Count set for expansion despite lower profits

Count Financialwill push ahead with dramatic expansion plans, including the launch of a new dealer group, despite reporting a lower than expected profit at its first ever annual general meeting as a listed company yesterday.

Count, arguably the largest independently owned dealer group in the country, reported an after tax profit of $4.05 million for the last financial year, down from $5.77 million in its prospectus projection, mostly as a result of a write down in its investment portfolio.

The group’s operating profit, which rose by 48 per cent to $6 million, was also marginally below expectations, impacted by both the GST and the loss of a number of franchisees to consolidators.

And the group is projecting only a moderate profit rise for the fist half of this financial year, as the development costs associated with the new dealer group, Compound Investments, eat into Count’s profit margins.

Compound, to be officially launched at the Financial Planning Association (FPA) conference later this month, is expected to have a negative impact on Count’s overall bottom line for the first half of this financial year at least, although the new dealer group is likely to contribute positively to Count’s flagship wrap account, the wealth-e-account.

The balance of the wealth-e-account, which still managed to break the $1 billion mark for funds under administration last month after only three years in operation, was affected by the market uncertainty brought on by the terrorist attacks in September.

“The impact of the September 11 US terrorist attacks, which saw our wealth-e-account fall for the first time, combined with the temporary general loss of confidence in the investment markets, will mean that the first half’s profits are unlikely to be quite as good as we would have hoped,” Count chairman Len Spencer says.

“At this time, subject to markets holding up, a modest profit rise for the first half year can be expected.”

But Count is remaining decidedly upbeat about the prospects for its existing businesses, and of the success of the soon to be launched Compound dealer group.

In an interview withMoney Managementafter the annual general meeting, Count managing director Barry Lambert indicated the group was already in discussion with a number of prominent dealer groups about joining Compound, and that Compound expected to ultimately dominate the middle ground between major institutions and smaller independent planning groups.

Lambert says an increasingly onerous regulatory environment, combined with growing costs for smaller planners, made the financial planning industry ripe for rationalisation, allowing Compound to move into a fragmented arena and build an independently owned brand for advisers.

“Compound will be there to help facilitate advisers become more efficient because all advisers should be looking at becoming more efficient,” Lambert says.

In other Count news, Geoff Guest has retired as a full time executive of the group after almost 20 years in the position, but was re-elected as a non-executive director yesterday.

Count’s deputy managing director Kylie Lambert was also re-elected as a director, and is believed to be the front runner to ultimately succeed Barry Lambert, whose current contract as managing director runs out at the end of next year.

Count Financial shares finished trading at 49 cents yesterday, down from a high of about 55 cents in July, but up from a low of under 44 cents in late September.