070917_KPGHL_Annual Report 2017_final_PREVIEW

Strategy
Kelly+Partners has seven strategic priorities:
+ + Private SME business owners in Greater Sydney - Since inception, Kelly+Partners’ focus has been building
accounting teams that can materially improve the financial situation of private SMEs and their owners. These clients
are “sticky” given that they desire long term relationships with their accountants.
+ + Recurring business lines - Kelly+Partners focuses on business lines that are predictable and recurring in nature
which include accounting and taxation. We regard audit as commoditised, and it represents less than 5% of our total
revenue. Approximately 85% of Kelly+Partners revenues are generated from accounting and taxation services.
+ + Premium service and prices - The Operating Businesses deliver high-quality service levels with a strong focus on
clients. We maximise value for clients using our proprietary processes and systems. The network benefits from strong
client loyalty with an annual client churn of 2%.
+ + Network expansion under a strong single-brand - Kelly+Partners has a long and successful track record of profitable
network expansion using an owner-driver model. Key synergies include a combination of higher cost efficiency,
active management of debtors and cashflow, and increased revenue opportunities. In addition, the adoption of a
strong single-brand provides proven benefits for future business development, overall staff culture, and in particular,
recruitment of talented team members.
+ + Ongoing system growth - Accounting and taxation services are driven by increasing tax complexity and compliance
in Australia. The SME subset of the accounting market represents approximately 60% (or $12 billion pa) 1 of total
industry revenues, and the role of intermediating the relationship between this client subset and the ATO will become
more important over time.
+ + Marketing and Advertising - The Company invests significantly in its brand through regular advertising and marketing
campaigns. This has included television, radio, and newspaper advertisements and this is expected to continue in the
future. These marketing and advertising campaigns are expected to continue to build awareness of the Kelly+Partners
brand, as well as attract prospective clients and potential new Operating Business opportunities.
+ + Property and Leases - Kelly+Partners owns a majority interest in a property on the Central Coast which is leased to the
Kelly Partners Central Coast Partnership. All other offices operate in a leased office with lease terms varying from
3-5 years.
Business Line Revenue Risk Typical Service Providers
Consulting and Advisory High – volatile, project based Big 4
Audit Low – stable, commoditised Big 4, National Mid-Tier
Tax and Compliance
Low – stable, recurring
Kelly+Partners
Small Private Firms
Bookkeeping
High – exposed to digital
disruption and outsourcing
Small Private Firms
Software Providers
1
Management estimates.
32 KELLY+PARTNERS ANNUAL REPORT 2017