Kelly Partners Group Holdings Limited
Front Page - 2022 Annual Report
30 June 2022
KELLY PARTNERS GROUP HOLDINGS LIMITED
ABN 25 124 908 363
ANNUAL REPORT – 2022
Kelly Partners Group Holdings Limited
Contents
30 June 2022
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 2022
Directors
Brett Kelly – Chairman, Executive Director
Stephen Rouvray – Deputy Chairman, Non-Executive Independent Director
Ryan Macnamee – Non-Executive Independent Director
Lawrence Cunningham – Non-Executive Independent Director (Appointed on 1 July 2022)
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 Tuesday, 8 November 2022 with the format of the AGM to be confirmed.
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 2022
The directors present their report, together with the financial statements, of 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 2022.
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
Lawrence Cunningham (appointed 1 July 2022)
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 the earnings of the operating businesses through tuck-in acquisitions;
(3)
Improving the earning power of the operating businesses;
(a) Growing the accounting businesses;
(b) Growing the complementary businesses;
(a) Making programmatic acquisitions;
(b) Making an occasional large acquisition where there is strategic alignment (i.e. greater than $5m in revenue); and
(4)
(5) Repurchasing Company’s shares when available at a meaningful discount from intrinsic value.
3
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
The following table presents the performance of the business against the comparative year in delivering the Group's strategy:
Strategy
Measure
FY22
FY21
FY20
FY19
FY18
FY17
(IPO)
(1) Improving the earning power
of the operating businesses
EBITDA margin of operating
businesses
30.9% 33.4% 32.5% 27.7% 34.0% 30.9%
-
-
-
-
-
-
-
1
-
-
1.0%
0.8%
0.4%
0.9%
n/a
-
-
-
-
26.5% 4.8%
6.6%
6.4%
17.2% -
4.7%
1.4%
6.6%
(6.9%)
10.5% -
1.5%
1.2%
2.8%
1.8%
3.1%
(2) Further increase earnings
through tuck-in acquisitions
(3) a. Growing our accounting
businesses
(3) b. Growing our
complementary
businesses
Contribution to revenue
growth from acquired
businesses
Contribution to revenue
growth from existing
accounting businesses
Contribution to revenue
growth from existing
complementary
businesses
Wealth
Finance
Investment office
Discontinued operations
Insurance (from Jan-21)
(4) a. Making programmatic
acquisitions
(4) b. Making an occasional
large acquisition (i.e.
greater than $5m in
revenue)
(5) Repurchasing the
Company's shares when
available at a meaningful
discount from intrinsic
value
0.9%
0.6%
(0.2%)
n/a
n/a
1.0%
0.2%
0.0%
n/a
n/a
0.4%
0.4%
0.9%
1.1%
n/a
3
-
0.7%
0.7%
0.0%
0.4%
n/a
4
-
Number of acquisitions
8
Number of large acquisitions
-
7
-
-
-
400k
95k
2k
0.88% 0.21% -
(i) Number of shares
repurchased
(ii) % of shares issued
repurchased
(iii) number of shares on
issue
45.0m 45.0m 45.4m 45.5m 45.5m 45.5m
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 2022
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:
Full year metrics
Key financial
metric
Return to owners
Owners' earnings* -
Group
Owners' earnings* -
Parent
Formula
FY22
FY21
FY20
FY19
FY18
FY17 (IPO)
Cash from operating
activities - repayment of
lease liabilities -
maintenance capex
Cash from operating
activities - repayment of
lease liabilities -
maintenance capex
$13,959,305 $12,807,837 $12,174,442 $9,673,451 $6,304,912 $6,619,077
$6,312,568 $5,014,894 $3,885,041 $3,128,904 n/a
n/a
Return on equity
Underlying NPATA /
Equity
Return on invested
capital^
(Underlying NPATA +
cash interest) / (Equity
+ debt)
Earnings per share
(EPS) (cents per
share)
Underlying attributed
NPATA / Weighted
average number of
shares
41.7%
46.7%
44.2%
36.6%
47.8%
35.1%
22.3%
27.9%
26.1%
22.7%
31.2%
21.9%
13.99
11.32
8.67
7.02
9.51
4.97
Dividends (cents
per share)**
Dividends payout
ratio**
Annual increase (EPS) 23.5%
30.7%
23.5%
(26.2%)
25.6%
Dividends paid
7.98
7.08
4.84
4.40
4.00
Dividends per share /
EPS (underlying
NPATA)
57.0%
62.0%
55.8%
62.7%
42.1%
-
-
-
Cash conversion /
debt
Cash conversion^^ Operating cashflow /
Statutory EBITDA
Gearing ratio
Net Debt / Underlying
EBITDA
83.3%
93.5%
97.3%
116.8%
63.5%
269.6%
1.36x
0.84x
0.96x
1.35x
0.79x
1.4x
Net debt per partner Net Debt / Number of
$505,938
$296,758
$346,198
$366,813
$291,167
$326,230
Partners
Number of partners Number of partners
62
54
45
41
40
37
^
Return on Invested Capital is impacted in FY22 as only part year contributions from in year acquisitions have been
included in the calculation of which the entire debt capital has been used as the denominator. Adjusted ROIC taking in
to account annualised contributions from in year acquisitions is 25.5%.
^^ Cash conversion is impacted in FY22 as the initial lockup (WIP & debtors) of the in-year acquisitions reduces the
cashflow in the first year. Cash conversion normalised for acquisition lockup is 98.0% (i.e. (Cash from operating
activities + debtors from in year acquisitions + accrued income from in year acquisitions)/ EBITDA)).
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
*
●
●
●
The Group uses owners' earnings to measure cash flow available to the Group. Owners' 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).
In FY22, Owners' earnings for the 12 months were $13,959,305 (FY21: $12,807,837) up 9.0% from the prior corresponding
period. Owners' earnings for the parent entity were $6,312,568 (FY21: $5,041,894), up 25.2% from the prior corresponding
period.
** Ordinary dividends paid represent the dividends paid relating to the stated financial year. For example, dividends paid
in FY22 relating to FY21 is shown in the FY21 column. Dividends shown for FY22 include the estimated final
dividends, including special dividends, that will be paid prior to November 2022.
Review of operations
In the year ended 30 June 2022 ('FY22' or '2022'), the Group has recorded a consolidated statutory net profit after income
tax from continuing operations of $13,328,745 (year ended 30 June 2021 ('FY21' or '2021'): $10,945,476), an increase of
21.8%. The statutory net profit attributable to the members of the parent entity was $5,565,475 (FY21: $4,625,330), an
increase of 20.3%.
The directors consider Underlying Earnings Before Interest, Tax, Depreciation and Amortisation ('Underlying EBITDA') and
Underlying Net Profit After Tax Before Amortisation ('Underlying NPATA') reflects 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 to be one-off
nonrecurring in nature.
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.
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Statutory net profit after income tax ('NPAT') from continuing operations
Finance costs
Income tax expense
Depreciation and amortisation expense
Consolidated
2022
$
2021
$
13,328,745
2,038,179
3,092,565
6,330,126
10,945,476
1,550,839
1,963,663
4,427,456
Earnings before interest, tax, depreciation and amortisation ('EBITDA')
24,789,615
18,887,434
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
Government subsidies in relation to Australian Apprenticeships Incentive Program
Change in fair value of contingent consideration
Net proceeds from settlement of legal dispute
Underlying EBITDA
-
740,178
-
38,179
91,306
721,474
169,246
165,314
(1,348,189)
(689,468)
(416,755)
-
(825,368)
-
(447,508)
(107,963)
23,113,560
18,653,935
Underlying EBITDA of the Group was $23,113,560 (2021: $18,653,935), an increase of 23.9%.
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
2022
$
2021
$
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
5,562,969
1,184,824
6,747,793
4,625,330
553,624
5,178,954
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
Government grants in relation to Australian Apprenticeships Incentives Program
Change in fair value of contingent consideration
Net proceeds from settlement of legal dispute
Net non-recurring items
-
616,020
-
22,774
(708,346)
(343,002)
(225,794)
-
(638,348)
87,366
426,836
96,180
82,854
(450,458)
-
(211,462)
(49,107)
(17,791)
Less: Tax effect of non-recurring items
187,510
(46,331)
Underlying NPATA attributable to owners of Kelly Partners Group Holdings Limited
6,296,955
5,114,832
Underlying NPATA attributable to members of the parent entity was $6,296,955 (2021: $5,114,832), an increase of 23.1%.
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
COVID-19
Management response and action
During the first half of FY22, the Greater Sydney and Melbourne area were subject to lockdown and extensive restrictions
as a result of a renewed COVID-19 outbreak. This has led to working from home arrangements being implemented across
the Group. Due to the COVID-19 outbreak and the working from home arrangements, the Group has experienced the
following impacts:
●
●
the timing of regular compliance and advisory work being completed has been impacted or delayed where the operating
businesses have had to prioritise assisting COVID-19 impacted clients with applying for government grants; and
the fees charged in relation to assisting COVID-19 impacted clients with applying for government grants are lower and
less profitable for the reasons of supporting our clients.
During the COVID-19 outbreak, various operating businesses of the Group satisfied the criteria for JobSaver and the Group
received in total $1,348,189 of COVID-19 government grants. As at 30 June 2022, the JobSaver program has ended. The
Group views the government grants received to be one-off non-recurring in nature and has deducted such income from its
underlying results for the purposes of looking through the true underlying performance of the business.
Irrespective of the above, the Group continues to grow and operate profitably. The Group continues to monitor the potential
impacts and risks posed by the pandemic and focuses heavily on protecting the physical and mental health of its people.
Quality shareholders
During the first half of FY22 the Group continued its Quality Shareholders initiative and was pleased to have William
Thorndike (author of 'The Outsiders : Eight Unconventional CEOs and Their Radically Rational Blueprint for Success') and
Lawrence Cunningham (author of 'The Essays of Warren Buffett: Lessons for Corporate America' and now a Non-Executive
Independent Director of the Company from 1 July 2022) speak at our 2021 Annual General Meeting. The Group extends its
thanks and appreciation to William and Lawrence for their contributions to cultivating the Group’s quality shareholder
base. The Group firmly believes that attracting Quality Shareholders, who view themselves as part owners of the business
and are willing to invest a meaningful amount of their wealth for a very long time, is critical in achieving the Group’s long-
term strategy and vision.
Financial performance
Acquisitions and integration
During FY22, the Group has completed acquisitions with estimated total annual revenues in the range of $11.7m to
$15.2m. Further, the Group has completed one acquisition in July 2022 with estimated total annual revenues in the range of
$3.4m to $4.2m. In aggregate the Group has completed eight acquisitions with estimated total annual revenues in the range
of $15.1m to $19.4m, representing 30.9% to 39.7% of FY21 revenue. The Group has well surpassed the $4.4m target
acquisition for FY22 as per the Group’s 5-year plan.
The completed acquisitions are listed in the table below.
# Acquired / scheduled
Location
Type
Acquired Revenue
1 Nov-21
2 Dec-21
3 Jan-22
4 Feb-22
5 Feb-22
6 Mar-22
7 Apr-22
Western Sydney
Canberra
Melbourne
Northern Beaches
Canberra
Central Coast
Bendigo
Tuck-in
Marquee
Tuck-in
Tuck-in
Tuck-in
Tuck-in
Marquee
Acquisitions completed in FY22
% of FY21 Revenue ($48.9m)
8 Jul-22
Hunter Region
Marquee
Acquisitions completed in FY23
% of FY21 Revenue ($48.9m)
Total Acquisitions since 1 July 2021
% of FY21 Revenue ($48.9m)
$3.2m - $4.3m
$0.8m - $0.9m
$1.0m - $1.4m
$1.0m - $1.4m
$0.9m - $1.1m
$1.0m - $1.4m
$3.8m - $4.7m
$11.7m - $15.2m
23.9% - 31.1%
$3.4m - $4.2m
$3.4m - $4.2m
7.0% - 8.6%
$15.1m - $19.4m
30.9% - 39.7%
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Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Offices and partners
As at 30 June 2022, the Group operated out of 19 offices (30 June 2021: 16). During the year, the Group commenced
businesses in three new locations in Newcastle, NSW (Jul-21), Canberra, ACT (Dec-21) and Bendigo, VIC (Apr-22). All of
the new office openings were a result of acquisitions of local accounting firms that were completed during the year. We are
pleased that 10 of our 19 offices now qualify as a top 100 accounting firm in their own right, commanding dominant market
positions in their respective regions. During the year, 6 of our offices underwent or are currently undergoing fitout
upgrades. Over the last 2 years, the Group has progressively upgraded the fitouts for each of its 19 offices in order to build
a consistent brand and office experience for its people and its clients.
As at 30 June 2022, the total number of equity partners (including the CEO, Brett Kelly) was 62 (30 June 2021: 54) with two
partners promoted internally, and eight partners joining the group from completed acquisitions. Post balance date, four
partners joined the group from the Hunter Region acquisition, taking the total number of equity partners to 66. 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 revenue growth.
Properties
On 20 December 2021, Kelly Partners (Canberra) Property Trust, a wholly owned subsidiary of Kelly Partners Group Holdings
Limited, purchased a 100% interest in a commercial property located in Kingston ACT for a total consideration of $2.2m. Kelly
Partners Canberra has operated from these premises since April 2022, having completed the acquisitions of two Canberra
accounting firms in December 2021 and February 2022. The office is located in a prime location on the Kingston foreshore
and will assist the business in building a presence in Canberra.
As detailed in previous commentary, the Group continues to pursue a strategy of removing properties off balance
sheet. Nonetheless, the Group still believes that the properties from which its business operate should be owned in a
separate structure in which our operating partners can own a share. The Group is currently in the process of considering and
establishing such structures to own the properties.
Revenue
Revenue for FY22 increased 32.6% to $64,862,110 (FY21: $48,906,446). A reconciliation of acquisition and organic growth
is set out below:
FY21 Revenue
Accounting business growth
Complementary business growth
Total organic growth
Total revenue from acquired businesses
FY22 Revenue
$
Growth rate
%
48,906,446
2,308,576
711,275
3,019,851
12,935,813
64,862,110
-
4.7
1.5
6.2
26.5
32.6
Acquired revenue of $12,935,813 contributed 26.5% of revenue growth, with in year acquisitions completed to date in FY22
contributing $10,507,605 and revenue from the acquisitions completed in FY21 contributing $2,428,208.
Organic revenue growth contributed 6.2% of revenue growth and has exceeded the Group’s target annual organic growth of
5%.
Operating expenses
Employment and related expenses have increased 42.4% compared to revenue growth of 32.6%. This is due to higher cost
of sales and administration staff costs from in year acquisitions and additional team members recruited in the parent entity’s
central progress team to support the Group’s growth. In many of the in year acquisitions, the outgoing vendor also receives
a consulting fee for the first 1-2 years post completion to ensure a successful transition of their business and clients to
Kelly+Partners. Other expenses have increased 21.1% on prior year.
Underlying EBITDA
Underlying EBITDA (which measures EBITDA before one off and non-recurring items) increased 23.9% to $23,113,559
(FY21: $18,653,935).
9
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
The directors consider underlying EBITDA margin before AASB 16 as a more meaningful measurement of performance. The
underlying EBITDA margin before AASB 16 is slightly lower than the prior year at 30.8% (FY21: 32.6%). The EBITDA margins
have been slightly depressed this year due to the large number of acquisitions completed and additional costs initially
required to transform the acquired businesses in order to achieve Kelly+Partners benchmark profitability metrics. Our aim is
to increase the EBITDA margin to 35.0% and we expect to do so once the recently completed acquisitions have undergone
a successful transition and transformation under our Kelly Partners Partner-Owner-DriverTM model.
A reconciliation of Underlying EBITDA before and after the AASB 16 leasing adjustment is set out in the table below.
Underlying EBITDA
Growth %
FY22
$
FY21
$
FY20
$
23,113,559 18,653,935 15,922,576
+23.9% +17.2% -
AASB 16 leasing adjustment - rent expense
(3,129,291) (2,703,699) (2,456,469)
Underlying EBITDA before AASB 16 leasing adjustments
Growth %
As a % of revenue
19,984,268 15,950,236 13,466,107
+25.3% +18.4% -
30.8%
32.6%
29.6%
Additional investment expenditure in the Parent Entity
Since the IPO, the parent entity has continued to invest in order to further develop the capabilities of the central services
team and to enable the business to be positioned for long term growth as well as to increase its competitive advantage.
These investments have sometimes 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 investment expenditure made during the coronavirus outbreak in March 2020 and committed
to reducing the ongoing additional investment spend to be in line with the income it receives from its operating businesses.
This focus and review have brought the additional investments expenditure down to $77,836 for the FY22 year contributing
to the uplift in the Underlying attributed NPATA. Investment expenditure continue to be brought in line with the income
received from its operating businesses in the current 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.
FY22
FY21
FY20
FY19
Group revenue
Group revenue growth on prior period
Additional investment expenditure
% of Revenue
$64,862,110 $48,906,446 $45,495,584 $39,975,031
+32.6% +7.5%
$371,127
$77,836
0.8%
0.1%
13.8%
$1,630,905
3.6%
1.3%
$742,439
1.9%
Non-recurring and one-off items
Total non-recurring income for the Group for the year was $2,454,412 (FY21: $1,380,839) and included:
1)
2)
3)
$1,348,189 in one-off government grants in relation to COVID-19;
$689,468 in subsidies received through the Australian Apprenticeships Incentives Program; and
$416,755 in non-cash income relating to a change in fair value of contingent consideration. This relates to a
completed acquisition in FY20 where the vendor had not achieved the required targets for the payment of the
contingent consideration.
10
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Total non-recurring expenses for the year of $778,358 (FY21: $1,147,340) which included:
(1) $292,296 in implementation costs relating to the in-year acquisitions, including but not limited to legal costs, costs to
establish financing, costs in relation to migration of databases, transitioning of servers and other IT infrastructure,
relocation costs to Kelly+Partners offices, conversion of ledgers and client bases etc. These costs cover the 8
acquisitions completed in FY22.
(2) $240,468 in lease, occupancy and termination costs relating to leases inherited as part of the acquisitions completed
during the year, including Canberra, Penrith, Narrabeen, Central Coast etc. In all of these leases, the existing team
was relocated to an existing Kelly Partners office on completion of the acquisition, rendering the existing premise vacant.
(3) $159,212 in lease expenses relating to a lease inherited as part of the Sydney CBD acquisition completed in July 2021.
On completion of the acquisition, as part of integrating the acquired business, the existing team was relocated to the
Kelly Partners Sydney CBD office, rendering the existing premise vacant. This cost is not expected to recur post the
expiration of the existing lease in October 2022, and hence has been excluded from underlying results.
(4) $86,381 in redundancy costs relating to restructuring of acquired businesses and other non-recurring expenses.
The Group classifies costs related to acquiring businesses under non-recurring and one-off items on the basis that those
specific acquisition costs (related to specific businesses acquired) will not re-occur in future periods whilst their associated
revenues and earnings are expected to continue into future periods. As part of its growth strategy, management continue to
identify acquisition targets and any future acquisition expenses are expected to be accompanied by future revenues and
earnings associated with those expenses. The separate classification of acquisition costs into non-recurring and one-off
items provides transparency to look-through to the underlying performance of the Group.
Depreciation and amortisation and finance costs
Depreciation and Amortisation expense increased to $6,330,126 (FY21: $4,427,456) and includes depreciation expense of
$3,968,067 (FY21: $3,352,706) and amortisation expense of $2,362,059 (FY21: $1,074,750). The increase in depreciation
expenses is due to the recent fitout upgrades as well as an increase number of leases (leading to higher number of 'right-of-
use assets' that need to be depreciated). The increase in amortisation expense is due to recent acquisitions completed
creating customer relationship intangible assets that are amortised in accordance with Australian accounting standards.
Finance costs increased to $2,038,179 (FY21: $1,550,839). Finance costs include interest on lease liabilities recognised
under AASB 16 and the increase is due to new property leases that the Group has entered into as part of acquiring
businesses in new locations.
Income tax expense
2022 2021
Net profit before income tax from continuing operations
% Growth
Income tax expense
% of net profit
$16,421,310 $12,909,139
27.2%
$3,092,565 $1,963,663
18.8%
15.2%
11.6%
The Group’s Income Tax Expense has increased to $3,092,565 (FY21: $1,963,663), mainly due to an increase in taxable
income and an increase in the applicable tax rates. The Group’s revenue for FY22 is greater than $50m, resulting in the
Group no longer being eligible as a 'base rate entity'. This has led to an increase in the tax rates to 30% (from 26% in FY21),
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
outside interests in these partnerships is not included in the consolidated accounts and therefore the actual tax expense is
below the applicable tax rate.
Cash flow
Cash from operations
Receipts from customers increased 23.9% to $66,092,248 (FY21: $53,359,426). Payments to suppliers and employees
increased 28.8% to $47,559,811 (FY21: $36,939,488). 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 12.9% to
$18,532,437.
11
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Operating cashflow
% Growth on prior year
2022
2021
$18,532,437 $16,419,938
12.9%
2.9%
Cash from investing activities
In FY22 the Group spent $6,797,390 on property, plant and equipment capital expenditure. Of this, $2,093,275 was used to
acquire a commercial property in Canberra now occupied by the Kelly Partners Canberra operating business. Amounts
totalling $4,009,103 was used in fitout upgrades completed in the Oran Park, Hunter Region, North Sydney, Western Sydney,
Canberra and Melbourne offices. Over the last 2 years, the Group has progressively upgraded the fitouts for each of its 19
offices in order to build a consistent brand and office experience for its people and its clients. The remaining $695,012
represents office and computer equipment, new motor vehicles and other capital expenditures.
Cash from financing activities
In FY22 the Group’s borrowings (excluding overdrafts considered as working capital) increased significantly by $15,867,226
or 96.1% to $32,372,077 (30 June 2021: $16,504,851). New borrowings of $23,406,865 were taken out during the year,
mainly for the completion of in year acquisitions. The difference reflects the repayments made during the year of $7,539,639
and reflects the Group’s strong and disciplined approach in repaying debt, compared to $6,426,892 in the prior period,
representing an increase of 17.3%. Proceeds from borrowings of $23,406,865 included $13,980,301 for acquisition funding,
$2,200,000 for the purchase of the Canberra property, $3,405,946 for fitout funding, $1,937,847 for recapitalisation loans,
$601,002 relating to the buy in by two new partners and the remaining $1,281,771 for insurance premium funding, motor
vehicle financing and other uses.
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 55.8 days or $11,622,743 (calculated on run rate revenue with annualised
revenue contributions from completed acquisitions) compared with the prior year (30 June 2021: 51.1 days, $6,841,427).
This continues to be a strong result and has been achieved alongside strong acquisition and organic growth. Note that lockup
calculated on actual revenue (which is used to calculate lockup) does not include the full 12 months’ revenue of the in-year
acquisitions. For the purposes of achieving a more meaningful comparison, the lockup based on annualised revenue has
been used.
Lockup $
Lock up days
Debtor
Debtor days
Accrued income and contract liabilities
Accrued income and contract liabilities days
2022
2021
$11,622,743 $6,841,427
55.8
$9,904,836
47.6
$1,717,907
8.3
51.1
$6,204,659
46.3
$636,768
4.8
Capital structure
The business continues to maintain a capital structure that supports its accelerated growth. As at 30 June 2022 the Group’s
Gearing Ratio (defined as Net Debt / Underlying EBITDA) increased to 1.36x (2021: 0.84x) mainly as a result of debt taken
out to complete the acquisitions. The Group does not view the increased gearing ratio as a risk given acquisition debt is
amortized and repaid through profits generated from the acquired business and is expected to be repaid in full over a 4-5
year term. Net Debt is a non-IFRS measure and means Total Borrowings less Cash and Cash Equivalents.
Gearing Ratio (Net Debt / Underlying EBITDA)
2022
2021
1.36x
0.84x
12
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Dividends
Amounts recognised as dividends:
During the year ended 30 June 2022:
For the year ended 30 June 2022:
First interim dividend of $0.00363 per ordinary share, paid on 30 July 2021
Second interim dividend of $0.00363 per ordinary share, paid on 31 August 2021
Third interim dividend of $0.00363 per ordinary share, paid on 30 September 2021
Fourth interim dividend of $0.00363 per ordinary share, paid on 29 October 2021
Fifth interim dividend of $0.00363 per ordinary share, paid on 30 November 2021
Sixth interim dividend of $0.00363 per ordinary share, paid on 31 December 2021
Seventh interim dividend of $0.00363 per ordinary share, paid on 31 January 2022
Eighth interim dividend of $0.00363 per ordinary share, paid on 28 February 2022
Ninth interim dividend of $0.00363 per ordinary share, paid on 31 March 2022
Tenth interim dividend of $0.00363 per ordinary share, paid on 29 April 2022
Eleventh interim dividend of $0.00363 per ordinary share, paid on 31 May 2022
Twelfth interim dividend of $0.00363 per ordinary share, paid on 30 June 2022
For the year ended 30 June 2021:
Final dividend of $0.00680 per ordinary share, paid on 20 August 2021
Special dividend of $0.00520 per ordinary share, paid on 20 August 2021
Special dividend of $0.00440 per ordinary share, paid on 30 September 2021
Special dividend of $0.00800 per ordinary share, paid on 29 October 2021
During the year ended 30 June 2021:
For 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
Consolidated
2022
$
2021
$
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
1,960,200
306,000
234,000
198,000
360,000
1,098,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
602,490
599,831
148,683
148,684
148,684
148,500
148,500
148,500
2,093,872
3,058,200
2,093,872
Final dividend for the year ended 30 June 2022 will be declared and paid prior to November 2022 and will be at a minimum
1.49 cents per share. Total ordinary dividends (excluding special dividends) for the year ended 30 June 2022 including the
final dividend is expected to be 5.85 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 7 acquisitions with total annual revenues of $11.7m to $15.2m. Details of the
acquisitions can be found in the preceding “Acquisitions and integration” 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
Appointment of Non-Executive Independent Director
On 1 July 2022, Lawrence Cunningham was appointed Non-Executive Independent Director.
13
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Acquisitions
On 1 July 2022, Kelly Partners Group Holdings Limited, acquired an accounting firm located in Dungog, NSW. The acquisition
is expected to contribute approximately $3.4m to $4.2m in annual revenues to the consolidated Group and approximately
$0.4m to $0.5m NPATA to the Parent.
On 21 July 2022, a subsidiary of Kelly Partners Group Holdings Limited executed agreements to acquire an accounting firm
located in Leeton, 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. The acquisition is expected to complete on 1 September
2022. For further details on the above acquisition, please refer to the latest ASX announcements.
The business combination disclosures have not been included as the acquisition accounting has not been finalised.
Parent entity facilities
On 7 July 2022, Westpac approved the increase in the parent's revolving line of credit from $400,000 to $3,000,000.
Apart from the matters discussed above, no other matter or circumstance has arisen since 30 June 2022 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.
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 31 businesses
over 20 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
22,646,592 ordinary shares
None
None
14
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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 50 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
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 and cyber security experience. He is currently on the board of thinkproject
Australia & New Zealand, and previously held board positions at the Open Data
Institute and Advanced Navigation. Ryan has served in numerous senior IT
management roles, including Group Chief Information Officer (CIO) and Group Chief
Information Security Officer (CISO) at Laing O'Rourke (2012-2022), Ryan has also held
various senior IT positions at financial, insurance, construction, and retail operations
globally. Ryan is co-founder of ECPPro, a Microsoft Azure cloud focused solution
provider helping large corporations and MSP (Managed Service Providers) to manage
complex cloud environments.
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
Member of the Audit and Risk Committee
159,901 ordinary shares
None
None
15
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Name:
Title:
Qualifications:
Experience and expertise:
Lawrence Cunningham (appointed on 1 July 2022)
Non-Executive Independent Director
BA Economics, JD
Lawrence is an expert on corporate governance, culture, and structure. Since 2007, he
has been the Tucker Research Professor at The George Washington University.
Cunningham has written extensively on corporate affairs in university journals and
periodicals. He has published many influential books, including The Essays of Warren
Buffett: Lessons for Corporate America, in collaboration with Mr. Buffett; The AIG Story,
with Hank Greenberg; and Quality Shareholders: How the Best Managers Attract and
Keep Them.
Lawrence is Vice Chairman of the Board of Constellation Software Inc., a Toronto Stock
Exchange company, and Director and former Treasurer of Ocean Colony LLC, a private
resort in East Hampton, New York. Cunningham is a Trustee of the Museum of
American Finance; a Member of the Dean's Council of Lerner College of Business at
the University of Delaware; and a Member of the Editorial Board of Financial History.
Lawrence has served on the Boards of Directors of Ashford Hospitality Prime, an NYSE
investor in luxury hotels; Pearl West Group, a private investment company in
Vancouver, and Strata, a private technology company in Silicon Valley.
A former Corporate Associate of Cravath, Swaine & Moore, Lawrence consults for
public and private corporations and advises management and boards of directors. He
has received numerous awards, including the 2018 B. Kenneth West Lifetime
Achievement Award from the National Association of Corporate Directors (NACD).
Vice Chairman of the Board of Constellation Software Inc. (TSE: CSU)
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
None
Contractual rights to shares:
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. Paul is the managing director of Kelly+Partners Sydney.
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 Audit and Risk Committee
166,243 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 20 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.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
397,698 ordinary shares
Interests in shares:
None
Interests in options:
None
Contractual rights to shares:
16
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Company secretary
Joyce Au - BCom, MCom, MTax, MA(Law), MAppFin. CA
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 2022, 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
6
6
6
6
6
6
6
6
6
1
1
1
-
-
1
1
1
-
-
-
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 ('KMP') remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP 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 KMP
17
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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.
18
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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 FY2022 the EIP Trust purchased 190,023 shares on
market for a total of $797,963 with an average share price of $4.04. As at 30 June 2022, total shares of 256,112 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 2022 there was no link between Group performance and KMP 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 KMP 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 2021 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 KMP of the Group are set out in this section.
The KMP 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
$
45,455
36,364
338,306
10,909
10,909
441,943
-
-
-
-
-
-
-
-
4,545
3,636
-
-
26,945
-
-
26,945
23,568
1,091
1,091
33,931
40,633
-
-
40,633
-
-
-
-
-
-
Total
$
50,000
40,000
429,452
12,000
12,000
543,452
2022
Non-Executive Directors:
Stephen Rouvray
Ryan Macnamee
Executive Directors:
Brett Kelly
Paul Kuchta
Ada Poon
19
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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
Details of Paul Kuchta and Ada Poon's remuneration are outlined below under 'Service agreements'.
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
2021
2022
At risk - STI
At risk - LTI
2022
2021
2022
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Service agreements
Remuneration and other terms of employment for KMP 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.
20
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
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.
Lawrence Cunningham
Non-Executive Independent Director
1 July 2022
No fixed period
Director fees of $60,000 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 and Kelly
Partners Sydney and receives a base salary plus dividends from the Operating
Business in accordance with the terms of the shareholders' 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 KMP as part of compensation during the year ended 30 June 2022.
Options
There were no options over ordinary shares issued to directors and other KMP as part of compensation that were outstanding
as at 30 June 2022.
Additional information
The earnings of the Group for the five years to 30 June 2022 are summarised below:
2022
$
2021
$
2020
$
2019
$
2018
$
Revenue and other gains
EBITDA
Profit after income tax
67,435,877
24,789,615
13,328,745
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
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2022
2021
2020
2019
2018
Share price at financial year end ($)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
3.88
12.36
12.36
21
3.40
10.24
10.24
0.88
8.84
8.84
0.89
5.35
5.35
1.23
9.63
9.63
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
Additional disclosures relating to KMP
Shareholding
The number of shares in the Company held during the financial year by each director and other members of KMP of the
Group, including their personally related parties, is set out below:
Ordinary shares
Brett Kelly
Stephen Rouvray
Ryan Macnamee
Paul Kuchta
Ada Poon
*
There were no shares received as part of remuneration.
Loans to/(from) KMP and their related parties
Key management personnel
Loans to directors:
Balance at the beginning of the year
- interest on loans
- repayment of loans advanced
Balance at the end of the year
Balance at
the start of Additions*/
(reduction)
the year
Other
22,701,961
150,000
145,046
164,000
351,227
23,512,234
(55,369)
-
14,855
2,243
46,471
8,200
Balance at
the end of
the year
22,646,592
150,000
159,901
166,243
397,698
23,520,434
-
-
-
-
-
-
2022
$
(73,926)
(237)
74,163
-
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. The facility is unsecured, repayable on demand and interest is charged at commercial rates. As at
30 June 2022 this facility was repaid in full.
Kelly Partners (Canberra) Property Trust
Loans from related party:
Balance at the beginning of the period
- loans from
- interest on loan
- payment
Balance at the end of the period
2022
$
-
(2,200,000)
(110,512)
110,512
(2,200,000)
Kelly Partners (Investment Office) Pty Ltd is the investment manager of Kelly Partners Investment Office Special
Opportunities Fund #2. Kelly Partners (Canberra) Property Trust is a wholly owned subsidiary of Kelly Partners Group
Holdings Limited.
On 20 December 2021, the Kelly Partners Investment Office Special Opportunities Fund #2 advanced a short term loan
facility of $2.2m to Kelly Partners (Canberra) Property Trust, to assist with the purchase of Unit 141, 39 Eastlake Parade,
Kingston ACT ('the Canberra Property'). The facility is secured by a mortgage over the Canberra Property and is guaranteed
by Kelly Partners Group Holdings Limited. The term of the facility is 12 months with interest charged at commercial rates.
Kelly Partners (Canberra) Property Trust expects to repay the facility in full on successful refinancing of the facility with a
commercial bank.
The Kelly Partners Canberra business has operated out of the Canberra Property since April 2022.
22
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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 2022 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.
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 32 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 32 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.
23
Kelly Partners Group Holdings Limited
Directors' report
30 June 2022
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
1 August 2022
Sydney
24
Kelly Partners Group Holdings Limited
Auditor’s independence declaration under section 307c of
the Corporations Act 2001
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2022
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck
Accountants & Advisors
ABN: 16 021 300 521
L.E. Tutt
Partner
Sydney, 1 August 2022
ACCOUNTANTS & ADVISORS
Sydney Office
Level 29, 66 Goulburn Street
Sydney NSW 2000
Parramatta Office
Level 7, 3 Horwood Place
Parramatta NSW 2150
Telephone: +61 2 8263 4000
williambuck.com
William Buck is an association of firms, each trading under the name of William Buck across Australia
and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
(WB013_2007)
Kelly Partners Group Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Revenue from continuing operations
Professional services revenue
Government grants and subsidies
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
Consolidated
Note
2022
$
2021
$
5
6
7
8
8
8
9
64,862,110
2,084,521
489,246
67,435,877
48,906,446
825,368
977,304
50,709,118
(32,267,931)
(96,409)
(9,503,564)
(778,358)
(6,330,126)
(2,038,179)
(51,014,567)
(22,659,311)
(145,900)
(7,847,131)
(1,169,342)
(4,427,456)
(1,550,839)
(37,799,979)
16,421,310
12,909,139
(3,092,565)
(1,963,663)
13,328,745
10,945,476
Loss after income tax benefit from discontinued operations
10
-
(4,925)
Profit after income tax (expense)/benefit for the year
13,328,745
10,940,551
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
4,915
(3,788)
4,915
(3,788)
Total comprehensive income for the year
13,333,660
10,936,763
Profit for the year is attributable to:
Non-controlling interests
Owners of Kelly Partners Group Holdings Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Non-controlling interests
Continuing operations
Discontinued operations
Owners of Kelly Partners Group Holdings Limited
7,765,776
5,562,969
6,318,214
4,622,337
13,328,745
10,940,551
7,768,185
-
7,768,185
6,316,358
-
6,316,358
5,565,475
-
5,565,475
4,625,330
(4,925)
4,620,405
13,333,660
10,936,763
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
26
Kelly Partners Group Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
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 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
11
11
11
11
11
11
Cents
Cents
12.36
12.36
10.25
10.25
-
-
(0.01)
(0.01)
12.36
12.36
10.24
10.24
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
27
Kelly Partners Group Holdings Limited
Consolidated statement of financial position
As at 30 June 2022
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
2022
$
2021
$
12
13
14
15
19
14
15
16
17
18
19
20
21
22
9
23
24
25
21
22
9
23
24
25
26
2,968,829
9,904,836
56,416
2,717,508
1,706,552
735,296
18,089,437
4,039,976
6,204,659
51,325
1,953,426
738,200
723,583
13,711,169
72,557
4,565,815
11,576,552
15,909,455
55,892,451
536,229
88,553,059
128,973
3,044,453
6,332,309
9,485,670
34,474,428
437,552
53,903,385
106,642,496
67,614,554
3,995,213
999,601
11,438,712
2,371,834
1,982,877
3,431,756
2,031,626
79,658
26,331,277
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
22,898,248
15,907,207
2,653,473
460,263
3,394,771
1,044,553
-
46,358,515
11,477,861
8,663,693
794,503
227,632
1,471,269
969,609
32,083
23,636,650
72,689,792
42,458,408
33,952,704
25,156,146
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
28
Kelly Partners Group Holdings Limited
Consolidated statement of financial position
As at 30 June 2022
Equity
Issued capital
Reserve
Retained profits
Equity attributable to the owners of Kelly Partners Group Holdings Limited
Non-controlling interests
Total equity
Consolidated
Note
2022
$
2021
$
27
28
13,469,960
2,088
7,224,669
20,696,717
13,255,987
13,469,960
(418)
4,479,057
17,948,599
7,207,547
33,952,704
25,156,146
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
29
Kelly Partners Group Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2022
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 27)
Equity attributable to acquisitions
Sale of equity interests
Amounts recognised as dividends (note 29)
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
Consolidated
Issued
capital
$
Reserve
$
Retained
profits
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2021
13,469,960
(418)
4,479,057
7,207,547
25,156,146
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:
Equity attributable to acquisitions (note 37)
Acquisition / sale of equity interest in subsidiary
Distributions to non-controlling interests
Amounts recognised as dividends (note 29)
-
-
-
-
-
-
-
-
5,562,969
7,765,776
13,328,745
2,506
-
2,409
4,915
2,506
5,562,969
7,768,185
13,333,660
-
-
-
-
-
240,843
-
(3,058,200)
5,166,150
-
(6,885,895)
-
5,166,150
240,843
(6,885,895)
(3,058,200)
Balance at 30 June 2022
13,469,960
2,088
7,224,669
13,255,987
33,952,704
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
30
Kelly Partners Group Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2022
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
2022
$
2021
$
66,092,248
(47,559,811)
2,084,521
23,670
(1,041,670)
(2,017,201)
53,359,426
(36,939,488)
1,125,254
106,515
(843,579)
(1,725,327)
Net cash from operating activities
39
17,581,757
15,082,801
Cash flows from investing activities
Payment for purchase of business
Payment for contingent consideration
Proceeds from sale of equity interest in subsidiary
Payments for investments
Payments for property, plant and equipment
Payments for intangibles
Payments to employee share scheme trust
Loans to partners - loans advanced
Loans to partners - proceeds from repayments
Proceeds from fitout contribution
Proceeds from disposal of property, plant and equipment
(Payments)/proceeds in respect of deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from related party loans
Repayment of borrowings
Payments for share buy-back
Proceeds from equity contribution, non-controlling interests
Dividends paid
Distributions paid to non-controlling interests
Repayment of lease liabilities
Proceeds from sub lease
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
24
39
39
39
27
39
(12,200,812)
(326,140)
240,843
-
(6,797,390)
(675,253)
(768,840)
(1,804,778)
471,669
889,338
170,711
(130,191)
(2,310,632)
(507,275)
-
(41,605)
(2,322,365)
(1,391)
(110,989)
(681,504)
1,252,212
233,333
-
37,636
(20,930,843)
(4,452,580)
21,206,865
2,200,000
(7,539,639)
-
975,691
(3,058,200)
(6,885,895)
(3,381,744)
59,292
6,538,544
-
(6,426,892)
(611,505)
-
(1,945,372)
(6,416,671)
(2,228,943)
92,956
3,576,370
(10,997,883)
227,284
776,662
(367,662)
1,144,324
Cash and cash equivalents at the end of the financial year
12
1,003,946
776,662
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
31
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
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 1 August 2022. 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.
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 36.
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 2022 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.
32
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interests acquired is recognised directly in equity
attributable to the parent.
Non-controlling interests 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 interests 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
interests 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.
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.
33
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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.
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.
34
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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
immediately.
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.
Accrued income and contract liabilities
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.
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.
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.
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.
35
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Buildings
Leasehold improvements
Plant and equipment
Motor vehicles
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.
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 3 years.
36
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans 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.
37
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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.
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 used to measure fair value are those that are appropriate in the circumstances and which
maximise the use of relevant observable inputs and minimise 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.
38
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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.
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 interests
in the acquiree. For each business combination, the non-controlling interests 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
interests 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 interests 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.
39
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
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 2022. 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 .
40
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
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.
41
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 4. Operating segments (continued)
Operating reportable segment information
Year ended 30 June 2022:
Revenue
EBITDA
Profit before income tax expense
Segment assets, liabilities and net assets at 30 June 2022:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
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
Note 5. Professional services revenue
Accounting
$
Other
services
$
Total
$
59,077,175
23,071,019
14,870,041
5,784,935
1,718,596
1,551,269
64,862,110
24,789,615
16,421,310
15,218,830
86,340,511
(24,067,820)
(43,541,117)
33,950,407
2,870,607
2,212,548
(2,263,457)
(2,817,398)
2,297
18,089,437
88,553,059
(26,331,277)
(46,358,515)
33,952,704
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
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
2022
$
2021
$
64,862,110
48,906,446
42
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 6. Government grants and subsidies
Government grants in relation to COVID-19
Government apprenticeship support programme
Consolidated
2022
$
2021
$
1,348,189
736,332
825,368
-
2,084,521
825,368
Government grants
Of the $1,348,189 (2021: $825,368) recognised in government grants relating to the Australian Governments’ supporting
measures in response to COVID-19, $1,348,189 (2021: $825,368) has been received in cash and $nil (2021: $nil) has been
accrued relating to FY22.
Note 7. Other income
Remeasurement of lease liabilities
Change in fair value of contingent consideration
Proceeds from settlement of legal dispute
Commissions
Other income
Other income
Consolidated
2022
$
2021
$
48,821
416,755
-
16,388
7,282
123,395
447,508
300,000
59,708
46,693
489,246
977,304
43
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 8. 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
Employment and related expenses
Salaries, wages and contractors
Superannuation*
Other on costs
Employee leave
Total employment and related expenses
Consolidated
2022
$
2021
$
2,477,468
1,490,599
2,362,059
2,174,598
1,178,108
1,074,750
6,330,126
4,427,456
651,823
1,041,670
344,686
505,023
843,579
202,237
2,038,179
1,550,839
336
49,450
28,968,513
2,006,042
879,782
413,594
20,494,875
1,351,327
677,683
135,426
32,267,931
22,659,311
*
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.
44
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 9. 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 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 before income tax benefit from discontinued operations
Tax at the statutory tax rate of 30% (2021: 26%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Other non-taxable items
Current year tax losses not recognised
Adjustment recognised for prior periods
Distributions to non-controlling interests
Change in tax rate to 30%
Income tax expense
Consolidated
2022
$
2021
$
3,072,893
37,093
(17,421)
-
1,891,749
(99,906)
127,794
43,273
3,092,565
1,962,910
3,092,565
-
1,963,663
(753)
3,092,565
1,962,910
16,421,310
-
12,909,139
(5,678)
16,421,310
12,903,461
4,926,393
3,354,900
83,394
8,414
5,009,787
50,974
(17,421)
(1,950,775)
-
3,363,314
-
127,794
(1,571,471)
43,273
3,092,565
1,962,910
As the majority of operating businesses are structured as partnerships, the income tax expense attributable to the non-
controlling interests in these partnerships is 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.
45
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 9. 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
Charged/(credited) to profit or loss
Additions through business combinations (note 37)
Other movements
Closing balance
Provision for income tax
Provision for income tax
Note 10. Discontinued operations
Consolidated
2022
$
2021
$
(939,484)
625,768
735,331
2,479,428
-
(247,570)
(532,492)
334,405
382,243
954,858
(78,244)
(266,267)
2,653,473
794,503
794,503
37,093
1,715,418
106,459
307,394
(99,906)
413,733
173,282
2,653,473
794,503
Consolidated
2022
$
2021
$
1,982,877
1,051,065
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
Other expenses
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit from discontinued operations
Consolidated
2022
$
2021
$
-
-
-
-
(5,678)
(5,678)
753
(4,925)
46
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 10. Discontinued operations (continued)
Cash flow information
Net cash used in operating activities
Net cash from investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents from discontinued operations
Note 11. Earnings per share
Earnings per share for profit from continuing operations
Profit after income tax
Non-controlling interests
Consolidated
2022
$
2021
$
-
-
-
-
(11,028)
21,500
(3,695)
6,777
Consolidated
2022
$
2021
$
13,328,745
(7,765,776)
10,945,476
(6,318,214)
Profit after income tax attributable to the owners of Kelly Partners Group Holdings Limited
5,562,969
4,627,262
Basic earnings per share
Diluted earnings per share
Earnings per share for loss from discontinued operations
Loss after income tax attributable to the owners of Kelly Partners Group Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit
Profit after income tax
Non-controlling interests
Cents
Cents
12.36
12.36
10.25
10.25
Consolidated
2022
$
2021
$
-
(4,925)
Cents
Cents
-
-
(0.01)
(0.01)
Consolidated
2022
$
2021
$
13,328,745
(7,765,776)
10,940,551
(6,318,214)
Profit after income tax attributable to the owners of Kelly Partners Group Holdings Limited
5,562,969
4,622,337
Basic earnings per share
Diluted earnings per share
Cents
Cents
12.36
12.36
10.24
10.24
47
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 11. Earnings per share (continued)
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic earnings per share
45,000,000
45,142,289
Weighted average number of ordinary shares used in calculating diluted earnings per share
45,000,000
45,142,289
Number
Number
Note 12. 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 21)
Balance as per statement of cash flows
Note 13. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Consolidated
2022
$
2021
$
2,968,829
4,039,976
2,968,829
(1,964,883)
4,039,976
(3,263,314)
1,003,946
776,662
Consolidated
2022
$
2021
$
10,273,615
(368,779)
6,420,216
(215,557)
9,904,836
6,204,659
Allowance for expected credit losses
The Group has written off a loss of $51,834 (2021: $140,323) in respect of credit losses during the year ended 30 June 2022.
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
2022
%
2021
%
Carrying amount
2021
$
2022
$
Allowance for expected
credit losses
2022
$
2021
$
0.81%
5.64%
40.92%
0.88%
5.77%
37.41%
8,793,989
871,599
608,027
5,522,598
533,218
364,400
70,819
49,155
248,805
48,432
30,791
136,334
10,273,615
6,420,216
368,779
215,557
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.
48
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 13. Trade and other receivables (continued)
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Note 14. Lease receivables
Current assets
Lease receivables
Non-current assets
Lease receivables
Note 15. Other financial assets
Current assets
Loans to partners
Non-current assets
Loans to partners
Loans to related parties
Consolidated
2022
$
2021
$
215,557
205,056
(51,834)
253,954
101,926
(140,323)
368,779
215,557
Consolidated
2022
$
2021
$
56,416
51,325
72,557
128,973
128,973
180,298
Consolidated
2022
$
2021
$
1,706,552
738,200
3,667,686
898,129
2,927,454
116,999
4,565,815
3,044,453
6,272,367
3,782,653
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.
49
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 16. 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
2022
$
2021
$
4,178,688
(118,302)
4,060,386
2,085,413
(46,860)
2,038,553
6,137,289
(2,388,567)
3,748,722
4,457,611
(1,780,741)
2,676,870
5,272,840
(1,989,573)
3,283,267
2,621,146
(1,403,303)
1,217,843
775,540
(291,363)
484,177
648,011
(248,968)
399,043
11,576,552
6,332,309
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 2020
Additions
Disposals - written down value
Other movements
Depreciation expense
Balance at 30 June 2021
Additions
Additions through business combinations (note
37)
Disposals - written down value
Net foreign currency and other movements
Depreciation expense
Land and
buildings
$
Leasehold
improve-
ments
$
Plant and
equipment
$
Motor
vehicles
$
Total
$
2,085,413
-
-
-
(46,860)
1,898,260
1,375,526
(5,360)
-
(591,556)
806,828
892,412
(19,774)
(459)
(461,164)
397,551
100,001
(19,981)
-
(78,528)
5,188,052
2,367,939
(45,115)
(459)
(1,178,108)
2,038,553
2,093,275
2,676,870
1,726,370
1,217,843
2,612,245
399,043
370,423
6,332,309
6,802,313
-
-
-
(71,442)
-
(3,052)
-
(651,466)
92,491
(4,600)
361
(635,073)
10,387
(163,058)
-
(132,618)
102,878
(170,710)
361
(1,490,599)
Balance at 30 June 2022
4,060,386
3,748,722
3,283,267
484,177
11,576,552
50
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 17. 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
2022
$
2021
$
21,467,495
(5,653,581)
15,813,914
14,379,975
(4,994,496)
9,385,479
337,073
(241,532)
95,541
252,355
(152,164)
100,191
15,909,455
9,485,670
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:
●
●
●
note 8 for details of depreciation on right-of-use assets, interest on lease liabilities and other lease payments;
note 22 for lease liabilities and maturities of lease liabilities;
consolidated statement of cash flow for repayment of lease liabilities.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Land and
buildings
$
Plant and
equipment
$
Total
$
Balance at 1 July 2020
Additions through business combinations (note 37)
Additions
Impairment of assets
Adjustments as a result of a different treatment of extension and termination
options
Depreciation expense
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)
Balance at 30 June 2021
Additions through business combinations (note 37)
Additions
Impairment of assets
Adjustments as a result of a different treatment of extension and termination
options
Depreciation expense
9,385,479
183,416
7,627,691
(165,902)
100,191
-
24,294
-
9,485,670
183,416
7,651,985
(165,902)
1,231,754
(2,448,524)
-
(28,944)
1,231,754
(2,477,468)
Balance at 30 June 2022
15,813,914
95,541
15,909,455
51
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 18. Intangible assets
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
2022
$
2021
$
36,058,902
25,264,891
3,300,000
3,300,000
24,325,076
(8,120,351)
16,204,725
11,780,770
(5,949,854)
5,830,916
665,141
(336,317)
328,824
223,376
(144,755)
78,621
55,892,451
34,474,428
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 2020
Additions
Additions through business combinations (note
37)
Amortisation expense
Balance at 30 June 2021
Additions
Additions through business combinations (note
37)
Amortisation expense
Brand names
and
intellectual
property
$
Goodwill
$
Customer
relationships
$
Computer
Software
$
Total
$
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)
25,264,891
-
3,300,000
-
5,830,916
358,850
78,621
436,484
34,474,428
795,334
10,794,011
-
-
-
12,185,456
(2,170,497)
5,281
(191,562)
22,984,748
(2,362,059)
Balance at 30 June 2022
36,058,902
3,300,000
16,204,725
328,824
55,892,451
Brand names and intellectual property have indefinite useful lives and are not amortised.
52
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 18. Intangible assets (continued)
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:
2022 - Consolidated
Kelly Partners North Sydney Partnership
Kelly Partners (Sydney) Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Western Sydney Partnership
Kelly Partners Wollongong Partnership
Other partnerships
2021 - Consolidated
Kelly Partners (Sydney) Pty Ltd
Kelly Partners South West Sydney Partnership
Kelly Partners Wollongong Partnership
Other partnerships
Brand names
and
intellectual
property
$
Total
$
361,542
478,835
480,156
466,873
310,397
1,202,197
4,312,090
5,711,035
5,726,792
5,568,369
3,702,089
14,338,527
Goodwill
$
3,950,548
5,232,200
5,246,636
5,101,496
3,391,692
13,136,330
36,058,902
3,300,000
39,358,902
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
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
Discount rate
Consolidated
2022
%
2021
%
2.5%
8.1%
2.5%
8.6%
The 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.
53
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 19. Other assets
Current assets
Prepayments
Non-current assets
Deposits
Other
Consolidated
2022
$
2021
$
735,296
723,583
482,418
53,811
384,310
53,242
536,229
437,552
1,271,525
1,161,135
Deposits primarily comprise of amounts used as security for bank guarantees. Refer to note 33 for further information on
guarantees.
Note 20. Trade and other payables
Current liabilities
Trade payables
GST payable
Sundry payables and accrued expenses
Refer to note 30 for further information on financial instruments.
Note 21. Borrowings
Current liabilities
Bank overdrafts
Bank loans
Related party loans
Non-current liabilities
Bank loans
Consolidated
2022
$
2021
$
991,748
1,188,202
1,815,263
853,898
932,975
1,241,821
3,995,213
3,028,694
Consolidated
2022
$
2021
$
1,964,883
7,273,829
2,200,000
3,263,314
5,026,990
-
11,438,712
8,290,304
22,898,248
11,477,861
34,336,960
19,768,165
Refer to note 30 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.
54
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 21. Borrowings (continued)
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 2022, the parent has a $400,000 revolving line of term credit. As at 7 July 2022, the revolving line of term
credit was increased to $3,000,000. 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.
Related party loans
Refer to note 35 for further information.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
2022
$
2021
$
11,450,137
30,452,116
2,200,000
44,102,253
7,544,000
18,395,150
-
25,939,150
1,964,883
30,172,077
2,200,000
34,336,960
3,263,314
16,504,851
-
19,768,165
9,485,254
280,039
-
9,765,293
4,280,686
1,890,299
-
6,170,985
Total facilities
Bank overdraft
Bank loans
Related party loan
Used at the reporting date
Bank overdraft
Bank loans
Related party loan
Unused at the reporting date
Bank overdraft
Bank loans
Related party loan
55
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 22. Lease liabilities
Current liabilities
Lease liabilities
Non-current liabilities
Lease liabilities
Refer to note 30 for further information on financial instruments.
Contractual maturities of lease liabilities at 30 June 2022 and 30 June 2021 is set out below:
Consolidated
2022
$
2021
$
2,371,834
2,383,296
15,907,207
8,663,693
18,279,041
11,046,989
Carrying
amount
$
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
18,279,041
2,371,834
2,067,661
4,858,378
8,981,168
18,279,041
11,046,989
2,383,295
2,077,487
3,438,285
3,147,922
11,046,989
Consolidated - 2022
Lease liabilities
Consolidated - 2021
Lease liabilities
Note 23. Provisions
Current liabilities
Employee entitlements
Dividends
Non-current liabilities
Employee entitlements
Note 24. Contingent consideration
Current liabilities
Contingent consideration
Non-current liabilities
Contingent consideration
56
Consolidated
2022
$
2021
$
3,431,756
-
1,845,086
148,500
3,431,756
1,993,586
460,263
227,632
3,892,019
2,221,218
Consolidated
2022
$
2021
$
2,031,626
697,682
3,394,771
1,471,269
5,426,397
2,168,951
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 24. Contingent consideration (continued)
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 discount rate
disclosed in note 18. The 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:
Opening balance
Additions
Additions through business combination (note 37)
Change in fair value of contingent consideration
Settled in cash
Fair value movement - unwinding of interest
Note 25. Other financial liabilities
Current liabilities
Loans from partners
Non-current liabilities
Loans from partners
Refer to note 15 for details on loans to and from partners.
Note 26. Other liabilities
Non-current liabilities
Deposits held
Note 27. Issued capital
Consolidated
2022
$
2021
$
2,168,951
125,362
3,530,293
(416,755)
(326,140)
344,686
1,445,800
127,000
1,348,697
(447,508)
(507,275)
202,237
5,426,397
2,168,951
Consolidated
2022
$
2021
$
79,658
60,473
1,044,553
969,609
1,124,211
1,030,082
Consolidated
2022
$
2021
$
-
32,083
Ordinary shares - fully paid
45,000,000
45,000,000
13,469,960
13,469,960
Consolidated
2022
Shares
2021
Shares
2022
$
2021
$
57
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 27. 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
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
Balance
Date
Shares
Issue price
$
1 July 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
45,400,000
(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
30 June 2022
45,000,000
$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
14,081,465
(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
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 11 October 2021, the Company announced the continuation of its share buy-back program of up to 5% of the minimum
number of Company's shares outstanding in the last 12 months (being a buy-back of up to 2,250,000 shares at 23 September
2020). During the financial year ended 30 June 2022, the Company did not buy-back any shares. At 30 June 2022, 2,250,000
shares are authorised for on-market buy-back.
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 21.
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.
58
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 28. Reserve
Foreign currency reserve
Consolidated
2022
$
2021
$
2,088
(418)
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 2020
Foreign currency translation
Less: share of non-controlling interest
Balance at 30 June 2021
Foreign currency translation
Less: share of non-controlling interest
Balance at 30 June 2022
Foreign
currency
$
1,514
(3,788)
1,856
(418)
4,915
(2,409)
2,088
59
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 29. Dividends
Amounts recognised as dividends:
During the year ended 30 June 2022:
For the year ended 30 June 2022:
First interim dividend of $0.00363 per ordinary share, paid on 30 July 2021
Second interim dividend of $0.00363 per ordinary share, paid on 31 August 2021
Third interim dividend of $0.00363 per ordinary share, paid on 30 September 2021
Fourth interim dividend of $0.00363 per ordinary share, paid on 29 October 2021
Fifth interim dividend of $0.00363 per ordinary share, paid on 30 November 2021
Sixth interim dividend of $0.00363 per ordinary share, paid on 31 December 2021
Seventh interim dividend of $0.00363 per ordinary share, paid on 31 January 2022
Eighth interim dividend of $0.00363 per ordinary share, paid on 28 February 2022
Ninth interim dividend of $0.00363 per ordinary share, paid on 31 March 2022
Tenth interim dividend of $0.00363 per ordinary share, paid on 29 April 2022
Eleventh interim dividend of $0.00363 per ordinary share, paid on 31 May 2022
Twelfth interim dividend of $0.00363 per ordinary share, paid on 30 June 2022
For the year ended 30 June 2021:
Final dividend of $0.00680 per ordinary share, paid on 20 August 2021
Special dividend of $0.00520 per ordinary share, paid on 20 August 2021
Special dividend of $0.00440 per ordinary share, paid on 30 September 2021
Special dividend of $0.00800 per ordinary share, paid on 29 October 2021
During the year ended 30 June 2021:
For 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
Consolidated
2022
$
2021
$
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
163,350
1,960,200
306,000
234,000
198,000
360,000
1,098,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
602,490
599,831
148,683
148,684
148,684
148,500
148,500
148,500
2,093,872
3,058,200
2,093,872
Final dividend for the year ended 30 June 2022 will be declared and paid prior to November 2022 and will be at a minimum
1.49 cents per share. Total ordinary dividends (excluding special dividends) for the year ended 30 June 2022 including the
final dividend is expected to be 5.85 cents per share, representing a 10% increase on prior year ordinary dividends.
Franking credits
Franking credits available for subsequent financial years
3,858,563
2,796,189
Consolidated
2022
$
2021
$
60
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 29. Dividends (continued)
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note 30. Financial instruments
Financial risk management objectives
The Group is exposed to a variety of financial risks through its use of financial instruments: market risk (including interest
rate risk and price risk), credit risk and liquidity risk.
The Group‘s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial
markets.
The Group does not use derivative financial instruments or speculate in financial assets.
Risk management is carried out by senior management under policies approved by the Board of Directors ('the Board'). The
policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk
limits. Management identifies and evaluates financial risks within the Group's businesses and reports to the Board on a
regular basis.
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable, bank loans and
overdrafts, loans to and from subsidiaries, and leases.
Market risk
Price risk
The Group is not exposed to any significant 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 floating
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% (2021: +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
%
2022
+1%
$
Weighted
average
interest rate
%
-1%
$
2021
+1%
$
-1%
$
4.74%
4.56%
(19,649)
(301,721)
19,649
301,721
3.68%
2.92%
(32,633)
(165,049)
32,633
165,049
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.
61
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 30. Financial instruments (continued)
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.
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.
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 - 2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing
Bank overdrafts
Bank loans*
Related party 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
$
-
-
-
991,748
3,003,465
2,031,626
-
-
3,394,771
-
-
-
-
-
-
991,748
3,003,465
5,426,397
4.74%
4.56%
9.50%
5.11%
1,964,883
7,273,829
2,200,000
2,371,834
19,837,385
-
6,130,475
-
2,067,661
11,592,907
-
14,528,259
-
4,858,378
19,386,637
-
2,239,514
-
8,981,168
11,220,682
1,964,883
30,172,077
2,200,000
18,279,041
62,037,611
Lease liabilities of $2,371,834 includes $1,187,952 payable within 6 months.
*
As at 30 June 2022, bank loans of $6,816,721 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.
62
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 30. Financial instruments (continued)
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.
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 31. 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
Other key management personnel transactions
For details of other transactions with key management personnel, refer to note 35.
Consolidated
2022
$
2021
$
466,284
33,931
43,237
538,671
29,270
4,873
543,452
572,814
63
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 32. 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:
Audit services - William Buck Accountants & Advisors
Audit or review of the financial statements
Other services - William Buck Accountants & Advisors
Audit of operating business' trust accounts
Note 33. Contingent liabilities
Consolidated
2022
$
2021
$
86,600
71,150
5,465
6,020
92,065
77,170
Bank guarantees as at 30 June 2022 totalling $932,909 (2021: $778,567) 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 2022 and 30
June 2021.
Note 34. 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 35. Related party transactions
Parent entity
Kelly Partners Group Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 38.
Consolidated
2022
$
2021
$
48,743
-
-
229,818
Key management personnel
Disclosures relating to key management personnel are set out in note 31 and the remuneration report included in the
directors' report.
64
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 35. Related party transactions (continued)
Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
Loans to/(from) related parties
Key management personnel
Loans to directors:
Balance at the beginning of the year
- loans from
- interest on loans
- repayment of loans advanced/(from)
Balance at the end of the year
2022
$
2021
$
(73,926)
-
(237)
74,163
18,143
(72,000)
(1,065)
(19,004)
-
(73,926)
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. The facility is unsecured, repayable on demand and interest is charged at commercial rates. As at
30 June 2022 this facility was repaid in full.
Kelly Partners (Canberra) Property Trust
Loans from related party:
Balance at the beginning of the period
- loans from
- interest on loan
- payment
Balance at the end of the period
2022
$
2021
$
-
(2,200,000)
(110,512)
110,512
(2,200,000)
-
-
-
-
-
Kelly Partners (Investment Office) Pty Ltd is the investment manager of Kelly Partners Investment Office Special
Opportunities Fund #2. Kelly Partners (Canberra) Property Trust is a wholly owned subsidiary of Kelly Partners Group
Holdings Limited.
On 20 December 2021, the Kelly Partners Investment Office Special Opportunities Fund #2 advanced a short term loan
facility of $2.2m to Kelly Partners (Canberra) Property Trust, to assist with the purchase of Unit 141, 39 Eastlake Parade,
Kingston ACT ('the Canberra Property'). The facility is secured by a mortgage over the Canberra Property and is guaranteed
by Kelly Partners Group Holdings Limited. The term of the facility is 12 months with interest charged at commercial rates.
Kelly Partners (Canberra) Property Trust expects to repay the facility in full on successful refinancing of the facility with a
commercial bank.
The Kelly Partners Canberra business has operated out of the Canberra Property since April 2022.
65
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 35. Related party transactions (continued)
Employee Share trust
Balance at the beginning of the year
- loans advanced
- interest on loan
- repayment of loans
Balance at the end of the year
2022
$
2021
$
116,999
768,840
13,957
(1,667)
-
110,989
6,010
-
898,129
116,999
In FY2021 and FY2022, 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).
Partners
Loans (to)/from partners are set out in note 15 and note 25.
Direct interest in subsidiaries
The following related parties hold a direct interest in the respective subsidiary of the Group:
Related party
Paul Kuchta
Paul Kuchta
Ada Poon
Note 36. Parent entity information
Subsidiary
2022
2021
Interest held Interest held
Kelly Partners Norwest Partnership
Kelly Partners (Sydney) Pty Ltd
Kelly Partners North Sydney Partnership
-
9.00%
9.75%
25.50%
-
10.00%
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
66
2022
$
2021
$
5,878,341
4,713,746
5,878,341
4,713,746
2022
$
2021
$
9,179,179
25,470,679
34,649,858
6,051,543
20,769,806
26,821,349
2,543,437
8,745,976
11,289,413
1,851,979
4,669,910
6,521,889
23,360,445
20,299,460
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 36. Parent entity information (continued)
Guarantees entered into by the parent entity in relation to the debts of 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 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.
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 37. Business combinations
Acquisitions during the year ended 30 June 2022
Kelly Partners Newcastle (formerly Kelly Partners Hunter Region)
On 1 July 2021, Kelly Partners (Newcastle) Pty Ltd acquired an accounting business in Newcastle, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $1,047,321 and a net profit before tax and amortisation of $94,161 to the
Group for the period from 1 July 2021 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
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 or payable to vendor
Contingent consideration
Fair value
$
312,628
(35,079)
(83,354)
194,195
889,878
1,084,073
782,012
302,061
1,084,073
Kelly Partners Sydney
On 12 July 2021, Kelly Partners (Sydney) Pty Ltd acquired an accounting business in Sydney, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
67
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $2,534,835 and a net profit before tax and amortisation of $818,096 to the
Group for the period from 12 July 2021 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
Details of the acquisition are as follows:
Customer relationships
Right-of-use assets
Deferred tax liabilities
Employee benefits
Lease liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Contingent consideration
Fair value
$
999,887
165,902
(239,097)
(202,898)
(209,045)
514,749
1,694,053
2,208,802
1,801,814
406,988
2,208,802
Kelly Partners Western Sydney
On 11 November 2021, Kelly Partners (Western Sydney) Pty Ltd acquired an accounting business in Penrith, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The NCI is valued based on a proportion of net assets.
The acquired business contributed revenues of $3,049,059 and a net profit before tax and amortisation of $961,446 to the
Group for the period from 11 November 2021 to 30 June 2022. Note the revenue and profit figures disclosed here may be
part year and include implementation and restructuring costs that may be one-off and non-recurring in nature.
68
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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 or payable to vendor
Equity contribution from NCI
Contingent consideration
Fair value
$
3,114,172
(398,024)
(465,976)
2,250,172
3,807,986
6,058,158
3,101,642
2,100,031
856,485
6,058,158
Kelly Partners Canberra
On 1 December 2021, Kelly Partners (Canberra) acquired an accounting business in Canberra, ACT.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $272,225 and a net profit before tax and amortisation of $53,146 to the Group
for the period from 1 December 2021 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
Details of the acquisition are as follows:
Fixed assets
Accrued income
Customer relationships
Deferred tax liabilities
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Contingent consideration
Fair value
$
10,000
7,500
599,490
(45,501)
(5,699)
565,790
472,191
1,037,981
935,681
102,300
1,037,981
Kelly Partners Melbourne
On 17 January 2022, Kelly Partners (Melbourne CBD) Pty Ltd acquired an accounting business in Carlton, VIC.
69
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $719,547 and a net profit before tax and amortisation of $201,729 to the
Group for the period from 17 January 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part
year and include implementation and restructuring costs that may be one-off and non-recurring in nature.
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 or payable to vendor
Contingent consideration
Fair value
$
951,138
(119,330)
(171,205)
660,603
619,255
1,279,858
781,905
497,953
1,279,858
Kelly Partners Northern Beaches
On 1 February 2022, Kelly Partners (Northern Beaches) Pty Ltd acquired an accounting business in Narrabeen, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $406,962 and a net profit before tax and amortisation of $147,428 to the
Group for the period from 1 February 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part
year and include implementation and restructuring costs that may be one-off and non-recurring in nature.
70
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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 or payable to vendor
Contingent consideration
Fair value
$
743,947
(101,593)
(79,944)
562,410
134,286
696,696
493,202
203,494
696,696
Kelly Partners Private Wealth (Northern Beaches)
On 1 February 2022, Kelly Partners Private Wealth (Northern Beaches) Pty Ltd acquired a wealth management business in
Narrabeen, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $196,910 and a net loss before tax and amortisation of $76,447 to the Group
for the period from 1 February 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
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 or payable to vendor
Contingent consideration
71
Fair value
$
621,973
(124,336)
(76,639)
420,998
402,976
823,974
587,217
236,757
823,974
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
Kelly Partners Canberra
On 1 February 2022, Kelly Partners (Canberra) acquired an accounting business in Canberra, ACT.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $375,575 and a net profit before tax and amortisation of $48,468 to the Group
for the period from 1 February 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
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 or payable to vendor
Contingent consideration
Fair value
$
778,921
(59,120)
(12,077)
707,724
346,289
1,054,013
873,695
180,318
1,054,013
Kelly Partners Central Coast
On 1 March 2022, Kelly Partners (Central Coast) Pty Ltd acquired an accounting business in Erina, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
The acquired business contributed revenues of $341,364 and a net profit before tax and amortisation of $221,008 to the
Group for the period from 1 March 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part
year and include implementation and restructuring costs that may be one-off and non-recurring in nature.
72
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
Details of the acquisition are as follows:
Accrued income
Customer relationships
Deferred tax liabilities
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Fair value
$
20,067
584,097
(82,806)
(33,157)
488,201
351,899
840,100
840,100
Kelly Partners Private Wealth (Central Coast & Hunter Region)
On 1 March 2022, Kelly Partners Private Wealth (Central Coast & Hunter Region) Pty Ltd acquired a wealth management
business in Erina, NSW.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $94,864 and a net profit before tax and amortisation of $10,744 to the Group
for the period from 1 March 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year and
include implementation and restructuring costs that may be one-off and non-recurring in nature.
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 or payable to vendor
Contingent consideration
Fair value
$
113,846
(34,154)
(11,187)
68,505
460,924
529,429
434,041
95,388
529,429
Kelly Partners Bendigo
On 1 April 2022, Kelly Partners (Bendigo) Pty Ltd acquired an accounting business in Bendigo, VIC.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
73
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The NCI is valued based on a proportion of net assets.
The acquired business contributed revenues of $1,058,930 and a net profit before tax and amortisation of $99,623 to the
Group for the period from 1 April 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year
and include implementation and restructuring costs that may be one-off and non-recurring in nature.
Details of the acquisition are as follows:
Fixed assets
Right-of-use assets
Customer relationships
Lease liabilities
Deferred tax liabilities
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Equity contribution from NCI
Contingent consideration
Fair value
$
98,159
17,514
3,265,718
(20,705)
(446,486)
(289,742)
2,624,458
1,557,235
4,181,693
1,488,503
2,090,428
602,762
4,181,693
Kelly Partners Growth Consulting Pty Ltd
On 5 April 2022, Kelly Partners Growth Consulting Pty Ltd acquired a consulting business in Melbourne, VIC.
The goodwill is attributable to synergies expected to be achieved from integrating the business in to the Kelly Partners
system. The goodwill recognised is not deductible for tax purposes.
Contingent consideration is based on the acquired business achieving the target revenue post completion.
The acquired business contributed revenues of $70,052 and a net profit before tax and amortisation of $49,198 to the Group
for the period from 5 April 2022 to 30 June 2022. Note the revenue and profit figures disclosed here may be part year and
include implementation and restructuring costs that may be one-off and non-recurring in nature.
74
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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 or payable to vendor
Contingent consideration
Fair value
$
99,639
(29,892)
69,747
57,039
126,786
81,000
45,786
126,786
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.
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 or payable to vendor
Contingent consideration
Fair value
$
267,887
(35,179)
232,708
159,905
392,613
242,939
149,674
392,613
Kelly Partners Central Coast
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.
75
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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 or payable to vendor
Contingent consideration
Fair value
$
243,536
(31,723)
211,813
164,299
376,112
214,661
161,451
376,112
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 or payable to vendor
Contingent consideration
76
Fair value
$
330,484
(43,822)
(41,571)
245,091
522,861
767,952
553,779
214,173
767,952
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. 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:
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
$
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
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.
77
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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
$
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.
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
78
Fair value
$
18,791
159,049
2,980
180,820
(88,602)
195,358
287,576
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 37. Business combinations (continued)
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
190,827
96,749
287,576
287,576
(18,791)
(96,749)
172,036
Note 38. Interests in subsidiaries
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
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
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
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
Kelly Partners Property Group Holdings Pty Ltd
79
Country of
incorporation
Ownership interest
2021
2022
%
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
100.00%
58.25%
100.00%
50.10%
100.00%
50.01%
100.00%
50.50%
100.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
100.00%
51.00%
100.00%
59.64%
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%
100.00%
100.00%
58.25%
100.00%
50.10%
100.00%
51.00%
100.00%
50.50%
100.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
100.00%
51.00%
100.00%
51.00%
100.00%
51.00%
100.00%
51.00%
50.50%
25.30%
50.50%
51.00%
100.00%
100.00%
100.00%
51.00%
51.00%
100.00%
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 38. Interests in subsidiaries (continued)
Name
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
KP GH CA Pty Ltd
Kelly Partners Corporate Advisory Partnership
KP GH NZ Pty Ltd (deregistered 25 April 2022)
Kelly Partners New Zealand Partnership (dissolved April 2022)
Kelly Partners SMSF Advisory Pty Ltd
KPIO Pty Ltd
Kelly Partners Private Wealth Pty Ltd
Kelly Partners Melbourne CBD Partnership
Kelly Partners Private Wealth Wholesale Partnership
Kelly Partners Alternative Asset Management Pty Ltd
Kelly Partners Ancillary Services Pty Ltd
Kelly Partners Finance (Central Coast & Hunter Region) Pty Ltd
Kelly Partners (Investment Office) 3 Pty Ltd (formerly Kelly Partners
Investment Office (Locations) Pty Ltd)
Kelly Partners (Investment Office) Pty Ltd
Kelly Partners Life Insurance Services (Central Coast & Hunter Region)
Pty Ltd
Kelly Partners Private Wealth (Central Coast & Hunter Region) Pty Ltd
KP GH AI Pty Ltd
KP GH HR Pty Ltd (formerly KP GH Care Pty Ltd)
KP GH CT Pty Ltd
KP GH EL Pty Ltd (deregistered 11 April 2022)
KP GH FIN CC Pty Ltd
KP GH GI Pty Ltd
KP GH NE Pty Ltd (formerly 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 (dissolved March
2021)
Kelly Partners Newcastle Partnership (formerly Kelly Partners Hunter
Region Partnership)
Kelly Partners Central Tablelands Partnership
Kelly Partners Pittwater Partnership
KP Care Partnership (dissolved May 2022)
Kelly Partners (Gold Coast) Pty Ltd
Kelly Partners (Growth Consulting) Pty Ltd
Kelly Partners Strategic Alliances Pty Ltd
KP GH BD Pty Ltd
KP GH UNS Pty Ltd
KP GH WM CC Pty Ltd
80
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2021
2022
%
%
100.00%
51.00%
100.00%
50.05%
100.00%
51.00%
51.00%
99.97%
100.00%
100.00%
100.00%
51.00%
-
-
100.00%
75.50%
100.00%
51.00%
51.00%
100.00%
100.00%
51.00%
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%
100.00%
66.00%
51.00%
100.00%
100.00%
51.00%
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%
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%
100.00%
-
51.00%
51.00%
68.00%
51.00%
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
51.00%
68.00%
51.00%
51.00%
-
-
100.00%
-
-
100.00%
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 38. Interests in subsidiaries (continued)
Name
KP GH WM NB Pty Ltd
KP GH LE Pty Ltd
Kelly Partners (Southport) Pty Ltd
KP GH GC Pty Ltd
Better Life Accounting Pty Ltd
Kelly Partners (Investment Office) Global Pty ltd
KP GH PM Pty Ltd
KP GH HR & C Pty Ltd
KP GH PW MB Pty Ltd
Kelly Partners General Insurance Partnership
Kelly Partners Private Wealth Northern Beaches Partnership
Kelly Partners Bendigo Partnership
Kelly Partners (Canberra) Property Trust
Kelly Partners (Central Tablelands) Property Trust
Kelly Partners Property Fund
Country of
incorporation
Ownership interest
2021
2022
%
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.99%
76.00%
50.01%
100.00%
90.00%
100.00%
-
-
-
-
-
-
-
-
-
51.00%
-
-
-
90.00%
-
The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
The Group has control over the Kelly Partners Oran Park Partnership because it controls the controlling partner of the
partnership, the Kelly Partners (South West Sydney) Trust.
(b) Subsidiaries with non-controlling interests
The following table summarises the aggregate financial information in relation to the share of the Group's subsidiaries held
by non-controlling interests. The information is before inter-company eliminations with other companies within the Group.
Revenue
Profit attributable to non-controlling interests
Distributions to non-controlling interests
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Consolidated
2022
$
2021
$
31,750,801
7,765,776
6,885,895
15,289,774
25,881,074
(7,253,393)
(18,736,774)
15,180,682
23,791,845
6,318,214
6,416,667
8,523,584
14,061,542
(4,839,385)
(7,944,082)
9,801,658
(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.
81
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 39. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax (expense)/benefit for the year
13,328,745
10,940,551
Consolidated
2022
$
2021
$
Adjustments for:
Depreciation and amortisation
Fair value movement - unwinding of interest
Other non-cash movements
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in deferred tax assets
Increase in trade and other payables
Increase in provision for income tax
Net cash from operating activities
Non-cash investing and financing activities
6,330,126
344,686
(3,056,873)
4,427,456
202,237
(1,397,002)
(4,981,886)
1,858,970
2,826,177
931,812
(54,803)
302,027
497,375
164,960
17,581,757
15,082,801
Consolidated
2022
$
2021
$
Additions to the right-of-use assets
Adjustments as a result of a different treatment of extension and termination options
7,651,984
1,231,755
6,299,871
(479,852)
8,883,739
5,820,019
82
23,470,909
(2,228,943)
6,538,544
(6,426,892)
6,299,871
501,596
(603,245)
27,551,840
(3,381,744)
8,541,322
23,406,865
(7,539,639)
110,512
(110,512)
229,750
Kelly Partners Group Holdings Limited
Notes to the consolidated financial statements
30 June 2022
Note 39. Cash flow information (continued)
Changes in liabilities arising from financing activities
Consolidated
Bank
loans
$
Lease
liabilities
$
Related
party loans
$
Total
$
Balance at 1 July 2020
Net cash used in financing activities
Proceeds from borrowings
Repayment of borrowings
Acquisition of leases
Changes through business combinations (note 37)
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
-
(603,245)
-
-
-
-
-
-
-
Balance at 30 June 2021
Net cash used in financing activities
Acquisition of leases
Proceeds from borrowings
Repayment of borrowings
Interest on loan
Repayment of loan
Changes through business combinations (note 37)
Adjustments as a result of a different treatment of extension
and termination options
Other changes
16,504,851
-
-
21,206,865
(7,539,639)
-
-
-
11,046,989
(3,381,744)
8,541,322
-
-
-
-
229,750
-
-
-
2,200,000
-
110,512
(110,512)
-
-
-
1,182,934
659,790
-
-
1,182,934
659,790
Balance at 30 June 2022
30,172,077
18,279,041
2,200,000
50,651,118
Note 40. Events after the reporting period
Appointment of Non-Executive Independent Director
On 1 July 2022, Lawrence Cunningham was appointed Non-Executive Independent Director.
Acquisitions
On 1 July 2022, Kelly Partners Group Holdings Limited, acquired an accounting firm located in Dungog, NSW. The acquisition
is expected to contribute approximately $3.4m to $4.2m in annual revenues to the consolidated Group and approximately
$0.4m to $0.5m NPATA to the Parent.
On 21 July 2022, a subsidiary of Kelly Partners Group Holdings Limited executed agreements to acquire an accounting firm
located in Leeton, 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. The acquisition is expected to complete on 1 September
2022. For further details on the above acquisition, please refer to the latest ASX announcements.
The business combination disclosures have not been included as the acquisition accounting has not been finalised.
Parent entity facilities
On 7 July 2022, Westpac approved the increase in the parent's revolving line of credit from $400,000 to $3,000,000.
Apart from the matters discussed above and dividend declared as disclosed in note 29, no other matter or circumstance has
arisen since 30 June 2022 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.
83
Kelly Partners Group Holdings Limited
Directors' declaration
30 June 2022
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
2022 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
1 August 2022
Sydney
84
Kelly Partners Group Holdings Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Kelly Partners Group Holdings Limited (the
Company and its subsidiaries [the Group]), which comprises the consolidated statement of
financial position as at 30 June 2022, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of
its financial performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
William Buck is an association of firms, each trading under the name of William Buck across Australia
and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
(WB013_2007)
ACCOUNTANTS & ADVISORS
Sydney Office
Level 29, 66 Goulburn Street
Sydney NSW 2000
Parramatta Office
Level 7, 3 Horwood Place
Parramatta NSW 2150
Telephone: +61 2 8263 4000
williambuck.com
KEY AUDIT MATTER
Recovery of Goodwill and Intangible Assets
Refer also to note 18
The Group has $55,892,451 of intangible
assets including:
— Goodwill of $36,058,902
— Brand names and intellectual property of
$3,300,000
— Customer relationships of $16,204,725
— Computer software of $328,824
The Group has assessed that the customer
relationships and computer software have
finite lives and are amortising these assets
over their useful lives. The other intangible
assets have indefinite lives.
The carrying values of the identifiable
intangible assets are contingent on future
cash flows and there is a risk that, if these
cash flows do not meet the Group’s
expectations, the assets might be impaired.
These recoverable amounts use cash flow
forecasts in which the Directors make
judgements over certain key inputs, for
example, but not limited to, revenue growth,
discount rates applied, long term growth
rates and inflation rates.
How our audit addressed it
We have performed procedures to respond to
the risk of misstatement of Goodwill and
Intangible Assets, these procedures included:
— Assessing the Group’s
determination of finite and indefinite
lives of intangible assets;
— Evaluating the Group’s budgeting
procedures (upon which the
forecasts are based);
— Assessing the principles and integrity of
the cash flow models;
— Consulting our own valuation specialists
when considering the appropriateness of
the discount rates and the long-term
growth rates;
— Testing the sensitivity of the value in use
calculations to variations in the
underlying assumptions;
— Reviewing the historical accuracy by
comparing actual results with the
original forecasts; and
— Assessing the amortisation rates used
for customer relationships and
computer software as well as testing
the corresponding charges made in
the year.
We have also assessed the adequacy of the
Group’s disclosures in respect of the intangible
assets.
Other Information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022 but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included pages 17 to 23 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Kelly Partners Group Holdings Limited, for the year ended
30 June 2022, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
William Buck
Accountants & Advisors
ABN: 16 021 300 521
L.E. Tutt
Partner
Sydney, 1 August 2022
Kelly Partners Group Holdings Limited
Shareholder information
30 June 2022
The shareholder information set out below was applicable as at 15 July 2022.
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
Ordinary shares
Options over ordinary
shares
Number
of holders
% of total
shares
issued
Number
of holders
% of total
shares
issued
511
332
105
164
46
44.13
28.67
9.07
14.16
3.97
292,118
828,063
799,188
4,827,318
38,253,313
0.65
1.84
1.78
10.73
85.00
1,158
100.00
45,000,000
100.00
Holding less than a marketable parcel
54
4.66
2,840
0.01
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 $3.88 on 30 June 2022.
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 (KELLY FAMILY A/C 1)
BNP PARIBAS NOMS PTY LTD (DRP)
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
KALUMIC PTY LTD (THE MICHELAKIS FAMILY A/C)
ACKC SUPER PTY LTD (CAMPBELL FAMILY S/F A/C)
GILDALE SUPER FUND PTY LTD (GILDALE SUPER FUND A/C)
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD (DRP A/C)
BULLOCK SUPERANNUATION PTY LTD (SUPER KAY BULLOCK A/C)
MR KRISTIAN GARNET HAIGH
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
KENNETH KO
MR SUNDEEP KALRA + MR ANOOP KALRA + MRS SHIKHA MOHANTY (GANESH
SUPER FUND A/C)
SANTRA SMSF PTY LTD (SANTRA SUPER A/C)
BULLOCK SUPERANNUATION PTY LTD (SUPER CRAIG BULLOCK A/C)
PACIFIC CUSTODIANS PTY LIMITED (KPG EMP SHARE PLAN TST A/C
INVIA CUSTODIAN PTY LIMITED (BARYL INVESTMENT A/C)
INVIA CUSTODIAN PTY LIMITED (BARYL SUPER FUND A/C)
BRJT ACCOUNTING PTY LTD (BRJT FAMILY A/C)
89
Ordinary shares
Number held
% of total
shares
issued
22,524,120
3,707,055
1,126,221
906,623
747,966
636,000
500,000
500,000
460,582
458,984
446,327
429,120
393,504
300,199
284,337
264,263
256,112
250,000
250,000
231,910
50.05
8.24
2.50
2.01
1.66
1.41
1.11
1.11
1.02
1.02
0.99
0.95
0.87
0.67
0.63
0.59
0.57
0.56
0.56
0.52
34,673,323
77.04
Kelly Partners Group Holdings Limited
Shareholder information
30 June 2022
Unquoted equity securities
There are no unquoted equity securities.
Substantial holders
Substantial holders in the Company are set out below:
KELLY INVESTMENTS 1 PTY LTD (KELLY FAMILY A/C 1)
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
22,524,120
3,707,055
50.05
8.24
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.
90
Kelly Partners Group Holdings Limited
End of annual report
30 June 2022
KELLY PARTNERS GROUP HOLDINGS LIMITED
Office - Level 8/32 Walker Street, North Sydney, NSW 2060
91