Kelly Partners Surges 22.8% in Revenue, Boosts Profit with Four Key Acquisitions

Strong Financial Performance Amid Strategic Expansion

Kelly Partners Group Holdings Limited has delivered a strong half-year performance for the period ending 31 December 2024, with revenues rising 22.8% to $64.9 million and profit attributable to owners increasing 27.6% to $2.5 million. The company’s underlying net profit after tax before amortisation (NPATA) also grew by 12.0% to $4.9 million, reflecting solid core earnings growth.

This growth was underpinned by a combination of organic expansion and a series of strategic acquisitions. The Group completed four acquisitions during the half-year, including marquee accounting businesses in the United States and the United Kingdom, as well as a tuck-in acquisition in Sydney. These acquisitions contributed between $14.4 million and $17.1 million in annualised revenues, representing approximately 13.3% to 15.8% of the Group’s FY24 revenue base.

Acquisitions and Geographic Expansion

The acquisitions in San Angelo, Texas; St Petersburg, Florida; Swansea, UK; and Sydney, NSW, have expanded Kelly Partners’ footprint internationally, particularly in the US market where the Group now operates multiple offices. The newly acquired US businesses, although relatively recent additions, have started contributing to revenue and earnings, albeit with lower EBITDA margins compared to the Australian operations.

Kelly Partners’ operating model, based on the Partner-Owner-Driver® structure, continues to drive alignment and growth, with the number of equity partners increasing to 104 by the end of the half-year. This growth in partners aligns with the Group’s strategy to retain key talent and support revenue expansion.

Operational Metrics and Profitability

Underlying EBITDA for the Group increased 11.2% to $20.4 million, with an underlying EBITA margin of 26.8%, slightly down from the prior year due to the integration of lower-margin US businesses. The Australian operations maintained a steady EBITDA margin of 31.0%. Employment and related expenses rose 27.1%, reflecting the expanded workforce and acquisition-related costs.

The Group’s net debt increased to $55.5 million, with a gearing ratio of 1.49x, primarily driven by acquisition funding. Kelly Partners maintains a disciplined approach to debt management, with acquisition debt expected to be repaid over four to five years from the earnings generated by the acquired businesses.

Dividend Suspension and Capital Management

Notably, Kelly Partners announced in February 2024 the cessation of dividend payments, with no dividends declared or paid during the half-year. This decision reflects the Group’s focus on reinvesting capital to support growth initiatives and acquisitions. The company also repurchased 100,000 shares during the period as part of its ongoing buy-back program.

Cash flow from operations improved significantly, with owners’ earnings rising 26.2% to $14.0 million, supporting the Group’s investment and financing activities.

Outlook and Strategic Positioning

Kelly Partners’ half-year results demonstrate the effectiveness of its acquisition-led growth strategy combined with organic expansion. While the integration of new businesses, particularly in the US, has temporarily compressed margins, the Group’s long-term focus remains on improving operating efficiencies and expanding its service offerings.

Management’s continued investment in central services and partner development underpins the Group’s ambition to build intrinsic per-share value. However, the suspension of dividends and increased leverage may prompt investors to closely monitor future cash flow generation and acquisition outcomes.