Kelly+Partners Group or KPG (ASX: KPG) is an accountants network, and they’ll have you know that they mean business. As the second half of FY23 begins, the Company has already released its audited financials for H1 FY23.

KPG’s net profit is up 7.5% to $3.6 million, and it witnessed a 42.2% revenue growth to $44 million from $30.9 million in 1H22. The Company’s revenue growth from acquisitions contributed 34.5% or $10.7 million to overall revenue, while organic growth comprised 7.8%. Both acquired and organic revenue growth—especially the former—surpassed KPG’s target of a mere 5%. 

On the operational front, KPG increased its offices count from 19 to 28. It opened six new locations in New South Wales and two in Queensland. It started expanding into the US and UK, with a new office in Malibu, California, as of January 2023.

Group, Founder & CEO Brett Kelly said, “We cannot continue to invest and deliver the world-class people, client and community impact we are known for and justify the investment if we don’t grow globally. Our clients over the next 25 years are all going to have to earn a return on a global basis and will need their accountants to help them operate in this new global world.”

Despite impressive revenue growth, the Company’s EBITDA margin reduced from 33.2% to 26.7%. Its net profit after tax margin fell 4.1% from about 24% to 20%. The operating business EBITDA margin also reduced to 30.0% from 33.5% in H1 FY22. These falls represent margins lagging from recent acquisitions. As a cohort, its operating businesses with annual revenues greater than $2 million generated EBITDA margins of 31.7%.

Acquired businesses shined here, generating 20.9% EBITDA margins for the half year. KPG’s goal is 35% EBITDA, and it’s not far off right now. 

Cashflow from operations increased to $10.3 million as the Company’s net debt increased by $5.5 million because of new borrowings that enabled acquisitions and buy-ins of partners. KPG’s client groups increased by 26% to over 17,000, up from about 13,000. 

The Company completed six acquisitions in H1 FY23, with approximate total annual revenues ranging between $8.2 million and $10.7 million. In FY24, the Company expects its revenue run rate, i.e. annualised revenue, including all acquisitions completed to date, to be over $90 million. This would exceed its target of $80 million as per its five-year plan. 

Since its IPO in 2017, the Company’s revenue has grown tremendously from about $30 million to over $85 million. That’s largely thanks to KPG’s strategy of taking the small wins via programmatic acquisitions (i.e. making many small deals).

The Company maintains a dividend payout ratio of 50 to 70% of Underlying NPATA, and it plans to grow ordinary dividends at a minimum of 10% per annum.

Kelly added, “As we grow our Australian businesses to $100m+ revenue in the near future and expand internationally to the US and the UK, where we see significant opportunities exist (Australia’s two largest ex-pat communities), we have begun to invest heavily in our people, our brand and our digital infrastructure to facilitate this growth.”

Many companies will be releasing their audited H1 FY23 results in mid-Feb.