In its first quarter update for the 2023–24 financial year, Count Limited has taken a bullish stance on its outlook, with chief executive Hugh Humphrey pointing to acquisitions and adviser growth as pillars of its roadmap moving forward.
“Count is uniquely placed to take advantage of consolidation in the accounting and wealth sectors. We have identified ourselves as the clear leader in the profession,” Mr Humphrey said.
The firm noted that with 379 advisers under its umbrella as at 30 June 2023, it has bucked the industry-wide trend of losses. This represents a growth of 36 per cent compared with FY2022, with much of the growth coming through the acquisitions made in FY23.
Mr Humphrey also noted that the business is well positioned for ongoing growth as a result of client demand for integrated wealth and accounting services, while also pointing to a number of recent acquisitions as avenues for increased earnings.
“We continue to deliver on our growth agenda through acquisitions and can see significant opportunities ahead in our growth pipeline. We have already made strong headway into our FY24 growth targets with four quality acquisitions already this financial year,” said Mr Humphrey.
Count chairman, Ray Kellerman, added that the business has “continued to execute” on its growth agenda, with its network of firms increasing by 42 per cent to 193 from 136 firms.
“Across the Count group, we now represent a strong community of 379 financial advisers and 563 accountants in equity firms with $16.8 billion of funds under advice,” Mr Kellerman said.
He added: “It is our intention to continue to identify acquisition opportunities that enable us to leverage the broader Count network of clients, businesses, and services provided. Our pipeline of opportunities continues to be strong and we will continue to look to grow where there is strong strategic fit, earnings accretion, and shareholder value.”
The most recent acquisitions include the Canberra accounting, tax, bookkeeping and advisory services firm Allan Watt Accounting (AWA) in early November and Victorian advice firm Vista Financial Group in October.
Diverger acquisition still a focus
Mr Humphrey added that Count is “making progress towards completing the acquisition of Diverger”, which he said is a complementary business to Count and “aligned with our strategic pillars”.
“We expect the transaction to complete at the end of February 2024, unlocking benefits for all stakeholders and adding significant scale to our wealth and services businesses,” he said.
The Diverger acquisition was first announced in September, with Count noting it would acquire 100 per cent of the issued shares in Diverger by way of a scheme of arrangement that values Diverger at $45.3 million.
“This is an exciting transaction that continues the disciplined execution of our growth strategy, bringing tangible benefits to Count and Diverger shareholders, our member firms, and their clients. Count and Diverger both have a deep heritage in accounting and financial advice, with complementary strengths that will position us as an industry leader,” Mr Humphrey noted at the time.
Diverger’s major shareholder, HUB24, issued a statement of support for the transaction, noting it will vote in favour of the scheme in the absence of a superior proposal.
The deal was dealt a blow soon after it was announced when DMX Asset Management – a holder of a 5.2 per cent stake in Diverger – publicly rejected the deal, which it said “substantially” undervalues the firm.
In an October statement to the ASX in response to media reports that a second bidder had emerged, Diverger confirmed that COG Financial Services had made a non-binding indicative offer to acquire the business.
“Diverger confirms it has received a non-binding indicative proposal from COG subject to a number of conditions,” Diverger said.
It added that the board does not consider the COG proposal to be a “superior proposal” than the September offer made by Count.
On the Count side, Mr Humphrey said he remains confident that the deal will go through.
“We remain focused on closing out the transaction and Count is on track in progressing with the various documentation and procedural requirements,” he said.
“We believe that the combined business of Diverger and Count will deliver a strong outcome for shareholders and are confident that the combined businesses will unlock meaningful synergies, create economies of scale, and deliver potential growth opportunities.”
Count also announced a 31.7 per cent increase in earnings before interest, tax and amortisation (EBITA) for the first quarter of the 2023–24 financial year over the prior corresponding period in FY23, improving to $5.4 million from $4.1 million in Q1FY23.
Mr Humphrey said the results reflected the business’ disciplined execution of its strategic plan.
“We are pleased to see that the momentum we had built in FY23 has carried through and delivered a strong start to FY24,” he said.
“We are particularly encouraged by the performance of our accounting segment where production has stabilised, after a period of disruption due to industry-wide resourcing challenges.”
He added: “In summary, we have delivered a transformative set of results for FY23. We have announced our strategic pillars and continue to deliver against our growth ambitions and vision.”
Yet they are the only AFSL still offering a year free dealer fees to try and entice planners. How do you think current full paying Count advisers feel about that?