070917_KPGHL_Annual Report 2017_final_PREVIEW

Notes to the Financial Statements | For the Year Ended 30 June 2017
28 Business Combinations
Kelly Partners (Sydney)
In January 2017, the Group acquired a controlling interest in Kelly Partners (Sydney) Pty Ltd. The purchase price was
settled through the payment of cash and a contingent amount is also payable upon achieving an agreed revenue target.
The acquired business contributed revenues of $4,840,193 and profit before tax of $1,412,929 to the Group for the period
from 1 January 2017 to 30 June 2017, after expensing its costs for restructuring. The contribution to profit before tax
attributable to members of the parent entity is $574,038.
The goodwill is attributable to synergies expected to be achieved from integrating the business into the Group's existing
business.
Fair value
$
Receivables and accrued income 5,085,950
Property, plant and equipment 198,040
Customer relationships 2,981,295
Payroll accruals (370,110)
Other liabilities (831,261)
Deferred tax liability (894,389)
Deferred tax asset 100,558
Total identifiable net assets acquired 6,270,083
Total consideration transferred,
including contingent consideration
5,554,200
Plus: non-controlling interest 4,254,000
Less: fair value of identifiable net
assets acquired
(6,270,083)
Goodwill arising on acquisition 3,538,117
Contingent consideration
The Group has agreed to pay the selling shareholder additional consideration based upon achieving an agreed revenue
target for the calendar year ended 31 December 2018. The fair value of this obligation at the acquisition date is $1,201,200
and is included in the total consideration transferred as disclosed in the above table.
Acquisition costs
In acquiring both Kelly Partners Sydney and Kelly Partners Southern Highlands, the Group incurred acquisition costs of
$963,645. These have been included in business acquisition expenses.
Kelly Partners Strategy Consulting
On 1 April 2017 Kelly Partners Group Holdings Pty Limited acquired 100% of the interest in Kelly Partners Strategy
Consulting Pty Limited. The purchase price of $1,137,160 included net assets of $44,328. Please see Note 31(d) for details
of the settlement of the consideration.
29 Operating Segments
The Group has only one reportable segment. The Group primarily provides accounting and tax services to small and
medium enterprises predominantly in Australia. This assessment is based on the internal reports that are reviewed by
the Board of Directors (identified as the Chief Operating Decision Maker) in assessing performance and in determining
allocation of resources. No revenue from a single customer exceeds 10% of group revenue.
30 Contingencies
Bank guarantees have been provided in relation to the leases of various premises by the Group. These guarantees will
only be payable in specific circumstances, such as failure to meet rental liabilities. In the opinion of the directors, no loss
will result to the Group as a result of these guarantees.
Except as noted above, in the opinion of the directors, the Company did not have any contingencies at 30 June 2017
(30 June 2016: None).
102 KELLY+PARTNERS ANNUAL REPORT 2017