Transactional and integration costs associated with the Affinia acquisition have led to Count’s wealth segment being a laggard in the group’s first-half financial results.
Results released to the ASX on Tuesday morning show Count’s wealth revenue increased 23 per cent from $8.44 million in 1H23 to $10.41 million in 1H24, but earnings before interest, tax and amortisation (EBITDA) dropped 18 per cent, from $1.37 million to $1.13 million.
In contrast, underlying revenue for the business was up 8 per cent compared to the previous corresponding period from $44.5 million to $47.9 million. Underlying EBITA was up 9 per cent (from $4.96 million to $5.43 million), which the company attributed to improved margins in its accounting segment.
At close of business Tuesday afternoon, Count’s share price increased 1.52 per cent to 67 cents per share.
The firm’s wealth segment revenue only covers the AFSL business; revenue from advice and accounting practice equity stakes is included in the accounting segment results.
Count CEO Hugh Humphrey told Professional Planner on Tuesday morning the driver of higher revenue was the Affinia acquisition, but integration costs for the period created the EBITA hit.
“There were some costs attached to it and we moved pretty quickly on that,” Humphrey said.
“We’ve taken some costs up front instead of taking them over the long term. There should be better earnings contribution from the Affinia firms both because those one-off costs will drop away, and because they’re now on a path to equalise their fees over coming years with the Count firms.”
Affinia was acquired from TAL last March with advisers still in the process of being transferred to the Count license.
While acquiring Affinia has led to both a boost in revenue and expenses, Humphrey said improved partnerships with advice firms in the network have boosted gross business earnings, which was also a contributing factor to the segment’s improved revenue.
“Because of the fee structure, quite appropriately, we support the firms to grow and then we share in the growth and saw a good result for the half,” Humphrey said.
Advice practices in Count’s network saw gross business earnings increase 54 per cent from $51.6 million in 1H23 to $75 million in 1H24, while gross business earnings per adviser were $206,000, up from $165,000 over 1H23.
Humphrey said much of this transformation is supporting the changing business structures required of the Count businesses that utilised a different model when the licensee was owned by the Commonwealth Bank.
“As we’ve been reshaping the business, it can really start to see that step-up in terms of earnings per adviser as we increase the size of the businesses in our network and improve the quality,” Humphrey said.
Funds under advice for Count was $17.9 billion, with $29.9 billion added through the Diverger acquisition.
The acquisition of Diverger, which was finalised in court last week, was expected to create the third largest licensee group when the deal was announced, with a combined more than 750 advisers on the ASIC Financial Adviser Register at the time.
According to research supplied to Professional Planner by Wealth Data, the five licensees now account for 731 advisers, which includes 324 on the Count licence and 34 still remaining on the Affinia licence, along with Diverger’s Merit Wealth (145), GPS Wealth (135) and Paragem (93).
In Tuesday morning’s update, Count announced it had more than 550 advisers in its network, which Humphrey clarified as being the total holistic advisers across all five licensees.
“Personally, I see [Merit] as quite a different business model,” Humphrey said.
“We’ve not included limited AR numbers in the overall AR, it’s really looking at the holistic financial advisers there and that’s the delta between the aggregate number. GPS has some limited advisers in there too, but basically Paragem and GPS are the full ARs and Merit is largely limited ARs.”
