COUNT LIMITED 
By ASX ANNOUNCEMENT - CUP
22 August 2013
Countplus Limited FY2013 Annual Results Member Firm Net Income: $20.15m (up 3%) Net Profit after Tax: $11.08m (down 2%) 3c Interim Quarterly Dividend Declared, Payable 15/11/13 9 Acquisitions/Investments Completed in Last 13 Months
The Directors of Countplus Limited (CUP) report a solid 2012/2013 financial result of Consolidated Net Profit after Tax of $11.08 million of which $10.92 million is attributable to CUP shareholders. This included a 3% increase in Member Firm operating profit before tax to
$20.15m. The 4th quarter earnings were impacted by falling business confidence, in part due to the pending federal election and as a result, the group did not achieve its positive market guidance.
The Company yesterday declared its first quarterly dividend for 2013/14 of 3 cents per share fully franked, payable on 15 November 2013.
Countplus is an aggregation of 21 businesses and their subsidiaries across Australia; 18 accounting/business advisory firms, one financial planning specialist, a property services group and a financial planning dealer group. The Company listed on the ASX on 22 December 2010.
Countplus Member Firms have completed five "tuck-in" acquisitions or investments during the year and another four acquisitions or investments over the last 2 months. These are disclosed below in sections 4.1 and 4.2.
A recorded presentation of the Countplus annual results, presented by the Chairman and CEO, will be accessible via Board Room Radioshortly.
The Company's results are sound given the difficult business conditions for the small business sector (the target client base of our Member Firms) across the country. The group benefits from its diversified portfolio of businesses, represented in every mainland capital city of Australia and in a number of regional centres.
The first profit guidance for 2013/14 is expected to be provided at the Annual General Meeting in November 2013. It is too early to determine if business confidence will pick up post the federal election.
ASX Announcement - CUP - 1 - 22 August 2013
2. Financial Highlights1. | Total Net Revenue | $94.80 million | Up 3.5% |
2. | Net Income Member Firms | $20.15 million | Up 2.6% |
3. | Consolidated Operating Profit (EBITA) | $19.37 million | Up 1.8% |
4. | Consolidated Net Profit After Tax | $11.08 million | Down 2.0% |
5. | Basic Earnings per Share | 9.98 cents | Down 2.4% |
6. | Diluted Earnings per Share | 9.92 cents | Down 3.0% |
7. | First quarterly 3 cent dividend declared payable 15 November 2013 | ex-date 21/10/2013 | record date: 25/10/2013 |
2013 | % Change | ||
$ 000 | % of total Revenue | % | |
Total Net Revenue (Member Firms) | 93,666 | 3.6% | |
Salaries & Employment Expense | (56,741) | 60.6% | |
Premises Expense | (6,000) | ||
Depreciation Expense | (1,253) | ||
Other Operating Expenses | (9,519) | ||
Total Expenses | (73,513) | 78.5% | 3.9% |
Net Income Member Firms | 20,153 | 21.5% | 2.6% |
Head Office Contribution (Net Cost) | (932) | 214% | |
Share of Profits from Associates | 486 | - | |
Operating Profit (EBITA) | 19,707 | 21.0% | 1.8% |
Non-Operating Income | 397 | ||
Share based Payments | (351) | ||
Interest Expense | (1,040) | 33.5% | |
Amortisation Expenses | (3,343) | (6.0%) | |
Non-cash Fair Value Adjustments (Incl. Impairment Charges) | (399) | ||
Profit before Tax | 14,971 | 0% | |
Tax | (3,888) | 5.9% | |
Consolidated Net Profit after Tax | 11,083 | (2.0%) |
The financial statements that accompany this ASX Announcement provide the consolidated financial information for Countplus Head Office & its Member Firms. Countplus is made up of 21 Member Firms. The above table is presented to show the performance of the Member Firms separating the Head Office Contribution. The first part of the financial summary above, presents the Member Firms results excluding Countplus Head Office. The second part of the table reconciles the summary to the consolidated net profit after tax figure, as presented in the consolidated financial statements.
ASX Announcement - CUP - 2 - 22 August 2013
3.2 Balance Sheet2013 | 2012 | % Change | |
$ 000 | $ 000 | % | |
Current Assets | 35,172 | 30,244 | 16.3% |
Current Liabilities | 22,126 | 22,429 | (1.4%) |
Current Ratio | 1.59 | 1.35 | |
Non-Current Assets | 66,454 | 64,777 | 2.6% |
Non-Current Liabilities | 27,515 | 18,989 | 44.9% |
Net Assets | 51,985 | 53,603 | (3.0%) |
Net Debt | 9,255 | 2,360 |
Revenues are primarily for accounting and related services, but also include financial planning revenue, revenue from loans & equipment financing, insurance commissions and property sales commissions.
Accounting related revenue was up 2.1% reflecting challenging business conditions.
Member Firm financial planning revenue was up 4.6% over the period, organically driven and makes up 20.8% (2012: 19.9%) of total net group revenue. This included a benefit from loyalty payments made by the Commonwealth Bank, as a result of the takeover of Count Financial, to Count Financial franchisees (also paid in the prior period). 17 Member Firms are franchisees of Count Financial.
Property and related services revenues contributed 4.1% of total Member Firm net revenue for the year (2012: 1.6%), due to a full year contribution from property services group, Pacific East Coast (PEC).
Legal revenue dropped $1.9m (70.3%) over the period as the legal subsidiaries of one of the group's Perth based firms were exited. These businesses have been a drag on the Company's results.
Total Member Firm expenses increased by 3.9%.
Member Firm employment expenses were impacted by acquisitions and also by additional resourcing for some Member Firms, particularly in financial planning in anticipation of improved investor sentiment and appetite for advice.
ASX Announcement - CUP - 3 - 22 August 2013
The decrease in other expenses (ex depreciation and premises) was assisted by lower provisioning expensed for doubtful debts. Our prudent provisioning policy was implemented in
2012 and has not changed.
Net income from Member Firms was $19.7m (up 1.0%) for the period. This equates to a margin of 21.1% of income (2012: 21.6%).
3.5 Head Office ContributionHead Office operations made a negative contribution of $0.9m for the year. It is expected that Head Office will only have a mildly negative (less than 5% of operating profit) financial impact on Countplus' performance going forward.
3.6 Share of Profits from Associates
This item is primarily made up of the group's share of profits from its 25% interest in a top 100
South Australian firm, Hood Sweeney, acquired in October 2012. They are performing well.
Amortisation expenses of $3.3m (2012: $3.6m) relate primarily to an accounting requirement to write down the value of intangible assets, acquired client relationships and adviser networks (non-cash), over their expected lifetime. A conservative diminishing value method is used to amortise these assets, ensuring that the proportional impact of this line item should reduce over time.
3.8 Interest ExpenseInterest expense for the period rose primarily from a loan facility with the Commonwealth Bank of Australia. These funds were drawn down to fund new acquisitions and pay for deferred consideration on acquisitions made during the period.
3.9 Net Profit ResultNet profit after tax was down 2.0% due to slightly higher tax expense for the period. Annual tax expense is expected to normalise at 30% of profits in future periods.
4. Acquisitions and Investments 4.1 Acquisitions made during the 2013 Financial YearDuring the 2013 financial year, the following acquisitions and investments were made:
