Loyalty payments to Count Financial franchisees from the Commonwealth Bank of Australia (CBA) have helped boost the revenue of Countplus’s financial planning division, the company’s managing director said.
Michael Spurr, the managing director and chief executive of the Count subsidiary, told Boardroom Radio that Countplus’s advice revenue has been “assisted” by the payments.
“Financial planning revenue was assisted by loyalty payments made by the CBA to franchisees of Count Financial, of which we have a number of Count franchisees within our group,” he said.
“But that was exceeded by the expense of the additional provisioning policies.”
Countplus’s financial planning revenue was up 11.6 per cent over the period and made up 19.9 per cent of total net group revenue, the company’s annual results said. Countplus has 17 member firms that are also franchisees of Count.
Spurr said total net member revenue was up 11.3 per cent to $90.24 million.
“Total net member revenue was $90.24 million which was up 11.3 per cent over the year. That was assisted by some acquisitions that were done but there was some organic growth both in the accounting and financial planning space,” he said.
Countplus’s member revenue is made up of a number of business divisions including financial planning, property, broking, and risk insurance.
The company also reported a consolidated net profit after tax of $11.31 million of which $11.16 million is attributable to Countplus’s shareholders.
While reported net profit after tax was down 12.2 per cent on prior year due to non-cash fair value consolidation and investments uplifts in the prior year, normalising for these adjustments, net profit after tax was up 19.4 per cent, the report said.
The company’s total expenses for the year stood at $70.73 million, Spurr said.
“Those expenses were impacted by some one off factors as a result of new positioning policies within the group that were implemented in the group, particularly around get up provision,” he said.
Spurr said company debt has increased due to new acquisition payments and deferred payments on previous acquisitions. Total loans and borrowings is $8.7 million, with net debt “very low” at $2.4 million at the end of June.
In terms of Countplus’s acquisition strategy, Spurr said organic growth remains the company’s priority.
“We expect that we can supplement this growth through good quality acquisitions,” he said.
“We expect that most acquisitions will be able to be funded out of profits, certainly the tuck-ins by the subsidiaries, and they are the type of acquisitions that we generally prefer.
“We’ve begun marketing outside of the Count group to accounting firms and the response has been extremely favourable and we expect our pipeline of acquisitions to remain strong for quite some time to come.”
Spurr also detailed the company’s expanded acquisition policy.
“We have expanded our acquisition policy. for larger practices we’ll look to acquire around 20 to 30 per cent model and that could be to buy out a retiring partner or to fund an acquisition they want to do,” he said.
“It’s a means for us to get to know firms that weren’t affiliated to count and so reduces the risk to the group.”
Countplus expects to make its first minority interest later this year, he said.
