070917_KPGHL_Annual Report 2017_final_PREVIEW

Growth strategy
The Company’s growth plan is based on a three-pronged strategy: organic growth, network expansion and the
introduction of new services.
Organic Growth
Underpinning organic growth for Kelly Partners is increased demand for accounting and taxation services driven by
the Australian tax system’s increasingly complex rules, legislation and compliance requirements. At the same time, our
increasing brand presence and market penetration delivers growth in our existing locations through:
+ the targeted acquisition of key people and fee parcels to add to existing businesses
+ the application of our client acquisition process
+ the application of our proprietary systems ('Integrated Advice Model' and 'Flight Plan')
Since formation, organic revenue growth for Kelly+Partners has averaged approximately 4% pa. The Company sets an
annual revenue growth target of 5% for mature Operating Businesses, comprising a 2% volume growth and a 3% price
growth. In addition, the Company has developed specific revenue and cost plans to improve EBITDA margins with a
target level of 32.5% per Operating Business. If achieved, this improvement will be an important driver of future
earnings growth. At present, approximately one-third of Operating Businesses generate EBITDA margins which exceed
or are in-line with this target.
Network Expansion
According to a recent industry survey 1 , there is a generational shift unfolding in the Australian accounting sector.
Over the next five years, up to 40% of accounting firms (who were surveyed) have accounting partners / owners who are
looking to retire, or exit the industry. Adding pressure to this dynamic is the fact that nearly 80% of accounting partners
(who were surveyed) do not have a succession plan.
Business Overview
Kelly+Partners is well positioned to take advantage of this demographic shift given our successful track record of
identifying and transforming accounting practices in need of a succession plan. Our owner-driver model delivers
long-term Operating Business Owner alignment, enhanced staff culture, improved financial performance, the rollout
of proprietary accounting systems and procedures, and a centralised platform in which to drive growth. As has
been demonstrated by our revenue CAGR of 37% over the past 10 years (FY07 to FY16), our successful track record with
business transformations has been a key driver of historical growth for Kelly+Partners.
The key characteristics which the Company requires when assessing a new Operating Business to add to the network
are summarised below:
+ alignment with Kelly+Partners' vision and culture;
+ capacity to meet Kelly+Partners’ target financial and operating metrics;
+ long-term commitment of Operating Business Owners via an approximate 49% ownership;
+ long-term client relationships, with strong SME and/or SMSF profile;
+ focus on tax and accounting services (which are recurring business lines);
+ must be fully owned by existing partners or shareholders; and
+ provides geographic expansion opportunities for Kelly+Partners;
The Company follows a strict process to identify and assess external accounting firms. Please refer to the description of
our 'Kelly+Partners Opportunity Filters'.
Kelly+Partners has identified a number of locations in the Greater Sydney area as targets for future geographic expansion
of its accounting network. Over time, the Company anticipates that our owner-driver network will expand into these
regions through either bolt-on opportunities, or the launch of new greenfield Operating Businesses, with clients
acquired through referrals, online enquiries and other marketing activities. This regional growth model will further
cement Kelly+Partners as the premier tax and accounting provider for SMEs in Greater Sydney.
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Business Fitness, The Good, The Bad & The Ugly Report 2017.
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