
subsidiaries
EBITDA margin of
operating businesses
33.4% 32.5% 27.7% 34.0% 30.9%
Further increase their earnings through
tuck-in acquisitions
(3) a. Growing our accounting subsidiaries
Contribution to revenue
growth from acquired
businesses
Contribution to revenue
growth from existing
accounting businesses
4.8%
6.6%
6.4%
17.2% -
1.4%
6.6%
(6.9%)
10.5% -
(3) b. Growing our complementary businesses Contribution to revenue
1.2%
2.8%
1.8%
3.1%
growth from existing
accounting businesses
Wealth
Finance
Investment office
Discontinued
operations*
Insurance(from Jan-21)
Alternative Investments
(from Jan-21)
1.0%
0.2%
0.0%
n/a
n/a
n/a
0.4%
0.4%
0.9%
1.1%
n/a
n/a
0.7%
0.7%
0.0%
0.4%
n/a
n/a
1.0%
0.8%
0.4%
0.9%
n/a
n/a
(4)
Repurchasing the Company's shares
when available at a meaningful discount
from intrinsic value
(i) Number of shares
repurchased
400,000 95,000
2,181
(ii) % of shares issued
repurchased
0.88% 0.21% -
(5) Making an occasional large acquisition
(i.e. greater than $5m in revenue)
Number of large
acquisitions
-
-
-
-
-
-
-
-
-
-
-
n/a
n/a
-
-
1
*
Discontinued operations being Kelly Partners Corporate Advisory. Financial metrics shown in this report exclude
discontinued operations.
Key financial metrics
The Company uses Return on Equity ('ROE'), Return on Invested Capital ('ROIC'), Earnings Per Share ('EPS') and
Owners' earnings as key financial metrics to measure the performance of the Group and its return to shareholders. The
Group continues to achieve superior returns on equity and invested capital, as measured by ROE and ROIC.
4
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
The following table summarises the key financial metrics used by the Company to measure the performance of the Group
and its return to shareholders, since IPO:
Key financial metric
Formula
FY21
FY20
FY19
FY18
FY17
(IPO)
Return to owners
Owners' earnings* - Group Cash from operating
$12,807,837 $12,174,442 $9,673,451 $6,304,912 $6,619,077
activities - repayment of
lease liabilities -
maintenance capex
Owners' earnings* - Parent Cash from operating
$5,014,894 $3,885,041 $3,128,904 n/a
n/a
Return on equity
Return on invested capital
Earnings per share (EPS)
(cents per share)
Ordinary dividends (cents
per share)**
Ordinary dividends payout
ratio**
Cash conversion / debt
Cash conversion
Gearing ratio
Net debt per partner
activities - repayment of
lease liabilities -
maintenance capex
Underlying NPATA /
Equity
(Underlying NPATA +
cash interest) / (Equity +
debt)
Underlying attributed
NPATA / Weighted
average number of
shares
46.7%
44.2%
36.6%
47.8%
35.1%
27.9%
26.1%
22.7%
31.2%
21.9%
11.32
8.67
7.02
9.51
4.97
Ordinary dividends paid 5.32
4.84
4.40
4.00
47.0%
55.8%
62.7%
42.1%
-
-
Ordinary dividends share
/ EPS (underlying
NPATA)
Operating cashflow /
Statutory EBITDA
Net Debt / Underlying
EBITDA
Net Debt / Number of
Partners
93.5%
97.3%
116.8%
63.5%
269.6%
0.84x
0.96x
1.35x
0.79x
1.4x
$296,758
$346,198
$366,813
$291,167
$326,230
Number of partners
Number of partners
53
44
40
39
36
*
The Group uses owners' earnings to measure cash flow available to the Group. Owner’s earnings is a non-IFRS
measure which is used to measure cash flow to the Group (after taxes and finance costs) and after taking into
account the necessary:
additions or deductions of working capital investment (debtors, accrued Income, and other accrual movements)
required as the business grows and makes acquisitions;
deductions required for the maintenance capital expenditure for the business to maintain on-going operations in the
long term; and
deducting the repayment of lease liability from cash from operations (which AASB16 reclassifies to cash from
financing activities).
5
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
In FY21, Owners’ earnings for the 12 months were $12,807,837 (FY20: $12,174,442) up 5.2% from the prior
corresponding period. Owners' earnings for the parent entity were $5,041,894 (FY20: $3,885,041), up 29.08%
from the prior corresponding period.
** Ordinary dividends for FY21 includes the final dividend for FY21 expected to be declared and paid prior to November
2021. The final dividend is expected to be at least 0.68 cents per share.
Review of operations
In the year ended 30 June 2021 ('FY21'), the Group has recorded a consolidated statutory net profit after income tax from
continuing operations of $10,945,476 (year ended 30 June 2020 ('FY20'): $10,142,653). The total comprehensive income
attributable to the owners of the parent entity was $4,625,330 (FY20: $3,949,955), an increase of 17.1%.
The directors consider Underlying Earnings Before Interest, Tax, Depreciation and Amortisation ('Underlying EBITDA') and
Underlying Net Profit After Tax Before Amortisation ('Underlying NPATA') to reflect the core earnings of the Group.
Underlying EBITDA and Underlying NPATA are financial measures not prescribed by Australian Accounting Standards
('AAS') and represents the profit under AAS adjusted for non-cash and other items which management consider unrelated
to the underlying performance of the Group.
Underlying EBITDA and Underlying NPATA are key measurements 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.
The following table provides a reconciliation between the NPAT and the Underlying EBITDA of the consolidated Group:
Statutory net profit after income tax ('NPAT') from continuing operations
Finance costs
Income tax expense
Depreciation and amortisation expense
Consolidated
2021
$
2020
$
10,945,476
1,550,839
1,963,663
4,427,456
10,142,653
1,535,539
1,430,335
3,740,900
Earnings before interest, tax, depreciation and amortisation ('EBITDA')
18,887,434
16,849,427
Add: Non-recurring expenses
Restructuring costs
Acquisition costs
Non-operating business losses
Other non-recurring expenses
Less: Non-recurring income
One-off government grants in relation to COVID-19
Lease standard - impact on changes on extension of options
Change in fair value of contingent consideration
Net proceeds received from settlement of legal dispute
Underlying EBITDA
91,306
721,474
169,246
165,314
165,389
540,682
-
-
(825,368)
-
(447,508)
(107,963)
(1,075,910)
(557,012)
-
-
18,653,935
15,922,576
Underlying EBITDA of the Group was $18,653,935 (2020: $15,922,576), an increase of 17.2%.
6
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
The following table provides a reconciliation between the NPAT and the Underlying NPATA which is attributable to the
owners of Kelly Partners Group Holdings Limited.
Consolidated
2021
$
2020
$
Statutory NPAT from continuing operations attributable to owners of Kelly Partners Group
Holdings Limited
Amortisation of customer relationship intangibles
NPATA attributable to owners of Kelly Partners Group Holdings Limited
4,625,330
553,624
5,178,954
3,949,955
452,728
4,402,683
Add: Non-recurring expenses
Restructuring costs
Acquisition costs
Non-operating business losses
Other non-recurring expenses
Less: Non-recurring revenue
One-off government grants in relation to COVID-19
Lease standard - impact on changes on extension of options
Change in fair value of contingent consideration
Net proceeds from settlement of legal dispute
Net non-recurring items
Less: Tax effect of non-recurring items
87,366
426,836
96,180
82,854
97,914
372,142
-
-
(450,458)
-
(211,462)
(49,107)
(17,791)
(592,515)
(322,321)
-
-
(444,780)
(46,331)
(20,225)
Underlying NPATA attributable to owners of Kelly Partners Group Holdings Limited
5,114,832
3,937,678
Underlying NPATA attributable to members of the parent entity was $5,114,832 (2020: $3,937,678), an increase of 29.9%.
COVID-19
Management response and action
As at 30 June 2021 the Group has not experienced a decline in revenue or collections. In FY20, out of an abundance of
prudence and caution, the Group has sought to protect margins through reducing expenses and to protect the balance
sheet by managing working capital and maximising liquidity through increasing its bank lines of credit. The additional bank
lines of credit were reduced to their original limits in FY21 as they were not utilised.
In July 2021, a renewed COVID-19 outbreak has led to lockdown and extensive restrictions imposed in the Greater Sydney
area. In response to this, the Group has recommenced working from home arrangements for its team members. At the
date of this report, the Group has not seen a significant impact on its revenue or collections but continues to act with
prudence and caution in the current pandemic environment.
Operationally the Group continues its focus on protecting the physical health, safety and mental wellbeing of its people.
The Group continues to maximise the use of technology and proactively seek opportunities to improve and upgrade its IT
infrastructure and security. In respect of acquisitions, the Group continues to see a strong pipeline and has adjusted its
commercial terms and due diligence processes to reflect the current market environment.
In FY20, the management undertook specific actions in response to the COVID-19 pandemic, including a reduction in
ongoing expenses and overheads, negotiations of rent abatements, reduction in team sizes etc. In response to the recent
COVID-19 outbreak, management may revisit these strategies to protect the Group from the potential impacts of the
pandemic.
Financial performance
Acquisitions and integration
Since 1 July 2020, the Group has completed 7 acquisitions with total annual revenues of $6.2m to $8.2m, representing an
annual $0.8m to $1.0m NPATA contribution to the parent. The Group has exceeded the $3.8m target acquisition for FY21
as per the Group’s 5-year plan. The completed acquisitions are listed in the table below:
7
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
# Acquired
1 Jul-20
2 Nov-20
3 Mar-21
4 Apr-21
5 Jul-21
6 Jul-21
7 Jul-21
Total
% of FY20 Revenue ($46.4m)
Location
Inner West
Oran Park
Inner West
Central Coast
Newcastle
Sydney CBD
Norwest
Type
Tuck-in
Tuck-in
Tuck-in
Tuck-in
Marquee
Tuck-in
Tuck-in
Acquired Revenue
$0.1m - $0.1m
$0.4m - $0.5m
$0.6m - $0.8m
$2.1m - $3.0m
$0.8m - $1.0m
$1.9m - $2.4m
$0.3m - $0.4m
$6.2m - $8.2m
13% - 18%
Acquired businesses generally have lower gross margins and higher operating costs initially. It is expected that any dilutive
impact of their existing margins will reduce over time as they evolve to our more efficient business model.
During FY21, the Group also benefited from the contribution for the full year from the two acquisitions made in FY20
(Melbourne and Glenbrook).
Offices and partners
As at 30 June 2021, the Group operates out of 16 offices (30 June 2020: 15). During the year, the Group negotiated
renewals of its North Sydney office lease at competitive rates. The Group also undertook a fitout upgrade to its Wollongong
and Northern Beaches offices, having relocated both businesses to more modern and aesthetic premises upon the
termination of its existing leases. Both new premises are located at street level with excellent exposure and visibility and
are ideal locations for the Wollongong and Northern Beaches businesses to operate from in the long run. In January 2021,
the Group also launched a new greenfield office in Pittwater with a view to creating a dominant presence in the Northern
Beaches region together with the existing Kelly Partners Northern Beaches office in Brookvale.
As at 30 June 2021, the total number of equity partners (excluding the CEO, Brett Kelly) was 53 (30 June 2020: 44) with
five new partners promoted internally, four new partners recruited externally, and two partners from completed acquisitions.
Post balance date, one new partner was promoted internally, taking the total number of equity partners to 54. The Group
continues its focus in admitting and recruiting new partners as part of its strategy to retain and motivate key talents and to
drive top line revenue growth.
Properties
As at 30 June 2021, the Group holds controlling interests in two of the properties out of which the Group operates. These
properties house the Central Coast and Central Tablelands offices in which the Group acquired controlling interests in
August 2019. The properties were acquired for a total consideration of $2.1m, of which the operating partners of the
Central Coast and Central Tablelands businesses own a non-controlling interest. Following a review of the property
strategy, the Group will look at unlocking its capital tied to these properties and removing the properties from the balance
sheet.
Revenue
Revenue for FY21 increased 7.5% to $48,906,446 (FY20: $45,495,584). A reconciliation of acquisition and organic growth
is set out below:
FY20 Revenue
Complementary business growth
Accounting business growth
Total organic growth
Acquisition revenue
Acquisition revenue
FY21 Revenue
8
$
Growth rate
%
45,495,584
555,648
655,373
1,211,021
2,199,841
2,199,841
48,906,446
-
1.2
1.5
2.7
4.8
4.8
7.5
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Acquired revenue of $2,199,841 contributed 4.8% of revenue growth, with in year acquisitions completed in FY21
contributing $925,948 and the annualised revenue from two acquisitions completed in FY20 contributing $1,273,893.
Organic revenue increased 2.7% compared to the prior period. The Group continues to target annual organic growth of
5%. While the Group has fallen short of this target this year due to limitations to price increases during the COVID-19
period, the Group expects organic revenue to increase post COVID-19 with more opportunities for price and volume
increases across the network.
Operating expenses
Employment and related expenses are the Group’s largest expense. Whilst the expense went up 6.3% to
$22,659,311, the increase is in line with the revenue growth of 7.5%.
Other expenses have decreased by $548,768 or 6.5% to $7,847,131, and is mainly due to a reduction in parent entity
investments, as outlined in the “Additional investments expenditure in the Parent Entity” section below. A target for
management has been to continually invest for growth but manage within or close to the Services Fee and IP License
Fee received by the parent entity.
Underlying EBITDA
Underlying EBITDA (which measures EBITDA before one off and non-recurring items) increased 17.2% to $18,653,935
(FY20: $15,922,576).
The directors consider underlying EBITDA margin before AASB 16 as a more meaningful measurement of performance.
The underlying EBITDA margin before AASB 16 has increased to 32.6% (FY20: 29.6%). The EBITDA margin improvement
has come about from significant reductions in the parent entity additional investments expenditure, as outlined in the
subsequent section below.
The Group continues to target minimum Underlying EBITDA margins (before AASB 16) of 32.5%. A reconciliation of
Underlying EBITDA before and after the AASB 16 leasing adjustment is set out in the table below.
Underlying EBITDA
AASB 16 leasing adjustment - Rent expense
2021
$
2020
$
2019
$
18,653,935
(2,703,699)
15,922,576
(2,456,469)
10,889,236
-
Underlying EBITDA before AASB 16 leasing adjustments
15,950,236
13,466,107
10,889,236
As a % of revenue
32.60%
29.60%
27.20%
Additional investments expenditure in the Parent Entity
The parent entity, has since the IPO, continued to invest significantly in growth in order to further develop the capabilities of
the central services team and for the business to be positioned for long term growth as well as to grow its competitive
advantage. These investments for growth have exceeded the central Services Fee and IP Fee income that the Company
receives from its operating businesses, as shown in the table below.
As communicated in prior financial results releases and announcements, the Company undertook a significant review of its
cost structures and additional investments expenditure made during the coronavirus outbreak in March 2020 and
committed to reducing the ongoing additional investments expenditure spend to be in line with the income it receives from
its operating businesses. This focus and review have brought the additional investments expenditure significantly
downwards to $371,127 for the year contributing significantly to the uplift in the Underlying attributed NPATA for the year.
The Company maintains its strategy to continue to improve operational efficiency impact overtime, unless attractive
opportunities arise where the Company sees a benefit in committing additional investments expenditure.
Group Revenue
Additional investments expenditure
48,906,446
371,127
45,495,584
1,630,905
39,975,031
742,439
39,468,666
371,913
% of Revenue
0.8%
3.6%
1.9%
0.9%
2021
$
2020
$
2019
$
2018
$
9
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Non-recurring and one-off items
Total non-recurring income for the Group for the year was $1,380,839 (FY20: $1,632,922) and included:
1)
$825,368 in one-off government grants in relation to COVID-19. The parent entity’s share of the government grants
were used to repay debt attributed to the parent;
$447,508 non-cash income relating to a change in fair value of contingent consideration. This relates to completed
acquisitions in FY20 where the vendor had not achieved the required targets for the payment of the contingent
consideration; and
$107,963 in net proceeds received from the settlement of a legal dispute. The legal dispute relates to the vendor of a
previously completed transaction who had breached the terms of the acquisition agreement and had agreed on
settlement of the dispute upon mediation. The amount shown is net of legal fees incurred in pursuing the dispute.
2)
3)
Total non-recurring expenses for the year of $1,147,340 (FY20: $706,071) which included:
1)
$321,359 in lease expenses relating to a lease inherited as part of the Central Coast acquisition. On completion of the
acquisition, as part of integrating the acquired business, the existing team was relocated to the Kelly Partners Central
Coast office, rendering the existing premise vacant and the lease onerous. This cost is not expected to recur post the
expiration of the existing lease in April 2022, and hence has been excluded from underlying results;
$202,237 in non-cash fair value movements (unwinding of interest) in contingent consideration payable on
acquisitions;
$197,878 in expenses related to completing the 7 acquisitions this year, including legal expenses, implementation
costs, finance costs of establishing debt acquisition funding, non-cash insurance expenses prepaid by the vendor and
amortised, and recruitment costs of new partner to lead acquired businesses;
$169,246 in start-up expenses to date in excess of revenue relating to non-operating businesses being Kelly Partners
Alternative Investments and Kelly Partners General Insurance. The Kelly Partners Alternative Investments business
has now been merged into Kelly Partners Private Wealth Wholesale. A new Senior Manager has been placed in the
Austbrokers Kelly Partners partnership (of which Kelly Partners General Insurance holds a 50% interest) and will
commence immediately post lockdown;
$91,306 in restructuring costs;
$81,948 in make good costs incurred on termination of the leases in the Wollongong and Northern Beaches premises;
and
$83,366 in other non-recurring expenses.
2)
3)
4)
5)
6)
7)
The Group excludes acquisition costs in determining the non-IFRS profit measures such as Underlying EBITDA, as it
provides transparency to look-through to the underlying performance of the Group.
Depreciation and amortisation and finance costs
Depreciation and Amortisation expense increased to $4,427,456 (FY20: $3,740,900) and includes depreciation expense of
$3,352,706 (FY20: $2,816,687) and amortisation expense of $1,074,750 (FY20: $924,213).The increase in amortisation
expense is due to recent acquisitions completed creating customer relationship intangible assets that are amortised in
accordance with accounting standards.
Finance costs of $1,550,839 is in line with the prior year (FY20: $1,535,539). Finance costs include interest on lease
liabilities recognised due to the implementation of AASB 16 and the reclassification of rent expense to finance and
depreciation costs.
Income tax expense
The Group’s Income Tax Expense has increased to $1,963,663 (FY20: $1,430,335), mainly due to an increase in taxable
income and an increase in the applicable tax rates. The Group’s forecast revenue for FY22 is expected to be greater than
$50m, resulting in the Group no longer being eligible as a “base rate entity”. This has led to the deferred tax rates to be
updated to 30% (from 26%), such that the proportionate increase in the Income Tax Expense is much higher than the
increase in Net Profit Before Tax. Note that as the majority of businesses are structured as partnerships, the income tax
expense attributable to the minority interests in these partnerships is not included in the consolidated accounts.
Cash flow
Cash from operations
Receipts from customers increased 2.8% to $53,359,426 (FY20: $51,901,820). Payments to suppliers and employees
increased at the same rate of 2.8% to $36,939,488 (FY20: $35,946,225). Operating Cashflow defined as Receipts from
Customers less Payments to suppliers and employees) excluding Other Income (which mainly consists of one-off items)
was up 2.9% to $16,419,938.
10
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Cash from investing activities
In FY21 the Group spent $2,322,365 on property, plant and equipment capital expenditure. This included $1,977,417 in
fitout upgrades completed in the Wollongong, Rozelle, Northern Beaches and Pittwater offices. The remaining $344,948
represents office and computer equipment, new motor vehicles and other capital expenditures.
Cash from financing activities
In FY21 the Group’s borrowings increased marginally by $127,816 to $16,504,851 (30 Jun 20: $16,377,035). This is
despite new borrowings of $3,367,109 taken out during the year for the completion of the FY21 acquisitions. This reflects
the Group’s strong and disciplined approach in repaying debt, having repaid $6,426,892 compared to $5,761,572 in the
prior period, representing an increase of 11.5%. Proceeds from borrowings of $6,538,544 included $3,367,109 in
acquisition funding, $1,494,052 in fitout funding, $1,080,000 relating to the buy in of seven new partners in to the
respective operating businesses, and the remaining $597,383 in insurance premium funding and motor vehicle financing.
Working capital
The Group continues to maintain a disciplined approach to managing its lockup (defined as trade receivables and accrued
income less contract liabilities), with lockup of $6,841,427 being in line with the prior year (30 Jun 20: $6,875,094). Lockup
days reduced, decreasing by 7.4% to 51.1 days (30 Jun 20: 55.2 days). This continues to be a strong result and has been
achieved alongside acquisition and organic growth.
Capital structure
The business continues to maintain an appropriately conservative capital structure. As at 30 June 2021 the Group’s
Gearing Ratio (defined as Net Debt / Underlying EBITDA) reduced to 0.84x (30 Jun 20: 0.96x). Net Debt is a non-IFRS
measure and means Total Borrowings less Cash and Cash Equivalents.
Dividends
Amounts recognised as dividends:
During the year ended 30 June 2021:
First interim dividend of $0.0133 per ordinary share, paid on 1 October 2020
Second interim dividend of $0.0133 per ordinary share, paid on 4 January 2021
Third interim dividend of $0.0033 per ordinary share, paid on 29 January 2021
Fourth interim dividend of $0.0033 per ordinary share, paid on 26 February 2021
Fifth interim dividend of $0.0033 per ordinary share, paid on 31 March 2021
Sixth interim dividend of $0.0033 per ordinary share, paid on 30 April 2021
Seventh interim dividend of $0.0033 per ordinary share, paid on 31 May 2021
Eighth interim dividend of $0.0033 per ordinary share, paid on 30 June 2021
During the year ended 30 June 2020:
Special dividend of $0.0055 per ordinary share, paid on 18 September 2019
First interim dividend of $0.0121 per ordinary share, paid on 30 September 2019
Second interim dividend of $0.0121 per ordinary share, paid on 2 January 2020
Third interim dividend of $0.0121 per ordinary share, paid on 2 April 2020
Final dividend of $0.0121 per ordinary share, paid on 2 July 2020
Consolidated
2021
$
2020
$
602,490
599,831
148,683
148,684
148,684
148,500
148,500
148,500
2,093,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
249,881
549,737
549,340
549,340
549,340
2,447,638
2,093,872
2,447,638
Final dividend for the year ended 30 June 2021 will be declared and paid prior to November 2021 and will be at a minimum
0.68 cents per share. Total dividends for the year ended 30 June 2021 including the final dividend is expected to be 5.32
cents per share, representing a 10% increase on prior year ordinary dividends.
Significant changes in the state of affairs
Acquisition
During the financial year, the Group completed 4 acquisitions with total annual revenues of $3.2m to $4.4m. Details of the
acquisitions can be found in the preceding “Acquisitions and integration” section.
11
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Share buy-back
On 9 September 2019, the Company announced a new share buy-back of up to 10% of the minimum number of
Company's shares outstanding in the last 12 months (being a buy-back of up to 4,543,280 shares at 9 September 2019)
less shares bought back in the buy-back closed on 2 September 2019 (being 64,372 shares), therefore a total of 4,478,908
shares. During the financial year ended 30 June 2020, the Company purchased and cancelled 32,809 shares. At 30 June
2020, 4,446,099 shares are authorised for on-market buy-back.
On 23 September 2020, the Company announced the continuation of its share buy-back program of up to 10% of the
minimum number of Company's shares outstanding in the last 12 months (being a buy-back of up to 4,530,000 shares at
23 September 2020). During the financial year ended 30 June 2021, the Company bought back 400,000 shares. At 30
June 2021, 4,230,000 shares are authorised for on-market buy-back.
COVID-19
The Group had not experienced a decline in revenue or collections due to COVID-19. Various measures were put in to
place in FY20 in response to the pandemic as outlined in the preceding “COVID-19” section.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Acquisitions
On 1 July 2021, Kelly Partners Hunter Region, a subsidiary of Kelly Partners Group Holdings Limited, acquired an
accounting firm located in Newcastle, NSW. The acquisition is expected to contribute approximately $0.8m to $1.0m in
annual revenues to the consolidated Group and approximately $0.1m NPATA to the Parent.
On 12 July 2021, Kelly Partners Sydney, a subsidiary of Kelly Partners Group Holdings Limited, acquired an accounting
firm located in Sydney CBD, NSW. The acquisition is expected to contribute approximately $2.2m to $2.4m in annual
revenues to the consolidated Group and approximately $0.3m NPATA to the Parent.
COVID-19
In July 2021, a renewed COVID-19 outbreak has led to lockdown and extensive restrictions imposed in the Greater Sydney
area. In response to this, the Group has recommenced working from home arrangements for its team members. At the
date of this report, the Group has not seen a significant impact on its revenue or collections but continues to act with
prudence and caution in the current pandemic environment. Further details on managements response and action to the
COVID-19 pandemic is included in the preceding “COVID-19” section.
Apart from the matters discussed above, no other matter or circumstance has arisen since 30 June 2021 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 (which includes
acquisitions, tuck-ins and greenfields) 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.
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.
12
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Brett Kelly (appointed on 16 April 2017)
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 of
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 26
businesses over 17 locations to date. Brett is also the best-selling author of four
books on life, business and wisdom.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Member of the Nomination and Remuneration Committee
22,701,961 ordinary shares
None
None
Name:
Title:
Qualifications:
Experience and expertise:
Stephen Rouvray (appointed on 2 May 2017)
Deputy Chairman and Non-Executive Independent 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 Group as a director for a number of its associates.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Chairman of the Nomination and Remuneration Committee
Chairman of the Audit and Risk Committee
150,000 ordinary shares
None
None
13
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Ryan Macnamee (appointed on 2 May 2017)
Non-Executive Independent 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 Australia since 2012 and served as Group CIO for 7.5 years. In addition to
his Australian CIO role, Ryan is also the Group Chief Information Security Officer
(CISO) at Laing O’Rourke. Ryan is responsible for all IT functions within Laing
O’Rourke with a focus on strategic objectives, global alignment and delivering
business value. In his Group Chief Information Security Officer role Ryan is
responsible for Cyber Security across the Laing O’Rourke Group. Prior to his current
role, he held several senior IT management positions at Woolworths, earlier in his
career, Ryan served in various senior IT positions at financial, insurance, construction
and retail operations globally. Ryan is currently on the board of thinkproject Australia
& New Zealand, and previously held board positions at the Open Data Institute and
Advanced Navigation.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Contractual rights to shares:
Member of the Nomination and Remuneration Committee
Member of the Audit and Risk Committee
145,046 ordinary shares
None
None
Name:
Title:
Qualifications:
Experience and expertise:
Paul Kuchta (appointed on 2 May 2017)
Executive Director
BBus, CA, FTIA, DipFP, RTA, JP
Paul is a Chartered Accountant with over 20 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.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Member of the Audit and Risk Committee
164,000 ordinary shares
None
None
Name:
Title:
Qualifications:
Experience and expertise:
Ada Poon (appointed on 6 September 2019)
Executive Director
BCom, MCom, JP, Registered Tax Agent, SMSF Specialist Advisor
Ada has more than 15 years' professional accountancy experience and has
specialised in accounting and taxation services to Private Business Owners based in
Sydney, business and personal taxation compliance self-managed super funds and
outsourced finance department services.
None
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
351,227 ordinary shares
Interests in shares:
None
Interests in options:
None
Interests in rights:
14
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Company secretary
Joyce Au - BCom, MCom, MTax, MA(Law), MAppFin. CA (appointed on 1 May 2020 as Company Secretary and General
Counsel)
Joyce is a solicitor admitted to the Supreme Court of NSW and a Chartered Accountant. Joyce has 15 years' experience
across accounting, tax, finance, commercial law, corporate transactions and business operations. Joyce has worked with
Kelly Partners for over 10 years since its inception in 2006 across a number of roles including accounting, audit, finance
and operations. Most recently she worked as the Corporate Advisor and Investment Analyst in Kelly Partners Corporate
Advisory and Kelly Partners Investment Office businesses, covering due diligence, transactions management, financial
analysis and fund administration. Prior to that, Joyce practised commercial law for several years advising on corporate
structures & transactions, taxation and Corporations Act matters. Joyce is an alumni of the University of Cambridge and
has graduated with a first class honours in law. She also holds Masters degrees in Accounting, Tax and Applied Finance.
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 2021, and the number of meetings attended by each director were:
Nomination and
Full Board
Attended
Held
Remuneration Committee Audit and Risk Committee
Attended
Attended
Held
Held
Brett Kelly
Stephen Rouvray
Ryan Macnamee
Paul Kuchta
Ada Poon
6
7
7
7
7
7
7
7
7
7
2
2
2
-
-
2
2
2
-
-
-
2
2
2
-
-
2
2
2
-
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
Paul Kuchta
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
15
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
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; and
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 has 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; and
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; and
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 $160,000 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; and
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 benefits (for example motor vehicle benefits)
where it does not create any additional costs to the Group and provides additional value to the executive.
16
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Employee Incentive Plan ('EIP')
In December 2019, the Board approved the establishment of the EIP. The EIP is designed to assist in the attraction,
motivation, retention and reward of employees by allowing them to participate in the overall success and growth of the
Group. The EIP is also designed to align the interests of employees with the interests of shareholders by providing an
opportunity for the participants to receive an equity interest in the Company. In FY2021 the EIP Trust purchased 57,360
shares on market for a total of $104,383 with an average share price of $1.82. As at 30 June 2021, total shares of 67,089
continue to be held in trust and have not been allocated to any employees.
Group performance and link to remuneration
For the year ended 30 June 2021 there was no link between Group performance and key management personnel
remuneration.
Use of remuneration consultants
During the financial year ended 30 June 2021, the Group engaged Godfrey Remuneration Group (GRG), remuneration
consultants, to review its existing remuneration policies and provide recommendations on short term incentive ('STI') and
long term incentive ('LTI') programs. A total amount of $49,500 was paid to engage GRG. The Board was satisfied that the
remuneration recommendation received was free from undue influence by members of the key management personnel to
whom the recommendation relates, because of strict protocols observed and complied with regarding any interaction
between GRG and management, and because all remuneration advice was provided to the Nomination and Remuneration
Committee. At the date of the report, no recommendations have been implemented.
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM')
The motion was put to a poll at the AGM and was carried.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in this section.
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 Independent Director
Paul Kuchta - Executive Director
Ryan Macnamee - Non-Executive Independent Director
Ada Poon - Executive Director
Short-term benefits
Post
employ-
ment
benefits
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Share-
based
payments
Equity-
settled
$
Leave
Annual
/long
service
$
45,662
38,844
338,306
10,959
10,959
444,730
-
-
-
-
-
-
-
-
4,338
1,156
-
-
44,389
-
-
44,389
21,694
1,041
1,041
29,270
54,425
-
-
54,425
-
-
-
-
-
-
Total
$
50,000
40,000
458,814
12,000
12,000
572,814
2021
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Paul Kuchta
Ada Poon
17
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Short-term benefits
Post
employ-
ment
benefits
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Share-
based
payments
Equity-
settled
$
Leave
Annual
/long
service
$
27,397
27,397
321,351
9,132
9,132
394,409
-
-
-
-
-
-
-
-
2,603
2,603
-
-
31,567
-
-
31,567
21,003
868
868
27,945
67,646
-
-
67,646
-
-
-
-
-
-
Total
$
30,000
30,000
441,567
10,000
10,000
521,567
2020
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly*
Paul Kuchta**
Ada Poon**
Details of Paul Kuchta and Ada Poon's remuneration are outlined below under 'Service agreements'.
*
**
Brett Kelly voluntarily received a 20% reduction in his base salary from 1 April 2020 to 30 June 2020 in response to
the uncertainty of COVID-19.
The Nomination and Remuneration Committee approved an annual director fee of $12,000 inclusive of
superannuation for executive directors Paul Kuchta and Ada Poon, commencing September 2019.
The fixed and the variable at risk proportions of remuneration are as follows:
Name
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Paul Kuchta
Ada Poon
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
100%
100%
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 p.a. inclusive of superannuation, to be reviewed annually by
the Nomination and Remuneration Committee. Terms include a 12 month termination
notice by either party, non-solicitation and non-compete clauses.
Stephen Rouvray
Deputy Chairman, Non-Executive Independent Director
2 May 2017
No fixed period
Director fees of $50,000 inclusive of superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
18
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Ryan Macnamee
Non-Executive Independent Director
2 May 2017
No fixed period
Director fees of $40,000 inclusive of superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
Paul Kuchta
Executive Director
2 May 2017
No fixed period
Director fees of $12,000 inclusive of superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
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.
Ada Poon
Executive Director
6 September 2019
No fixed period
Director fees of $12,000 inclusive of superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
Ada Poon is an Operating Business Owner in the Kelly Partners North Sydney
Partnership and receives a base distribution plus a distribution of profits from that
Operating Business in accordance with the terms of the Partnership Agreement.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2021.
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 2021.
Additional information
The earnings of the Group for the five years to 30 June 2021 are summarised below:
2021
$
2020
$
2019
$
2018
$
2017
$
Revenue and other gains
EBITDA
Profit after income tax
50,709,118
18,887,434
10,940,551
47,289,924
16,849,427
10,359,306
40,342,134
10,165,144
7,147,654
40,824,551
13,553,603
9,964,034
30,331,286
2,914,140
1,085,446
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2021
2020
2019
2018
2017
Share price at financial year end ($)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
3.40
10.24
10.24
0.88
8.84
8.84
0.89
5.35
5.35
1.23
9.63
9.63
1.42
(8.37)
(8.37)
19
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
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:
Ordinary shares
Brett Kelly
Stephen Rouvray
Ryan Macnamee
Paul Kuchta
Ada Poon
Balance at
the start of
the year
23,400,000
100,000
145,046
164,000
326,398
24,135,444
Additions*
Other
(698,039)
50,000
-
-
24,829
(623,210)
Balance at
the end of
the year
22,701,961
150,000
145,046
164,000
351,227
23,512,234
-
-
-
-
-
-
*
There were no shares received as part of remuneration.
Loans to/(from) key management personnel and their related parties
On 18 March 2020, the Board of Directors resolved and approved the advancing of a short term loan facility between the
Group and an associated entity of Brett Kelly and David Irwin, the Operating Partner in the Kelly Partners Inner West
Partnership ('KP(IW)P'), to assist with the purchase of 766 Darling St, Rozelle ('the Rozelle Property'). The facility is
unsecured, repayable on demand and interest is charged at commercial rates. The KW(IW)PT business operates out of
the Rozelle Property, under a lease which was in place prior to the sale and purchase of the Rozelle Property. As at 30
June 2020, there was $18,143 owing on this facility. This facility was repaid in the 2021 financial year.
On 23 February 2021, an associated entity of Brett Kelly and David Irwin advanced a short term loan facility to Kelly
Partners Inner West Partnership to the amount of $72,000. The facility is unsecured, repayable on demand and interest is
charged at commercial rates. This loan has subsequently been repaid in July 2021.
Loans to/(from) directors:
Balance at the beginning of the year
- loans advanced
- interest on loans
- repayment of loans advanced
Balance at the end of the year
$
18,143
(72,000)
(1,065)
(19,004)
(73,926)
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 2021 and up to the date of this report.
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.
20
Kelly Partners Group Holdings Limited
Directors' report
30 June 2021
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 31 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 31 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 (including Independence Standards) 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 William Buck Accountants & Advisors
There are no officers of the Company who are former partners of William Buck Accountants & Advisors.
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.
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 and Chief Executive Officer
9 August 2021
Sydney
21
Corporations Act 2001
22
Kelly Partners Group Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue from continuing operations
Professional services revenue
Other income
Total revenue and other income
Expenses
Employment and related expenses
Rent and utilities
Other expenses
Business acquisition and restructuring costs
Depreciation and amortisation expense
Finance costs
Total expenses
Profit before income tax expense from continuing operations
Income tax expense
Profit after income tax expense from continuing operations
(Loss)/profit after income tax (expense)/benefit from discontinued operations
Consolidated
Note
2021
$
2020
$
5
6
7
7
7
8
9
48,906,446
1,802,672
50,709,118
45,495,584
1,794,340
47,289,924
(22,659,311)
(145,900)
(7,847,131)
(1,169,342)
(4,427,456)
(1,550,839)
(37,799,979)
(21,308,283)
(188,704)
(8,395,899)
(547,611)
(3,740,900)
(1,535,539)
(35,716,936)
12,909,139
11,572,988
(1,963,663)
(1,430,335)
10,945,476
10,142,653
(4,925)
216,653
Profit after income tax (expense)/benefit for the year
10,940,551
10,359,306
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
(3,788)
(3,788)
1,440
1,440
Total comprehensive income for the year
10,936,763
10,360,746
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:
Continuing operations
Discontinued operations
Non-controlling interest
Continuing operations
Discontinued operations
Owners of Kelly Partners Group Holdings Limited
6,318,214
4,622,337
6,344,797
4,014,509
10,940,551
10,359,306
6,316,358
-
6,316,358
6,194,138
151,393
6,345,531
4,625,330
(4,925)
4,620,405
3,949,955
65,260
4,015,215
10,936,763
10,360,746
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
23
Kelly Partners Group Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Earnings per share for profit from continuing operations attributable to the
owners of Kelly Partners Group Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) from discontinued operations attributable
to the owners of Kelly Partners Group Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the owners of Kelly Partners
Group Holdings Limited
Basic earnings per share
Diluted earnings per share
10
10
10
10
10
10
Cents
Cents
10.25
10.25
(0.01)
(0.01)
10.24
10.24
8.36
8.36
0.14
0.14
8.84
8.84
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
24
Kelly Partners Group Holdings Limited
Consolidated statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Lease receivables
Accrued income
Other financial assets
Other assets
Total current assets
Non-current assets
Lease receivables
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Current tax liabilities
Provisions
Contingent consideration
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Contingent consideration
Other financial liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Consolidated
Note
2021
$
2020
$
11
12
13
14
18
13
14
15
16
17
18
19
20
21
8
22
23
24
20
21
8
22
23
24
25
4,039,976
6,204,659
51,325
1,953,426
738,200
723,583
13,711,169
3,779,132
5,782,772
92,956
1,656,656
903,610
635,113
12,850,239
128,973
2,927,454
6,332,309
9,485,670
34,474,428
554,551
53,903,385
180,298
2,865,078
5,188,052
5,895,450
30,299,572
453,754
44,882,204
67,614,554
57,732,443
3,028,694
1,316,658
8,290,304
2,383,296
1,051,065
1,993,586
697,682
60,473
18,821,758
2,312,757
564,334
6,291,235
1,742,850
886,105
2,202,475
637,256
10,992
14,648,004
11,477,861
8,663,693
794,503
227,632
1,471,269
969,609
32,083
23,636,650
12,720,608
5,351,024
307,394
237,313
808,544
689,914
46,244
20,161,041
42,458,408
34,809,045
25,156,146
22,923,398
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
25
Kelly Partners Group Holdings Limited
Consolidated statement of financial position
As at 30 June 2021
Equity
Issued capital
Reserve
Retained profits
Equity attributable to the owners of Kelly Partners Group Holdings Limited
Non-controlling interest
Total equity
Consolidated
Note
2021
$
2020
$
26
27
13,469,960
(418)
4,479,057
17,948,599
7,207,547
14,081,465
1,514
1,812,094
15,895,073
7,028,325
25,156,146
22,923,398
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
26
Kelly Partners Group Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2021
Consolidated
Issued
capital
$
Reserve
$
Retained
profits
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2019
14,169,601
808
245,223
8,770,487
23,186,119
Profit after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share buy-back (note 26)
Amounts recognised as dividends (note 28)
Distributions to non-controlling interests
-
-
-
-
4,014,509
6,344,797
10,359,306
706
706
-
734
1,440
4,014,509
6,345,531
10,360,746
(88,136)
-
-
-
-
-
-
(2,447,638)
-
-
-
(8,087,693)
(88,136)
(2,447,638)
(8,087,693)
Balance at 30 June 2020
14,081,465
1,514
1,812,094
7,028,325
22,923,398
Consolidated
Issued
capital
$
Reserve
$
Retained
profits
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2020
14,081,465
1,514
1,812,094
7,028,325
22,923,398
Profit after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share buy-back (note 26)
Equity attributable to acquisitions
Sale of equity interests
Amounts recognised as dividends (note 28)
Distributions to non-controlling interests
-
-
-
-
4,622,337
6,318,214
10,940,551
(1,932)
-
(1,856)
(3,788)
(1,932)
4,622,337
6,316,358
10,936,763
(611,505)
-
-
-
-
-
-
-
-
-
-
-
138,498
(2,093,872)
-
-
279,535
-
-
(6,416,671)
(611,505)
279,535
138,498
(2,093,872)
(6,416,671)
Balance at 30 June 2021
13,469,960
(418)
4,479,057
7,207,547
25,156,146
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
27
Kelly Partners Group Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Government grants received
Other income
Finance costs paid
Income taxes paid
Consolidated
Note
2021
$
2020
$
53,359,426
(36,939,488)
1,125,254
106,515
(843,579)
(1,725,327)
51,901,820
(35,946,225)
776,024
-
(822,514)
(1,264,883)
Net cash from operating activities
38
15,082,801
14,644,222
Cash flows from investing activities
Payment for purchase of business
Payment for contingent consideration
Payments for investments
Payments for property, plant and equipment
Payments to employee share scheme trust
Payments for intangibles
Loans to partners - loans advanced
Loans to partners - proceeds from repayments
Proceeds from fitout contribution
Proceeds from disposal of property, plant and equipment
Proceeds from release of deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payments for share buy-back
Dividends paid
Distributions paid to non-controlling interests
Repayment of lease liabilities
Proceeds from sub lease
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
23
38
38
26
38
(2,310,632)
(507,275)
(41,605)
(2,322,365)
(110,989)
(1,391)
(681,504)
1,252,212
233,333
-
37,636
(2,531,000)
-
-
(1,944,240)
-
(236,438)
(305,009)
2,153,985
-
20,000
190,888
(4,452,580)
(2,651,814)
6,538,544
(6,426,892)
(611,505)
(1,945,372)
(6,416,671)
(2,228,943)
92,956
6,037,413
(5,761,572)
(88,136)
(2,398,743)
(8,087,693)
(2,158,946)
180,913
(10,997,883)
(12,276,764)
(367,662)
1,144,324
(284,356)
1,428,680
Cash and cash equivalents at the end of the financial year
11
776,662
1,144,324
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
28
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
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 9 August 2021. 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, amendments and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards, amendments or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards, amendments and Interpretations adopted during the year are most relevant to the
Group:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new
definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but
it has not had a material impact on the Group's financial statements.
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 and
financial liabilities 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 35.
29
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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 2021 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.
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.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
30
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts
and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are
determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.
Provision of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed
price or an hourly rate.
Commissions and other income
Commissions and other income is recognised when it is received or when the right to receive the payment is established.
Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.
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.
An income tax benefit will arise for the financial year where an income tax loss is incurred and, where permitted to do so, is
carried-back against a qualifying prior period's tax payable to generate a refundable tax offset.
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.
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.
31
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
Discontinued operations
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
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 allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
32
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Accrued income
An accrued income asset arises where the Group has performed by transferring goods or services to a customer prior to
the receipt of consideration from the customer or prior to payment becoming due and represents the Group's right to
consideration for the transferred good or service.
When a customer pays in advance, the amount received by the Group is recognised as a contract liability until the service
has been provided to the customer.
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. Such assets are subsequently measured
at either amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
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:
Land and buildings
Leasehold improvements
Plant and equipment
Motor vehicles
40 years
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 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.
33
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
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.
34
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer services to a customer and are recognised when a customer
pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever
is earlier) before the Group has transferred the services to the customer.
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 and borrowings are classified as non-current.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss as other income or finance costs.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the Group's incremental borrowing
rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are
incurred. Variable lease payments include rent concessions in the form of rent forgiveness or a waiver as a direct
consequence of COVID-19 and which relate to payments originally due on or before 30 June 2022.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Group as a lessor
When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The
sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Leases in which the Group transfers substantially all the risks and rewards incidental to the ownership of an asset are
classified as a finance lease, where the asset is recognised on the statement of financial position and presented as a lease
receivable at an amount equal to the net investment in the lease. The interest rate implicit in the lease is used to measure
the net investment in the lease. Initial direct costs are included in the initial measurement of the net investment in the lease.
Finance costs
All finance costs are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
35
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
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.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
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.
36
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Share buy-back
Where any group company purchases the Company’s equity instruments, for example as the result of a share buy-back or
a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income
taxes) is deducted from equity attributable to the owners of Kelly Partners Group Holdings Limited as treasury shares until
the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received,
net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to the owners of Kelly Partners Group Holdings Limited.
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the Company, on or before the end of the financial year but not distributed at the reporting date.
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.
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.
37
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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 2021. The Group has
not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
COVID-19
Judgement has been exercised in considering the impacts that COVID-19 has had, or may have, on the Group based on
known information. This consideration extends to the nature of the products and services offered, customers, supply chain,
staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not
currently appear to be either any significant impact upon the financial statements or any significant uncertainties with
respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a
result of COVID-19.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on shared credit risk characteristics and on days overdue, and makes
assumptions to allocate an overall expected credit loss rate for each group. These assumptions include past default
experience of the debtor profile and an assessment of the historical loss rates.
Accrued income
An accrued income asset arises where the Group has performed by transferring goods or services to a customer prior to
the receipt of consideration from the customer and represents the Group’s right to consideration for the transferred good or
service. While assessing the accrued income balance, a degree of estimation needs to be applied on its recoverability and
the assessment is primarily based on the Operating Business Owner’s professional judgement on the proportionate
completion of the performance obligations in comparison to the transaction price stated in the contract .
38
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such
a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an
asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination
accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the
assets and liabilities, depreciation and amortisation reported.
Note 4. Operating segments
The Group is organised into two reportable segments: (1) Accounting and (2) Other services.
The principal products and services of each of these operating segments are as follows:
Accounting
Accounting and taxation services, corporate secretarial, outsourced CFO, audits, business
structuring, bookkeeping, and all other accounting related services.
Financial broking services, wealth management, investment office and all other non-
accounting services.
Other services
The operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are
identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of
resources.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
39
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 4. Operating segments (continued)
Operating reportable segment information
Year ended 30 June 2021:
Revenue
EBITDA
Profit before income tax expense
Segment assets, liabilities and net assets at 30 June 2021:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Year ended 30 June 2020:
Revenue
EBITDA
Profit before income tax expense
Segment assets, liabilities and net assets at 30 June 2020:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Note 5. Professional services revenue
Accounting
$
Other
services
$
Total
$
45,874,517
17,928,432
11,986,462
3,031,929
959,002
922,677
48,906,446
18,887,434
12,909,139
11,177,990
53,284,032
(17,243,216)
(21,995,145)
25,223,661
2,533,179
619,353
(1,578,542)
(1,641,505)
(67,515)
13,711,169
53,903,385
(18,821,758)
(23,636,650)
25,156,146
Accounting
$
Other
services
$
Total
$
43,396,473
15,801,060
10,549,304
2,099,111
1,048,367
1,023,684
45,495,584
16,849,427
11,572,988
12,076,862
44,837,660
(14,304,010)
(20,137,154)
22,473,358
773,377
44,544
(343,994)
(23,887)
450,040
12,850,239
44,882,204
(14,648,004)
(20,161,041)
22,923,398
Professional services revenue
Timing of revenue recognition
The revenue from provision of services from contracts with customers is recognised over time.
Refer to note 4 for revenue by operating segments.
Consolidated
2021
$
2020
$
48,906,446
45,495,584
40
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 6. Other income
Government grants in relation to COVID-19
Remeasurement of lease liabilities
Change in fair value of contingent consideration
Proceeds from settlement of legal dispute
Commissions
Other income
Other income
Consolidated
2021
$
2020
$
825,368
123,395
447,508
300,000
59,708
46,693
1,075,910
557,012
-
-
109,238
52,180
1,802,672
1,794,340
Government grants
Of the $825,368 (2020: $1,075,910) recognised in government grants relating to the Australian Governments’ supporting
measures in response to COVID-19, $825,368 (2020: $776,024) has been received in cash and $nil (2020: $299,886) has
been accrued relating to FY21 (2020: FY20) amounts expected to be received in FY22 (2020: FY21).
Note 7. Expenses
Profit before income tax from continuing operations includes the following specific expenses:
Depreciation and amortisation
Depreciation right-of-use of assets
Depreciation property, plant and equipment
Amortisation
Finance costs
Interest and finance charges paid/payable on lease liabilities
Interest on bank overdrafts and loans
Interest on unwinding retention
Net loss on disposal
Net loss on disposal of property, plant and equipment
Leases (included in rent and utilities expense)
Short-term lease payments
Employment and related expenses
Salaries, wages and contractors
Superannuation*
Other on costs
Employee leave
Total employment and related expenses
Consolidated
2021
$
2020
$
2,174,598
1,178,108
1,074,750
2,102,657
714,030
924,213
4,427,456
3,740,900
505,023
843,579
202,237
554,565
822,514
158,460
1,550,839
1,535,539
49,450
20,488
-
55,026
20,494,875
1,351,327
677,683
135,426
19,325,876
1,380,982
870,806
(269,381)
22,659,311
21,308,283
*
Superannuation as a percentage of salaries, wages and contractors may vary from year to year due to changes in
salary sacrifice arrangements as well as changes to contractor engagements.
41
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 8. Income tax
Income tax expense
Current tax
Origination and reversal of temporary differences
Adjustment recognised for prior periods
Change in tax rate to 30%
Aggregate income tax expense
Income tax expense is attributable to:
Profit from continuing operations
(Loss)/profit from discontinued operations
Aggregate income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense from continuing operations
(Loss)/profit before income tax (expense)/benefit from discontinued operations
Tax at the statutory tax rate of 26% (2020: 27.5%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Other non-taxable items
Adjustment recognised for prior periods
Distributions to non-controlling interests
Change in tax rate to 30%
Income tax expense
Consolidated
2021
$
2020
$
1,891,749
(99,906)
127,794
43,273
1,596,483
(57,578)
(65,238)
-
1,962,910
1,473,667
1,963,663
(753)
1,430,335
43,332
1,962,910
1,473,667
12,909,139
(5,678)
11,572,988
259,985
12,903,461
11,832,973
3,354,900
3,254,068
8,414
(226,345)
3,363,314
127,794
(1,571,471)
43,273
3,027,723
(65,238)
(1,488,818)
-
1,962,910
1,473,667
As the majority of operating businesses are structured as partnerships, the income tax expense attributable to the non-
controlling 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 non-controlling 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.
42
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 8. Income tax (continued)
Net deferred tax liability
Amounts recognised in profit or loss:
Accrued expenses
Income assessable on receipt
Differences between accounting and tax depreciation
Customer relationship intangibles
Expenses deductible over five years
Leases
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss
Additions through business combinations (note 36)
Other movements
Closing balance
Provision for income tax
Provision for income tax
Note 9. Discontinued operations
Consolidated
2021
$
2020
$
(532,492)
334,405
382,243
954,858
(78,244)
(266,267)
(425,655)
297,771
242,097
594,596
(212,015)
(189,400)
794,503
307,394
307,394
(99,906)
413,733
173,282
412,468
(57,578)
223,643
(271,139)
794,503
307,394
Consolidated
2021
$
2020
$
1,051,065
886,105
Description
In August 2020, Kelly Partners Corporate Advisory ceased operating with the exit of its operating business partner. The
business’ cashflows and operations can clearly be distinguished operationally and financially from the rest of the Group
and hence is disclosed as a discontinued operation.
Financial performance information
Professional services revenue
Employment and related expenses
Other expenses
Total expenses
(Loss)/profit before income tax (expense)/benefit
Income tax (expense)/benefit
Consolidated
2021
$
2020
$
-
858,882
-
(5,678)
(5,678)
(5,678)
753
(453,931)
(144,966)
(598,897)
259,985
(43,332)
(Loss)/profit after income tax (expense)/benefit from discontinued operations
(4,925)
216,653
43
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 9. Discontinued operations (continued)
Cash flow information
Net cash (used in)/from operating activities
Net cash from investing activities
Net cash used in financing activities
Consolidated
2021
$
2020
$
(11,028)
21,500
(3,695)
341,747
30,046
(434,081)
Net increase/(decrease) in cash and cash equivalents from discontinued operations
6,777
(62,288)
Note 10. Earnings per share
Earnings per share for profit from continuing operations
Profit after income tax
Non-controlling interest
Consolidated
2021
$
2020
$
10,945,476
(6,318,214)
10,142,653
(6,344,797)
Profit after income tax attributable to the owners of Kelly Partners Group Holdings Limited
4,627,262
3,797,856
Weighted average number of ordinary shares used in calculating basic earnings per share
45,142,289
45,418,414
Weighted average number of ordinary shares used in calculating diluted earnings per share
45,142,289
45,418,414
Number
Number
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) from discontinued operations
(Loss)/profit after income tax
Non-controlling interest
(Loss)/profit after income tax attributable to the owners of Kelly Partners Group Holdings
Limited
Cents
Cents
10.25
10.25
8.36
8.36
Consolidated
2021
$
2020
$
(4,925)
-
216,653
(151,393)
(4,925)
65,260
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
45,142,289
45,418,414
Weighted average number of ordinary shares used in calculating diluted earnings per share
45,142,289
45,418,414
Basic earnings per share
Diluted earnings per share
44
Cents
Cents
(0.01)
(0.01)
0.14
0.14
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 10. Earnings per share (continued)
Earnings per share for profit
Profit after income tax
Non-controlling interest
Consolidated
2021
$
2020
$
10,940,551
(6,318,214)
10,359,306
(6,344,797)
Profit after income tax attributable to the owners of Kelly Partners Group Holdings Limited
4,622,337
4,014,509
Weighted average number of ordinary shares used in calculating basic earnings per share
45,142,289
45,418,414
Weighted average number of ordinary shares used in calculating diluted earnings per share
45,142,289
45,418,414
Number
Number
Basic earnings per share
Diluted earnings per share
Note 11. 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:
Balances as above
Bank overdrafts (note 20)
Balance as per statement of cash flows
Note 12. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Cents
Cents
10.24
10.24
8.84
8.84
Consolidated
2021
$
2020
$
4,039,976
3,779,132
4,039,976
(3,263,314)
3,779,132
(2,634,808)
776,662
1,144,324
Consolidated
2021
$
2020
$
6,420,216
(215,557)
6,204,659
5,738,538
(253,954)
5,484,584
-
298,188
6,204,659
5,782,772
Allowance for expected credit losses
The Group has written off a loss of $140,323 (2020: $60,059) in respect of credit losses during the year ended 30 June
2021.
45
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 12. Trade and other receivables (continued)
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Expected credit loss rate
2021
%
2020
%
Carrying amount
2020
$
2021
$
Allowance for expected
credit losses
2021
$
2020
$
0.88%
5.77%
37.41%
0.88%
6.17%
43.09%
5,522,598
533,218
364,400
4,939,036
362,767
436,735
48,432
30,791
136,334
43,398
22,376
188,180
6,420,216
5,738,538
215,557
253,954
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available. As at 30 June 2021 the historic roll rates, including those roll rates through the COVID-
19 pandemic period, do not indicate a slow down in collections. Furthermore management are not aware of forward looking
information which indicates or identifies a slow down in collection rates in its 30 June 2021 trade receivables balance and
as such, the calculation of expected credit loss is based on the historic roll rates without further adjustments.
Movements in the allowance for expected credit losses are as follows:
Consolidated
2021
$
2020
$
253,954
101,926
-
(140,323)
339,956
-
(25,943)
(60,059)
215,557
253,954
Consolidated
2021
$
2020
$
51,325
92,956
128,973
180,298
180,298
273,254
Opening balance
Additional provisions recognised
Reductions in provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Note 13. Lease receivables
Current assets
Lease receivables
Non-current assets
Lease receivables
46
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 14. Other financial assets
Current assets
Loans to partners
Non-current assets
Loans to partners
Consolidated
2021
$
2020
$
738,200
903,610
2,927,454
2,865,078
3,665,654
3,768,688
Loans to partners primarily represents amounts of money which have first been borrowed on the balance sheet of various
controlled entities, and then secondly on lent to partners to assist them with their purchase of equity into that entity. This
results in the controlled entity having both a financial liability to the financier, and a corresponding financial asset to the
partner. These loans are typically repaid over a four to eight year period. As the loans are repaid by the partners and the
financial asset amortises, there is a corresponding amortisation in the financial liability. Repayment of these loans is
typically from partner equity distributions.
Note 15. Property, plant and equipment
Non-current assets
Land and buildings - at cost
Less: Accumulated depreciation
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Consolidated
2021
$
2020
$
2,085,413
(46,860)
2,038,553
2,085,413
-
2,085,413
4,457,611
(1,780,741)
2,676,870
3,172,594
(1,274,334)
1,898,260
2,621,146
(1,403,303)
1,217,843
2,133,789
(1,326,961)
806,828
648,011
(248,968)
399,043
624,503
(226,952)
397,551
6,332,309
5,188,052
47
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 15. 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 2019
Additions
Disposals - written down value
Other movements
Depreciation expense
Balance at 30 June 2020
Additions
Disposals - written down value
Other movements
Depreciation expense
Land and
buildings
$
Leasehold
improve-
ments
$
Plant and
equipment
$
Motor
vehicles
$
625,825
1,459,588
-
-
-
2,085,413
-
-
-
(46,860)
2,167,170
98,974
(11,554)
(1,000)
(355,330)
1,898,260
1,375,526
(5,360)
-
(591,556)
804,913
333,523
(43,852)
702
(288,458)
806,828
892,412
(19,774)
(459)
(461,164)
359,934
141,546
(37,345)
3,658
(70,242)
397,551
100,001
(19,981)
-
(78,528)
Total
$
3,957,842
2,033,631
(92,751)
3,360
(714,030)
5,188,052
2,367,939
(45,115)
(459)
(1,178,108)
Balance at 30 June 2021
2,038,553
2,676,870
1,217,843
399,043
6,332,309
Note 16. Right-of-use assets
Non-current assets
Land and buildings - right-of-use assets
Less: Accumulated depreciation
Plant and equipment - right-of-use
Less: Accumulated depreciation
Consolidated
2021
$
2020
$
14,379,975
(4,994,496)
9,385,479
13,432,769
(7,597,420)
5,835,349
252,355
(152,164)
100,191
174,247
(114,146)
60,101
9,485,670
5,895,450
The Group leases land and buildings for its offices under agreements of between 2 to 10 years with, in some cases,
options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The
Group also leases office equipment under agreements of between 2 to 5 years.
For other AASB 16 and lease related disclosures refer to the following:
Refer to note 7 for details of depreciation on right-of-use assets, interest on lease liabilities and other lease payments;
Refer to note 21 for lease liabilities and maturities of lease liabilities;
Refer to consolidated statement of cash flow for repayment of lease liabilities.
48
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 16. Right-of-use 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
Balance at 1 July 2019
Recognised on adoption of AASB 16
Additions through business combinations (note 36)
Disposals
Adjustments as a result of a different treatment of extension and termination
options
Depreciation
Balance at 30 June 2020
Additions through business combinations (note 36)
Additions
Impairment of assets
Adjustments as a result of a different treatment of extension and termination
options
Depreciation expense
Balance at 30 June 2021
Note 17. Intangible assets
Land and
buildings
$
Plant and
equipment
$
Total
$
-
9,325,329
587,611
(114,884)
-
88,332
8,623
-
-
9,413,661
596,234
(114,884)
(1,896,904)
(2,065,803)
-
(36,854)
(1,896,904)
(2,102,657)
5,835,349
367,935
6,066,537
(189,802)
60,101
69,049
-
(69,049)
5,895,450
436,984
6,066,537
(258,851)
(557,958)
(2,136,582)
78,106
(38,016)
(479,852)
(2,174,598)
9,385,479
100,191
9,485,670
Non-current assets
Goodwill - at cost
Brand names and intellectual property - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Computer software - at cost
Less: Accumulated amortisation
Consolidated
2021
$
2020
$
25,264,891
22,438,348
3,300,000
3,300,000
11,780,770
(5,949,854)
5,830,916
9,359,097
(4,916,586)
4,442,511
223,376
(144,755)
78,621
221,986
(103,273)
118,713
34,474,428
30,299,572
49
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 17. 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
Balance at 1 July 2019
Additions
Additions through business combinations (note
36)
Disposals
Amortisation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note
36)
Amortisation expense
Brand names
and
intellectual
property
$
Goodwill
$
Customer
relationships
$
Computer
Software
$
Total
$
20,211,955
-
3,300,000
-
3,552,141
344,198
163,801
21,144
27,227,897
365,342
2,226,393
-
-
-
-
-
1,409,086
-
(862,914)
-
(4,933)
(61,299)
3,635,479
(4,933)
(924,213)
22,438,348
-
3,300,000
-
4,442,511
127,000
118,713
1,390
30,299,572
128,390
2,826,543
-
-
-
2,294,673
(1,033,268)
-
(41,482)
5,121,216
(1,074,750)
Balance at 30 June 2021
25,264,891
3,300,000
5,830,916
78,621
34,474,428
Brand names and intellectual property have indefinite useful lives and are not amortised.
Impairment testing
In disclosing the carrying amount of goodwill allocated to each cash-generating units ('CGU'), a materially threshold of 10%
of the total value of goodwill was used. Any individual CGU with a carrying amount of goodwill under the threshold is
grouped in the 'Other partnerships' category. The aggregate carrying amount of goodwill allocated to each CGU is:
2021 - Consolidated
Kelly Partners (Sydney) Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Wollongong Partnership
Other partnerships
2020 - Consolidated
Kelly Partners (Sydney) Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Wollongong Partnership
Other partnerships
50
Brand names
and
intellectual
property
$
Total
$
462,139
685,295
443,009
1,709,557
4,000,286
5,931,931
3,834,701
14,797,973
Goodwill
$
3,538,147
5,246,636
3,391,692
13,088,416
25,264,891
3,300,000
28,564,891
Brand names
and
intellectual
property
$
Total
$
520,354
771,621
498,815
1,509,210
4,058,501
6,018,257
3,890,507
11,771,083
Goodwill
$
3,538,147
5,246,636
3,391,692
10,261,873
22,438,348
3,300,000
25,738,348
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 17. Intangible assets (continued)
The recoverable amount of each CGU 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 reasonable possible change in
any of the key assumptions used would cause the carrying value of the unit to materially exceed its recoverable amount.
The following assumptions were used in the calculations:
Terminal growth rate
Post-tax discount rate
Consolidated
2021
%
2020
%
2.5%
8.6%
2.5%
11.3%
The post-tax discount rate is calculated using the Weighted Average Cost of Capital (WACC) of the Group, taking into
account the Group's sources of capital including listed equity, unlisted equity and bank debt.
Note 18. Other assets
Current assets
Prepayments
Non-current assets
Deposits
Other
Consolidated
2021
$
2020
$
723,583
635,113
501,309
53,242
442,117
11,637
554,551
453,754
1,278,134
1,088,867
Deposits primarily comprise of amounts used as security for bank guarantees. Refer to note 32 for further information on
guarantees.
Note 19. Trade and other payables
Current liabilities
Trade payables
GST payable
Sundry payables and accrued expenses
Refer to note 29 for further information on financial instruments.
51
Consolidated
2021
$
2020
$
853,898
932,975
1,241,821
479,951
914,711
918,095
3,028,694
2,312,757
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 20. Borrowings
Current liabilities
Bank overdrafts
Bank loans
Non-current liabilities
Bank loans
Consolidated
2021
$
2020
$
3,263,314
5,026,990
2,634,808
3,656,427
8,290,304
6,291,235
11,477,861
12,720,608
19,768,165
19,011,843
Refer to note 29 for further information on financial instruments.
Controlled entities' facilities
The Group has banking facilities in place with Westpac for all of its operating businesses. The facilities consist of overdraft
facilities, term loans, bank guarantees and other ancillary facilities.
In June 2020, the Group’s financier approved working capital facility increases in aggregate of $4,179,000 across the
operating businesses. The Group requested the facility increases out of an abundance of caution to provide additional lines
of liquidity in response to the COVID-19 related slow down to the economy. The additional facilities are in place for 12
months. As part of the approved facilities there were no changes to the Group’s financial covenants or existing amortisation
arrangements which continue to be met. The Group considers the additional working capital lines to be both precautionary
and prudent. The Group has not taken up any of the banks, COVID-19 Customer Support packages or deferral of interest
payments. As at 30 June 2021, the additional working capital lines have expired and have not been extended as they were
not utilised.
In the year ended 30 June 2019, the Group commenced restructuring its debt facilities with Westpac. As at 30 June 2021,
all subsidiaries had entered into the new facility structure. The facilities provide the Group with consistent terms and
conditions, consistent reporting and undertaking requirements, consistent risk margins and a consistent security structure
across its subsidiaries. Each subsidiary's debt facilities is granted security by that entity, the corporate partners of that
entity, limited personal guarantees of the operating business owners, and a guarantee provided by the parent over all
existing and future assets and undertakings.
Subsidiaries also have bilateral arrangements in place with Westpac and other financiers for other facilities including credit
cards, equipment finance, and bank guarantees. These facilities and their securities are permitted under the Westpac
arrangements.
Parent entity facilities
As at 30 June 2021, the parent has a $2,000,000 revolving line of term credit, as well as a $250,878 term amortising loan.
The debt facilities are granted security over the parent entity, as well as the guarantor group which comprises Kelly
Partners Group Holdings Limited and the majority of its wholly owned subsidiaries. The guarantor group does not include
the local owner-driven operating partnerships.
The parent entity also has bilateral arrangements in place with Westpac and other financiers for ancillary facilities including
credit cards, equipment finance, and bank guarantees. These facilities and their securities are permitted under the
Westpac arrangements.
Covenants
The Group’s financier has financial covenants in place, which may act to limit the total indebtedness of the Group under
certain circumstances, such as if there were a significant drop in earnings. As at balance date, the Group is in compliance
with its financial covenants.
52
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 20. Borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans
Used at the reporting date
Bank overdraft
Bank loans
Unused at the reporting date
Bank overdraft
Bank loans
Note 21. Lease liabilities
Current liabilities
Lease liabilities
Non-current liabilities
Lease liabilities
Consolidated
2021
$
2020
$
7,544,000
18,395,150
25,939,150
10,559,000
17,198,702
27,757,702
3,263,314
16,504,851
19,768,165
2,634,808
16,377,035
19,011,843
4,280,686
1,890,299
6,170,985
7,924,192
821,667
8,745,859
Consolidated
2021
$
2020
$
2,383,296
1,742,850
8,663,693
5,351,024
11,046,989
7,093,874
Refer to note 29 for further information on financial instruments.
Contractual maturities of lease liabilities at 30 June 2021 and 30 June 2020 is set below:
Carrying
amount
$
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
11,046,989
2,383,295
2,077,487
3,438,285
3,147,922
11,046,989
7,093,874
1,742,850
1,301,710
2,924,862
1,124,452
7,093,874
Consolidated - 2021
Lease liabilities
Consolidated - 2020
Lease liabilities
53
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 22. Provisions
Current liabilities
Employee entitlements
Dividends
Lease make good
Non-current liabilities
Employee entitlements
Consolidated
2021
$
2020
$
1,845,086
148,500
-
1,453,135
549,340
200,000
1,993,586
2,202,475
227,632
237,313
2,221,218
2,439,788
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the
end of the respective lease terms.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 2021
Carrying amount at the start of the year
Paid during the year
Recognised during the year
Carrying amount at the end of the year
Note 23. Contingent consideration
Current liabilities
Contingent consideration
Non-current liabilities
Contingent consideration
Lease make
good
$
Dividends
$
200,000
(225,000)
25,000
549,340
(549,340)
148,500
-
148,500
Consolidated
2021
$
2020
$
697,682
637,256
1,471,269
808,544
2,168,951
1,445,800
Contingent consideration relates to the fair value of the contingent component of the purchase price of the acquisitions
completed in the current and prior period(s).
Contingent consideration is classified as Level 3 in the fair value hierarchy and has been estimated using a present value
approach. The contingent consideration fair value is estimated by discounting the future cash outflows by the post-tax
discount rate disclosed in note 17. The post discount rate is calculated using the weighted average cost of capital ('WACC')
of the Group.
A reconciliation of the movement in contingent consideration for the financial year is set out below:
54
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 23. Contingent consideration (continued)
Opening balance
Additions
Additions through business combination (note 38)
Change in fair value of contingent consideration
Settled in cash
Fair value movement - unwinding of interest
Note 24. Other financial liabilities
Current liabilities
Loans from partners
Non-current liabilities
Loans from partners
Refer to note 14 for details on loans to and from partners.
Note 25. Other liabilities
Non-current liabilities
Deposits held
Note 26. Issued capital
Consolidated
2021
$
2020
$
1,445,800
127,000
1,348,697
(447,508)
(507,275)
202,237
544,719
-
742,621
-
-
158,460
2,168,951
1,445,800
Consolidated
2021
$
2020
$
60,473
10,992
969,609
689,914
1,030,082
700,906
Consolidated
2021
$
2020
$
32,083
46,244
Ordinary shares - fully paid
45,000,000
45,400,000
13,469,960
14,081,465
Consolidated
2021
Shares
2020
Shares
2021
$
2020
$
55
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 26. Issued capital (continued)
Movements in ordinary share capital
Details
Balance
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Balance
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Balance
Date
Shares
Issue price
$
1 July 2019
01 July 2019
20 August 2019
27 August 2019
28 August 2019
29 August 2019
30 August 2019
21 October 2019
22 October 2019
30 June 2020
25 August 2020
26 August 2020
27 August 2020
15 October 2020
16 October 2020
20 October 2020
26 October 2020
28 October 2020
29 October 2020
30 October 2020
7 December 2020
29 December 2020
30 December 2020
31 December 2020
30 March 2021
7 April 2021
45,495,000
(4,353)
(40,647)
(1,000)
(1,000)
(1,000)
(14,191)
(25,745)
(7,064)
45,400,000
(9,882)
(63,638)
(26,480)
(3,670)
(6,330)
(136,000)
(2,497)
(1,503)
(47,615)
(1)
(2,384)
(11,557)
(32,339)
(510)
(5,594)
(50,000)
30 June 2021
45,000,000
$0.83
$0.90
$0.93
$0.88
$0.88
$0.93
$0.97
$1.01
$1.17
$1.23
$1.25
$1.30
$1.36
$1.36
$1.46
$1.54
$1.55
$1.61
$1.68
$1.98
$2.05
$2.08
$2.10
$2.10
14,169,601
(3,613)
(36,582)
(930)
(879)
(880)
(13,158)
(24,960)
(7,134)
14,081,465
(11,515)
(78,230)
(32,968)
(4,771)
(8,592)
(184,996)
(3,646)
(2,307)
(73,908)
(2)
(4,005)
(22,883)
(66,252)
(1,061)
(11,624)
(104,745)
13,469,960
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which
those shares are paid up. 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
On 9 September 2019, the Company announced a new share buy-back of up to 10% of the minimum number of
Company's shares outstanding in the last 12 months (being a buy-back of up to 4,543,280 shares at 9 September 2019)
less shares bought back in the buy-back closed on 2 September 2019 (being 64,372 shares), therefore a total of 4,478,908
shares. During the financial year ended 30 June 2020, the Company purchased and cancelled 32,809 shares. At 30 June
2020, 4,446,099 shares are authorised for on-market buy-back.
On 23 September 2020, the Company announced the continuation of its share buy-back program of up to 10% of the
minimum number of Company's shares outstanding in the last 12 months (being a buy-back of up to 4,530,000 shares at
23 September 2020). During the financial year ended 30 June 2021, the Company bought back 400,000 shares. At 30
June 2021, 4,230,000 shares are authorised for on-market buy-back.
56
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 26. Issued capital (continued)
Capital risk management
Management controls the capital of the Group in order to maintain acceptable debt to equity and debt to EBITDA ratios,
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 capital includes ordinary share capital and financial liabilities.
There are no externally imposed capital requirements other than the financial covenants outlined in note 20.
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.
Note 27. Reserve
Foreign currency reserve
Consolidated
2021
$
2020
$
(418)
1,514
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Movements in reserve
Movements in reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Foreign currency translation
Less: share of non-controlling interest
Balance at 30 June 2020
Foreign currency translation
Less: share of non-controlling interest
Balance at 30 June 2021
Foreign
currency
$
808
1,440
(734)
1,514
(3,788)
1,856
(418)
57
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 28. Dividends
Amounts recognised as dividends:
During the year ended 30 June 2021:
First interim dividend of $0.0133 per ordinary share, paid on 1 October 2020
Second interim dividend of $0.0133 per ordinary share, paid on 4 January 2021
Third interim dividend of $0.0033 per ordinary share, paid on 29 January 2021
Fourth interim dividend of $0.0033 per ordinary share, paid on 26 February 2021
Fifth interim dividend of $0.0033 per ordinary share, paid on 31 March 2021
Sixth interim dividend of $0.0033 per ordinary share, paid on 30 April 2021
Seventh interim dividend of $0.0033 per ordinary share, paid on 31 May 2021
Eighth interim dividend of $0.0033 per ordinary share, paid on 30 June 2021
During the year ended 30 June 2020:
Special dividend of $0.0055 per ordinary share, paid on 18 September 2019
First interim dividend of $0.0121 per ordinary share, paid on 30 September 2019
Second interim dividend of $0.0121 per ordinary share, paid on 2 January 2020
Third interim dividend of $0.0121 per ordinary share, paid on 2 April 2020
Final dividend of $0.0121 per ordinary share, paid on 2 July 2020
Consolidated
2021
$
2020
$
602,490
599,831
148,683
148,684
148,684
148,500
148,500
148,500
2,093,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
249,881
549,737
549,340
549,340
549,340
2,447,638
2,093,872
2,447,638
Final dividend for the year ended 30 June 2021 will be declared and paid prior to November 2021 and will be at a minimum
0.68 cents per share. Total dividends for the year ended 30 June 2021 including the final dividend is expected to be 5.32
cents per share, representing a 10% increase on prior year ordinary dividends.
Franking credits
Consolidated
2021
$
2020
$
Franking credits available for subsequent financial years
2,796,189
2,293,566
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 29. 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.
58
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 29. Financial instruments (continued)
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 market risk in relation to the prices it charges for the provision of professional
services.
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 on the net result for the year and equity to a reasonably possible change in
interest rates of +1% and -1% (2020: +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.
Borrowings
Bank overdrafts
Bank loans
Weighted
average
interest rate
%
2021
+1%
$
Weighted
average
interest rate
%
-1%
$
2020
+1%
$
-1%
$
3.68%
2.92%
(32,633)
(165,049)
32,633
165,049
4.16%
4.27%
(26,348)
(163,770)
26,348
163,770
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net
of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available. As at 30 June 2021 the historic roll rates, including those roll rates through the COVID-
19 pandemic period, do not indicate a slow down in collections. Furthermore management are not aware of forward looking
information which indicates or identifies a slow down in collection rates in its 30 June 2021 trade receivables balance and
as such, the calculation of expected credit loss is based on the historic roll rates without further adjustments.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan and no active enforcement activity.
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.
59
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 29. Financial instruments (continued)
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 and available facilities to meet its liquidity requirements for up to a minimum 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 financial liabilities have contractual maturities which are summarised below:
Consolidated - 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing
Bank overdrafts
Bank loans*
Lease liabilities
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
$
-
-
-
853,898
2,174,796
697,682
-
-
1,471,269
-
-
-
-
-
-
853,898
2,174,796
2,168,951
3.68%
2.92%
5.06%
3,263,314
5,026,990
2,383,295
14,399,975
-
6,598,635
2,077,487
10,147,391
-
4,879,226
3,438,285
8,317,511
-
-
3,147,922
3,147,922
3,263,314
16,504,851
11,046,989
36,012,799
Lease liabilities of $2,383,295 includes $1,224,528 payable within 6 months.
*
As at 30 June 2021, bank loans of $3,462,872 represents the current portion of long term debt which is being repaid
under scheduled amortisation repayments, and is not expected to be refinanced or face refinance risk.
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing
Bank overdrafts
Bank loans*
Lease liabilities
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
$
-
-
-
479,951
1,832,806
637,256
-
-
789,532
-
-
19,012
-
-
-
479,951
1,832,806
1,445,800
4.16%
4.27%
5.05%
2,634,808
3,656,427
1,742,850
10,984,098
-
7,262,412
1,301,710
9,353,654
-
5,458,196
2,924,862
8,402,070
-
-
1,124,452
1,124,452
2,634,808
16,377,035
7,093,874
29,864,274
Lease liabilities of $1,742,850 includes $1,083,770 payable within 6 months.
*
As at 30 June 2020, bank loans of $3,568,388 represents the current portion of long term debt which is being repaid
under scheduled amortisation repayments, and is not expected to be refinanced or face refinance risk.
60
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 29. Financial instruments (continued)
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 30. 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
Consolidated
2021
$
2020
$
538,671
29,270
4,873
490,486
26,208
4,873
572,814
521,567
Other key management personnel transactions
For details of other transactions with key management personnel, refer to note 34.
Note 31. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by William Buck Accountants &
Advisors, the auditor of the Company, and unrelated firms:
Audit services - William Buck Accountants & Advisors
Audit or review of the financial statements
Other services - William Buck Accountants & Advisors
Other services
Audit services - unrelated firms (Deloitte Touche Tohmatsu)
Audit or review of the financial statements
Consolidated
2021
$
2020
$
71,150
53,800
6,020
7,900
77,170
61,700
-
60,587
61
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 32. Contingent liabilities
Bank guarantees as at 30 June 2021 totalling $778,567 (2020: $806,339) 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.
Guarantees have been provided in relation to the banking facilities of the operating businesses by the parent entity. These
guarantees will only be payable in specific circumstances, such as when the operating business is unable to meet its
repayment obligations.
Contingent considerations in respect of acquisitions are carried on balance sheet and are not classified as contingent
liabilities by the management.
Except as noted above, in the opinion of the directors, the Group did not have any contingencies at 30 June 2021 and 30
June 2020.
Note 33. Commitments
Short-term lease commitments
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Leasehold improvements
Note 34. Related party transactions
Parent entity
Kelly Partners Group Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 37.
Consolidated
2021
$
2020
$
-
8,845
229,818
-
Key management personnel
Disclosures relating to key management personnel are set out in note 30 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.
62
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 34. Related party transactions (continued)
Loans (to)/from related parties
Key management personnel
On 18 March 2020, the Board of Directors resolved and approved the advancing of a short term loan facility between the
Group and an associated entity of Brett Kelly and David Irwin, the Operating Partner in the Kelly Partners Inner West
Partnership ('KP(IW)P'), to assist with the purchase of 766 Darling St, Rozelle ('the Rozelle Property'). The facility is
unsecured, repayable on demand and interest is charged at commercial rates. The KW(IW)PT business operates out of
the Rozelle Property, under a lease which was in place prior to the sale and purchase of the Rozelle Property. As at 30
June 2020, there was $18,143 owing on this facility. This facility was repaid in the 2021 financial year.
On 23 February 2021, an associated entity of Brett Kelly and David Irwin advanced a short term loan facility to Kelly
Partners Inner West Partnership to the amount of $72,000. The facility is unsecured, repayable on demand and interest is
charged at commercial rates. This loan has subsequently been repaid in July 2021.
Loans to directors:
Balance at the beginning of the year
- loans (from) / advanced
- interest on loans
- repayment of loans advanced
Balance at the end of the year
2021
$
2020
$
18,143
(72,000)
(1,065)
(19,004)
-
333,623
11,220
(326,700)
(73,926)
18,143
Employee Share trust
In FY2021, a number of operating businesses paid amounts to an Employee Share Trust as part of the Employee Share
Scheme ('ESS'). The monies received by the Employee Share Trust were used to acquire the shares of Kelly Partners
Group Holdings Limited (KPG.ASX). As at 30 June 2021, none of the shares held in trust were allocated to any employees
of Kelly Partners.
Balance at the beginning of the year
- loans advanced
- interest on loan
Balance at the end of the year
2021
$
2020
$
-
110,989
6,010
116,999
-
-
-
-
Partners
Loans (to)/from partners are set out in note 14 and note 24.
Direct interest in subsidiaries
The following related parties hold a direct interest in the respective subsidiary of the Group:
Related party
Paul Kuchta
Ada Poon
Subsidiary
2021
2020
Interest held Interest held
Kelly Partners Norwest Partnership
Kelly Partners North Sydney Partnership
25.50%
10.00%
25.50%
10.00%
63
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity. The following table summarises the standalone
financial information of the parent entity and is before inter company eliminations and adjustments on consolidation.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
2021
$
2020
$
4,713,746
3,537,134
4,713,746
3,537,134
2021
$
2020
$
6,051,543
20,769,806
26,821,349
6,752,174
18,402,516
25,154,690
1,851,979
4,669,910
6,521,889
1,832,525
5,169,577
7,002,102
20,299,460
18,152,588
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
In the financial year ended 30 June 2019, the Group commenced restructuring its debt facilities with Westpac. The facility
restructure was completed in November 2019. The facility restructure provides the Group with consistent and improved
terms and conditions, consistent and reduced reporting and undertaking requirements, consistent risk margins and a
consistent security structure across its subsidiaries. Each subsidiary's debt facilities are granted security by that entity, the
corporate partners of that entity, limited personal guarantees of the operating business owners, and a guarantee provided
by the parent over all existing and future assets and undertakings.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
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 36. Business combinations
Acquisitions during the year ended 30 June 2021
Kelly Partners Oran Park
On 16 November 2020, Kelly Partners (Oran Park) Pty Ltd acquired an accounting business in Camden, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
Oran Park business.
64
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
The acquired business contributed revenues of $246,434 and a net profit before tax of $71,222 to the Group for the period
from 16 November 2020 to 30 June 2021. The profit includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Customer relationships
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Contingent consideration
Kelly Partners Central Coast
Fair value
$
267,887
(35,179)
232,708
159,905
392,613
242,939
149,674
392,613
On 15 March 2021, Kelly Partners (Central Coast) Pty Ltd acquired an accounting business in Central Coast, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
Central Coast business.
The acquired business contributed revenues of $140,262 and a net profit before tax of $29,275 to the Group for the period
from 15 March 2021 to 30 June 2021. The profit includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Customer relationships
Deferred tax liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Contingent consideration
65
Fair value
$
243,536
(31,723)
211,813
164,299
376,112
214,661
161,451
376,112
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Kelly Partners Inner West
On 1 March 2021, Kelly Partners (Inner West) Pty Ltd acquired an accounting business in Stanmore, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
Inner West business.
The acquired business contributed revenues of $206,151 and a net profit before tax of $24,929 to the Group for the period
from 1 March 2021 to 30 June 2021. The profit includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Customer relationships
Deferred tax liabilities
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Contingent consideration
Fair value
$
330,484
(43,822)
(41,571)
245,091
522,861
767,952
553,779
214,173
767,952
66
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Kelly Partners Private Wealth (Central Coast & Hunter Region) Pty Ltd
On 23 April 2021, Kelly Partners Group Holdings Limited acquired a 51% interest in a financial planning business in
Central Coast, NSW.
The acquired business contributed revenues of $380,392 and a net profit before tax of $81,288 to the Group for the period
from 23 April 2021 to 30 June 2021. The profit includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Fair value
$
124,764
2,832
125,590
1,119,416
436,984
(93,740)
(485,432)
(338,188)
(477,144)
(16,164)
(35,424)
(152,042)
211,452
(103,611)
1,570,038
1,677,879
1,057,256
620,623
1,677,879
1,677,879
(124,764)
(620,623)
932,492
Cash and cash equivalents
Trade and other receivables
Other assets
Customer relationships
Right of use asset
Trade and other payables
Lease liability
Deferred tax liabilities
Contract liabilities
Borrowings
Other liabilities
Employee benefits
Net assets acquired
Less: non-controlling interests
Goodwill
Acquisition date fair value of the total consideration transferred
Representing:
Cash consideration
Contingent consideration
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: contingent consideration
Net cash used
67
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Kelly Partners Finance (Central Coast & Hunter Region) Pty Ltd
On 23 April 2021, Kelly Partners Group Holdings Limited acquired a 51% interest in a mortgage broking business in
Central Coast, NSW.
The acquired business contributed revenues of $31,602 and a net loss before tax of ($30,706) to the Group for the period
from 23 April 2021 to 30 June 2021. The loss includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Cash and cash equivalents
Customer relationships
Trade and other payables
Net assets acquired
Less: non-controlling interests
Goodwill
Acquisition date fair value of the total consideration transferred
Representing:
Cash consideration
Contingent consideration
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: contingent consideration
Fair value
$
4,215
174,301
(311)
178,205
(87,321)
214,082
304,966
198,940
106,026
304,966
304,966
(4,215)
(106,026)
194,725
Kelly Partners Insurance Services (Central Coast & Hunter Region) Pty Ltd
On 23 April 2021, Kelly Partners Group Holdings Limited acquired a 51% interest in a life insurance broking business in
Central Coast, NSW.
The acquired business contributed revenues of $57,966 and a net profit before tax of $43,316 to the Group for the period
from 23 April 2021 to 30 June 2021. The profit includes one-off transaction and implementation costs.
The revenue and net profit of the acquired business, from 1 July 2020 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
68
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Details of the acquisition are as follows:
Cash and cash equivalents
Customer relationships
Trade and other receivables
Net assets acquired
Less: non-controlling interests
Goodwill
Acquisition date fair value of the total consideration transferred
Representing:
Cash consideration
Contingent consideration
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: contingent consideration
Fair value
$
18,791
159,049
2,980
180,820
(88,602)
195,358
287,576
190,827
96,749
287,576
287,576
(18,791)
(96,749)
172,036
69
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Acquisitions during the year ended 30 June 2020
Kelly Partners Melbourne CBD
On 1 November 2019, Kelly Partners (Melbourne CBD) Pty Ltd acquired an accounting business in Melbourne, VIC.
The acquired business contributed revenues of $1,636,214 and net profit before tax of $60,962 to the Group for the period
from 1 November 2019 to 30 June 2020. The profit includes one-off transaction and implementation costs. The business
continues to be integrated in to the Kelly Partners Group and management expect the business to be profitable on a full 12
month basis.
The revenue and net profit of the acquired business, from 1 July 2019 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Customer relationships
Deferred tax liability
Employee benefits
Provisions
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Contingent consideration
Fair value
$
771,176
(113,841)
(143,953)
(67,500)
445,882
1,741,460
2,187,342
1,811,733
375,610
2,187,343
70
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 36. Business combinations (continued)
Kelly Partners Blue Mountains & Central Tablelands
On 1 November 2019, Kelly Partners (Blue Mountains & Central Tablelands) Pty Ltd acquired an accounting business in
Glenbrook, NSW.
The acquired business contributed revenues of $657,370 and net profit before tax of $65,976 to the Group for the period
from 1 November 2019 to 30 June 2020. The profit includes one-off transaction and implementation costs. The business
continues to be integrated in to the Kelly Partners Group and management expect the business to be profitable on a full 12
month basis.
The revenue and net profit of the acquired business, from 1 July 2019 to the date of acquisition, has not been disclosed
due to limitations in the financial information relating to the pre-acquisition period.
Details of the acquisition are as follows:
Right-of-use assets
Customer relationships
Deferred tax liability
Employee benefits
Lease liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Contingent consideration
Note 37. Interests in subsidiaries
Fair value
$
596,234
637,910
(109,802)
(50,733)
(596,234)
477,375
484,933
962,308
719,267
243,041
962,308
(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
Country on incorporation
KP GH NS Pty Ltd
Kelly Partners North Sydney Partnership
KP GH CC Pty Ltd
Kelly Partners Central Coast Partnership
KP GH WS Pty Ltd
Kelly Partners (Western Sydney) Partnership
KP GH SWS Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Management Services Pty Ltd
Kelly Partners Services Trust
KP GH NW Pty Ltd
Kelly Partners Norwest Partnership
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
71
Ownership interest
2020
2021
%
%
100.00%
58.25%
100.00%
50.10%
100.00%
51.00%
100.00%
50.50%
100.00%
100.00%
100.00%
51.00%
100.00%
58.25%
100.00%
50.10%
100.00%
51.00%
100.00%
50.50%
100.00%
100.00%
100.00%
51.00%
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 37. Interests in subsidiaries (continued)
Name
Country on incorporation
KP GH TC Pty Ltd
Kelly Partners Tax Consulting Partnership
Kelly Partners (Strategy Consulting) Pty Ltd
KP GH BM Pty Ltd (formerly KP GH BMCT Pty Ltd)
Kelly Partners Blue Mountains Partnership (formerly
Kelly Partners Blue Mountains & Central Tablelands
Partnership)
KP GH WO Pty Ltd
Kelly Partners Wollongong Partnership
KP GH NB Pty Ltd
Kelly Partners Northern Beaches Partnership
KP GH SH Pty Ltd
Kelly Partners Southern Highlands Partnership
Kelly Partners (South West Sydney) Trust
Kelly Partners Oran Park Partnership
Super Certain Pty Ltd
Kelly Partners Management Services (Hong Kong)
Limited
KP GH FIN Pty Ltd
KP GH WM Pty Ltd
KP GH HK Pty Ltd
Kelly Partners Finance Partnership
Kelly Partners Private Wealth Sydney Partnership
(formerly Kelly Partners Wealth Management
Partnership)
Kelly Partners Marketing Advisory Pty Ltd
(deregistered)
Kelly Partners Property Group Holdings Pty Ltd
Kelly Property Group Pty Ltd
Kelly Partners (Central Coast) Property Trust
KP GH SYD CBD Pty Ltd
Kelly Partners (Sydney) Pty Ltd
KP GH IW Pty Ltd
Kelly Partners Inner West Partnership
Kelly Partners (Tax Legal) Pty Ltd
Kelly Partners (Sydney) Audit Partnership
Kelly Partners Private Wealth Group Holdings Pty Ltd
KP GH MCBD Pty Ltd (formerly KP GH WM MCBD Pty
Ltd)
KP GH CA Pty Ltd
Kelly Partners Corporate Advisory Partnership
KP GH NZ Pty Ltd
Kelly Partners New Zealand Partnership
Kelly Partners SMSF Advisory Pty Ltd
KPIO Pty Ltd (formerly Kelly Partners (Investment
Office) Pty Ltd)
Kelly Partners Legacy Team Pty Ltd (deregistered 24
Feb 2021)
Kelly Partners (Sports & Entertainment) Pty Ltd
(deregistered 24 Feb 2021)
Kelly Partners Private Wealth Pty Ltd
KP GH MEL Pty Ltd
Kelly Partners Melbourne CBD Partnership
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
72
Ownership interest
2020
2021
%
%
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%
51.00%
100.00%
100.00%
68.00%
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%
50.05%
100.00%
51.00%
51.00%
50.04%
100.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
51.00%
100.00%
100.00%
51.00%
100.00%
50.05%
100.00%
51.00%
51.00%
50.04%
100.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
75.50%
75.50%
100.00%
100.00%
-
100.00%
100.00%
66.00%
100.00%
100.00%
100.00%
66.00%
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 37. Interests in subsidiaries (continued)
Name
Country on incorporation
Australia
Australia
Australia
Australia
Kelly Partners (Melbourne CBD) Pty Ltd (formerly
Kelly Partners Private Wealth (Melbourne) Pty Ltd)
Kelly Partners Private Wealth (International) Pty Ltd
Australia
(deregistered 4 Feb 2021)
Australia
Kelly Partners (Estate Office) Pty Ltd
KP GH ES Pty Ltd (deregistered 24 Feb 2021)
Australia
Kelly Partners Private Wealth Wholesale Partnership Australia
Kelly Partners Alternative Asset Management Pty Ltd
(incorporated in December 2019)
Kelly Partners Ancillary Services Pty Ltd
Kelly Partners Finance (Central Coast & Hunter
Region) Pty Ltd (formerly Moneywise Loan & Leasing
Pty Ltd)
Australia
Kelly Partners Investment Office (Locations) Pty Ltd Australia
Kelly Partners (Investment Office) Pty Ltd
(incorporated in April 2020)
Kelly Partners Life Insurance Services (Central Coast
& Hunter Region) Pty Ltd (formerly Moneywise
Insurance Services Pty Ltd)
Kelly Partners Private Wealth (Central Coast &
Hunter Region) Pty Ltd (formerly Moneywise
Financial Solutions Pty Ltd)
KP GH AI Pty Ltd
KP GH Care Pty Ltd
KP GH CT Pty Ltd
KP GH EL Pty Ltd
KP GH FIN CC Pty Ltd
KP GH GI Pty Ltd
KP GH HR Pty Ltd
KP GH IS CC Pty Ltd
KP GH PW Pty Ltd
KPGH Pty Ltd
Cancer Schmancer Movement Limited (public
company limited by guarantee – registered charity)
Kelly Partners Alternative Investments Partnership
Kelly Partners Hunter Region Partnership
Kelly Partners Central Tablelands Partnership
Kelly Partners Pittwater Partnership
KP Care Partnership
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2020
2021
%
%
95.00%
95.00%
-
100.00%
-
51.00%
100.00%
100.00%
51.00%
100.00%
51.00%
51.00%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
51.00%
51.00%
68.00%
51.00%
51.00%
100.00%
100.00%
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.
73
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 37. Interests in subsidiaries (continued)
(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
2021
$
2020
$
23,791,845
6,318,214
6,416,667
8,523,584
14,061,542
(4,839,385)
(7,944,082)
9,801,658
22,005,678
6,344,797
8,087,693
6,100,394
12,230,579
(2,606,778)
(6,036,802)
9,687,393
(c) Consequences of changes in a parent's ownership in a subsidiary that do not result in a loss of control
There were no material 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.
Note 38. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax (expense)/benefit for the year
10,940,551
10,359,306
Consolidated
2021
$
2020
$
Adjustments for:
Depreciation and amortisation
Repayment of lease liabilities
Fair value movement - unwinding of interest
Other non-cash movements
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in deferred tax assets
Increase in trade and other payables
Increase in provision for income tax
Net cash from operating activities
4,427,456
(2,228,943)
202,237
831,941
3,740,900
(1,978,034)
158,460
785,190
(54,803)
302,027
497,375
164,960
803,348
(105,074)
564,208
315,918
15,082,801
14,644,222
74
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2021
Note 38. Cash flow information (continued)
Non-cash investing and financing activities
Consolidated
2021
$
2020
$
Additions to the right-of-use assets
Adjustments as a result of a different treatment of extension and termination options
6,299,871
(479,852)
9,413,661
(1,896,904)
Changes in liabilities arising from financing activities
Consolidated
5,820,019
7,516,757
Bank
loans
$
Lease
liabilities
$
Total
$
Balance at 1 July 2019
Net cash used in financing activities
Proceeds from borrowings
Repayment of borrowings
Leases recognised on the adoption of AASB 16
Acquisition of leases
Adjustments as a result of a different treatment of extension and termination
options
16,101,194
-
6,037,413
(5,761,572)
-
-
-
(2,158,946)
-
-
11,225,389
596,234
16,101,194
(2,158,946)
6,037,413
(5,761,572)
11,225,389
596,234
-
(2,568,803)
(2,568,803)
Balance at 30 June 2020
Net cash used in financing activities
Proceeds from borrowings
Repayment of borrowings
Acquisition of leases
Changes through business combinations (note 36)
Adjustments as a result of a different treatment of extension and termination
options
16,377,035
-
6,538,544
(6,426,892)
-
16,164
7,093,874
(2,228,943)
-
-
6,299,871
485,432
23,470,909
(2,228,943)
6,538,544
(6,426,892)
6,299,871
501,596
-
(603,245)
(603,245)
Balance at 30 June 2021
16,504,851
11,046,989
27,551,840
Note 39. Events after the reporting period
Acquisitions
On 1 July 2021, Kelly Partners Hunter Region, a subsidiary of Kelly Partners Group Holdings Limited, acquired an
accounting firm located in Newcastle, NSW. The acquisition is expected to contribute approximately $0.8m to $1.0m in
annual revenues to the consolidated Group and approximately $0.1m NPATA to the Parent.
On 12 July 2021, Kelly Partners Sydney, a subsidiary of Kelly Partners Group Holdings Limited, acquired an accounting
firm located in Sydney CBD, NSW. The acquisition is expected to contribute approximately $2.2m to $2.4m in annual
revenues to the consolidated Group and approximately $0.3m NPATA to the Parent.
COVID-19
In July 2021, a renewed COVID-19 outbreak has led to lockdown and extensive restrictions imposed in the Greater Sydney
area. In response to this, the Group has recommenced working from home arrangements for its team members. At the
date of this report, the Group has not seen a significant impact on its revenue or collections but continues to act with
prudence and caution in the current pandemic environment. Further details on management's response and action to the
COVID-19 pandemic is included in the “COVID-19” section within the Directors Report.
Apart from the matters discussed above and dividend declared as disclosed in note 28, no other matter or circumstance
has arisen since 30 June 2021 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.
75
Kelly Partners Group Holdings Limited
Directors' declaration
30 June 2021
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
2021 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 and Chief Executive Officer
9 August 2021
Sydney
76
Report on the Audit of the Financial Report
Corporations Act 2001
2001
Corporations Regulations
Responsibilities for the Audit of the Financial Report
Auditors
Corporations Act 2001
(including Independence Standards)
Code of Ethics for Professional Accountants
Corporations Act 2001
77
78
Corporations Act 2001
Report on the Remuneration Report
Corporations Act 2001
Corporations Act 2001
79
Kelly Partners Group Holdings Limited
Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 8 July 2021.
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
Ordinary shares
Options over ordinary
shares
Number
of holders
% of total
shares
issued
Number
of holders
% of total
shares
issued
376
287
108
162
43
976
24
0.58
1.72
1.89
10.97
84.84
100.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The number of shareholders holding less than a marketable parcel of ordinary shares is based on Kelly Partners Group
Holdings Limited's closing share price of $3.4 on 30 June 2021.
Equity security holders
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
BNP Paribas Noms Pty Ltd DRP
Sandhurst Trustees Ltd
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd IB AU Noms Retail Client DRP
Citicorp Nominees Pty Limited
Kalumic Pty Ltd
HSBC Custody Nominees (Australia) Limited
Kristian Garnet Haigh
Ackc Super Pty Ltd
Eric Golf Pty Ltd
Gildale Super Fund Pty Ltd
Bullock Superannuation Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Cust Serv Ltd DRP
HSBC Custody Nominees (Australia) Limited
Kenneth Ko
Mikalu Pty Ltd
Sundeep Kalra + Anoop Kalra + Shikha Mohanty
BRJT Accounting Pty Ltd
Santra SMSF Pty Ltd
Unquoted equity securities
There are no unquoted equity securities.
81
80
Ordinary shares
Number held
% of total
shares
issued
22,500,000
2,720,491
999,970
843,116
777,806
711,792
636,000
571,897
501,500
500,000
491,338
466,420
458,984
425,311
423,043
393,504
364,000
300,199
286,120
273,001
34,644,492
50.00
6.05
2.22
1.87
1.73
1.58
1.41
1.27
1.11
1.11
1.09
1.04
1.02
0.95
0.94
0.87
0.81
0.67
0.64
0.61
76.99
Kelly Partners Group Holdings Limited
Shareholder information
30 June 2021
Substantial holders
Substantial holders in the Company are set out below:
Kelly Investments 1 Pty Ltd
BNP Paribas Noms Pty Ltd DRP
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
% of total
shares
issued
22,500,000
2,720,491
50.00
6.05
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.
82
81
KELLY PARTNERS GROUP HOLDINGS LIMITED
Office - Level 8/32 Walker Street, North Sydney, NSW 2060
83